TREATMENT OF GOODS AND MARGINS ON GOODS


The current treatment of goods purchased by visitors in the Australian TSA effectively deems a direct relationship exists between the visitor and all the businesses involved in the production and delivery of goods through a retail outlet. This treatment results in the output and value added of the retailer as well as various industries which are involved in the supply chain from the production of the finished good onwards being attributed to the tourism industry. This includes industries such as manufacturing, agriculture, oil refining as well as other margin activities such as wholesale trade and freight transport.

TSA:RMF 2008 recommends that only the retail margin will contribute to direct tourism output and value added. This is because in the case of retail goods, it is deemed that only the retailer has a direct relationship with the visitor and is therefore part of the tourism industry. The implication of the revised treatment is that the value added generated in the chain of supply of goods to visitors up to, but not including, the retail level will be treated as an 'indirect effect' of tourism consumption, while only the value added generated from retail trade activities provided to visitors will be considered as a direct effect.


Conceptual Issues

The estimates of tourism output, tourism gross value added and tourism gross domestic product (GDP) in the Australian TSA relate to the direct effects of tourism consumption. The direct effects take into account only the immediate effects of the additional demand (tourism consumption) associated with visitors in terms of additional output and additional value added. A direct effect occurs where there is a direct relationship, generally in the form of direct physical contact, between the visitor and producer of a good or service.

Indirect effects (second round effects) of tourism consumption is a broader notion that includes downstream effects of tourism demand and is out of scope for the Australian TSA. For example, when a visitor buys a meal, indirect effects are generated for the food manufacturer, the transporter, the electricity company, etc., that provide the necessary inputs required to make the meal.

This treatment will have a significant impact on the measurement of tourism output, tourism value added and tourism GDP. It should be noted though that this change does not affect tourism consumption which will continue to reflect the full value of the retail purchase. This is stated clearly in the revised international standards, in particular:

'Although the acquisition of goods is part of tourism consumption for their whole value at purchasers' prices, and some goods might even be considered as tourism characteristic, it is only the retail trade activity associated with the good acquired by visitor that will be considered as serving the visitor and will be taken into consideration in the compilation of the direct effects of tourism in an economy.' (2008 Tourism Satellite Account: Recommended Methodological Framework, para 4.25).


Implementation

This change in methodology will require the removal of the following components of supply by businesses that do not have a direct relationship (i.e. direct contact) with visitors in deriving tourism output at basic prices:

• The basic value of goods purchased in Australia by visitors that are domestically produced by businesses in the supply chain that are not in direct contact with the visitor. This relates specifically to goods produced by firms in the agriculture, mining and manufacturing industries.
• Associated wholesale and transport margins, given that these services are provided by businesses in the wholesale trade and transport industries with no direct relationship with the visitor purchasing the good from the retailer.

The key impact of this treatment will therefore be the removal of the agriculture (part of Other industries), mining (part of Other industries) and manufacturing industries from tourism output and tourism gross value added.

In addition, the component of tourism consumption of goods that relate to other margin activities will need to be removed from tourism output and subsequently tourism value added. This will lead to a reduction in tourism output and tourism gross value added for transport industries such as Other road transport and Rail transport since these tourism related industries include both passenger and freight transportation activities. It will also lead to a reduction in the tourism output of the wholesale industry which is currently part of Other industries in the Australian TSA.

The introduction of this revised treatment of tourism value added will also impact on estimates of tourism employment. Tourism employment is derived for each industry by applying the tourism value added industry ratios to employment estimates for each industry.

The proposed approach is preferred in terms of consistency with the national accounts and particularly for the purpose of comparison to other industries and understanding the economic impacts flowing from the direct interaction between visitors and businesses. This approach also addresses concerns previously raised by the Productivity Commission relating to the treatment of upstream production in the Australian TSA.


CHARACTERISTIC PRODUCTS AND INDUSTRIES

The Australian TSA distinguishes between products and industries that are related to tourism and those which are not. Tourism related products and industries are further classified into tourism characteristic and tourism connected. The current approach in the Australian TSA is to base this on the significance of their link to tourism in Australia, rather than their link to tourism in the worldwide context.

The current list of tourism related products in Australian TSA is consistent with the Australian and New Zealand Standard Product Classification (ANZSPC) and aligns closely with the recommended list of tourism related products in TSA:RMF 2000. The current list of tourism related industries directly concords with the 1993 version of the Australian and New Zealand Standard Industrial Classification (ANZSIC), with the level of detail again broadly consistent with recommendations in TSA:RMF 2000. The concordance between tourism related products and industries with ANZSPC and ANZSIC is outlined in Appendix 1 and 2 of the 2007-08 issue of the Australian TSA (cat. no. 5249.0).


Revised List of Tourism Characteristic Products and Industries

Under the revised international standards for tourism statistics, core lists of tourism characteristic products and activities (industries), based on the significance of their link to tourism in the worldwide context, are recommended for implementation to facilitate international comparison. The list of tourism characteristic products is consistent with the newly revised international classification of products, namely the Central Product Classification, Version 2 (CPC V2.0). The recommended list of tourism characteristic activities (industries) is consistent and concords with the newly revised International Standard Industrial Classification, Revision 4 (ISIC Rev. 4).

It is recommended that country-specific tourism characteristic products are identified using criteria which are broadly consistent with that already applied in the Australian context. Whether or not an industry is classified as characteristic has no effect on total value added resulting from tourism, as the TSA measures the gross value added resulting from the production of products directly consumed by visitors, not the total gross value added generated by tourism characteristic industries.


Implementation

Tourism Characteristic Products

The ABS has decommissioned the ANZSPC as the Australian statistical standard for products. The ABS has adopted the international CPC V2.0 as the overarching framework for product classifications. The CPC is a multipurpose classification covering all goods and services and recent developments to increase the level of detail and comparability with other international standards has positioned it well to replace ANZSPC.

The product classification to be used in the Australian TSA endeavours to align as far as possible with the recommended classification of tourism characteristic products in the revised standards. The degree of alignment able to be achieved is adversely affected by availability of demand and/or supply side data in the following cases:

• While the recommended product classification splits passenger transport services by mode of transport, the Australian TSA provides this split by Taxi fares, Local area passenger transportation and Long distance passenger transportation.
• In terms of cultural and recreational services, the Australian TSA only separately identifies Gambling services from Other cultural and recreational services.
• Retail trade cannot be separately identified for tourism characteristic goods and will instead include all goods consumed by both visitors and non-visitors.

Tourism Characteristic Industries

The industry detail recommended in the revised standards is for twelve tourism industries plus All other tourism industries. This is less industry detail than currently in the Australian TSA since industries such as Cafes, restaurants and takeaway food outlets and Clubs, pubs, taverns and bars are combined under Food and beverage serving industry in the revised standards.

In the following cases, however, the Australian TSA lacks the industry detail recommended in the revised standards:

• For the transport industries, passenger transport is separately identified for each of the modes of transport. While this would provide closer alignment to the corresponding tourism characteristic product, the lack of recent transport industry data and confidentiality restrictions means that this level of industry detail cannot currently be produced.
• TSA:RMF 2008 also recommends a retail industry which only relates to the retail trade of country-specific tourism characteristic goods. Data for this industry are not collected or compiled by the ABS.

A joint project between the ABS and Statistics New Zealand has developed a new standard classification of industrial activity, the Australian and New Zealand Standard Industrial Classification, 2006 (ANZSIC06). This will replace the existing classification, Australian and New Zealand Standard Industrial Classification, 1993 (ANZSIC93), with a more contemporary classification system. This new classification is in response to changes in the structure and composition of the economy, changing user demands, and the need for enhancing compatibility with other major international classification standards. Furthermore, ANZSIC has been revised to align more closely with ISIC Rev. 4. The result of implementing this new classification is a significant change to the layout of industry representation in the Australian TSA.

In particular these changes have brought about:

• changes to the ANZSIC06 division structure which will include 19 divisions compared to 17 in ANZSIC93. This will impact on tables in the Australian TSA that display data by industry division
• an introduction of a new industry division, 'Information Media and Telecommunications'. The activities of this new division group include the creation and storage of information products in media that allow for their dissemination. This includes libraries which were previously part of the 'Cultural and Recreational Services' division group under ANZSIC93
• the splitting of 'Property and Business Services' division to its three separate ANZSIC divisions:
  - Rental, Hiring and Real Estate Services
  - Professional, Scientific and Technical Services
  - Administrative and Support Services
• classes moving between groups, subdivisions and divisions. For example, Takeaway Food Retailing which has moved from the 'Retail Trade' division under ANZSIC93 to 'Accommodation and Food Services' under ANZSIC06.

Given that the tourism related industries in the Australian TSA provide an alternative view of ANZSIC (since these industries directly concord with at least the ANZSIC class level), the existing version of the Australian TSA Industry Classification has been revised due to changes in the underlying ANZSIC classification. The table in Appendix 1 provides information about ANZSIC93 primary activities that are classified to a different tourism related industry under the ANZSIC06 classification. While many of these changes affect primary activities that would not generally be provided to visitors, the movement of these activities may impact the level of the corresponding tourism industry ratio.


DEFINITION OF TOURISM CONSUMPTION AND ITS DIFFERING SCOPES

The national accounts concept of final and intermediate consumption expenditure provides the basis for the measurement of tourism consumption in the Australian TSA. Tourism consumption is currently defined in the Australian TSA as:

'...the total consumption made by a visitor or on behalf of a visitor for and during his/her trip and stay at the destination' (Tourism Satellite Account: Recommended Methodological Framework, para 3.8).

Included in this definition are both actual expenditures and imputations for the consumption by visitors of certain services for which they do not make a payment. Consumption before or after the trip is also included provided the expenditures are related to the trip, such as the purchase of luggage or printing of photos.


Conceptual Issues

The revised international standards explicitly define two concepts in relation to consumption by visitors, namely tourism expenditure and tourism consumption. Tourism expenditure covers actual expenditure by the visitor, or on behalf of the visitor, and is defined in the revised international standards as:

'...the amount paid for the acquisition of consumption goods and services, as well as valuables, for own use or to give away, for and during tourism trips. It includes expenditure by visitors themselves as well as expenses that are paid for or reimbursed by others' (International Recommendations for Tourism Statistics 2008, para 4.2).

Actual expenditures included in Australian TSA include:

• expenditures on goods and services by visitors while on a trip and prior to the trip where they are related to it
• expenditure on goods and services by visitors with a main trip purpose of business whether this is totally or partially paid by businesses or government
• tourism single-purpose consumer durables purchased before or during a trip for use almost exclusively on trips
• consumer durables purchased on a trip, even though they are not mainly for use on trips.

Tourism consumption, as currently defined in the Australian TSA and the revised international standards, is broader in scope and also includes imputations for the consumption by visitors of certain services for which they do not make a payment. Imputed consumption included in the Australian TSA include:

• services provided by one household to the visiting members of another household free of charge, including the value of goods such as food and purchased services provided by host family/friends
• housing services provided by vacation homes on own account (imputed services of holiday homes deemed to be consumed by their visitor owners)
• imputed values of non-market services such as public museums deemed to be consumed by visitors

Because of the different nature of market and non-market consumption and also recognising that some countries may not have the data to estimate it, the revised international standards recommend that tourism consumption should be subdivided into 'actual' and 'imputed' components. This split is not currently included in the Australian TSA and is planned for inclusion with the implementation of the revised standards in the 2008-09 issue.

Under the revised international standards, the concepts of tourism expenditure and tourism consumption contain some differences in definition and scope to those currently included in the Australian TSA. The definition of tourism consumption explicitly mentions the acquisitions of valuables. Since there is no reliable data source in Australia for acquisitions of valuables, this item is not included in the national accounts or economic statistics and will also be excluded from tourism consumption in the Australian TSA.


CHANGES TO THE FORMAT OF PUBLICATION TABLES

The ten recommended analytical tables that make up the Tourism Satellite Account are derived from and related to the supply and use tables of the Systems of National Accounts. These tables are illustrative of the measures to be presented from the Tourism Satellite Account and there is expected to be some differences in format between countries depending on user requirements and the scope of available data. The recommended tables are pages 55-66 of the TSA:RMF 2008 which can be viewed at the United Nations World Tourism Organisation (UNWTO) website: http://www.unwto.org/statistics/tsa_rmf/tsa_rmf.htm

There are some differences between the current Australian TSA publication tables and the core tables contained in the new international standards. Many of the differences also existed when comparing the Australian TSA with the TSA:RMF 2000. The core tables in the new international standards (Tables 1-6) can be released with some exceptions in terms of the level of detail. The ABS will address some of the differences in the content and presentation of tables outlined in the TSA:RMF 2008 that can be readily implemented from existing input data.

This section describes the main differences between the recommended core tables and the information available in the current format of the Australian TSA.


Table 1: Inbound tourism expenditure by products and classes of visitors

Comparison to Australian TSA tables:

• The Australian TSA publishes the broader concept of tourism consumption by international visitors at the individual product level (Table 11), but does not isolate imputations for non-market transactions to allow tourism expenditure to be presented.
• Inbound tourism expenditure by same-day visitors is not applicable in the Australian context.

Table 2: Domestic tourism expenditure by products, classes of visitors and types of trips

Comparison to Australian TSA tables:

• The Australian TSA publishes the broader concept of tourism consumption by domestic visitors at the individual product level (Table 11), but does not isolate imputations for non-market transactions to allow tourism expenditure to be presented.
• In terms of types of trips, the total value of tourism consumption of domestically produced goods and services by domestic residents on outbound trips is presented in Table 14, but is not disaggregated by product as recommended in the core tables.
• Outbound tourism expenditure by same-day visitors is not applicable in the Australian context.

Table 3: Outbound tourism expenditure by products and classes of visitors

Comparison to Australian TSA tables:

• The total value of tourism consumption of overseas produced goods and services by domestic residents on outbound trips is presented in Table 14, but is not disaggregated (or able to be disaggregated) by product as recommended in the core tables.
• Outbound tourism expenditure refers to consumption of overseas goods and services by domestic residents on outbound trips, and will therefore not contribute to domestic production and tourism value added.
• Outbound tourism expenditure by same-day visitors is not applicable in the Australian context.

Table 4: Internal tourism consumption by products

The Australian TSA does not separately isolate imputations for non-market transactions.


Table 5: Production accounts of tourism industries and other industries (at basic prices)

Comparison to Australian TSA tables:

• Table 5 is an augmentation of the supply table of the Australian economy, focusing though on tourism characteristic products and tourism industries.
• It is produced as an intermediate step as part of the benchmark process, but only key aggregates related to industry gross value added (Table 5, cat. no. 5249.0, 2006-07) and product output (Table 8, cat. no. 5249.0, 2006-07) are currently presented in Australian TSA publication tables.

Table 6: Total domestic supply and internal tourism consumption (at purchasers' prices)

Comparison to Australian TSA tables:

• Table 6 is an extension of Table 5, with additional information presented for the tourism share of each cell of the supply table as well as a reconciliation of domestic output at basic prices to domestic supply at purchasers' prices.
• All of the information required for this table is produced as an intermediate step as part of the benchmark process, but only key aggregates related to supply by product (Table 8, cat. no. 5249.0, 2006-07) and income components of tourism gross value added by industry (Table 9, cat. no. 5249.0, 2006-07) are presented in Australian TSA publication tables.

The ABS intends to discuss possible changes to the Australian TSA tables in planned information sessions and/or meetings with key stakeholders prior to implementation in the 2008-09 issue to be released in June 2010.