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EXPLANATORY NOTES


INTRODUCTION

1 This publication provides an analysis of the characteristics and international trading activities of Australian exporters in 2006-07. Although the ABS has released a series of articles on the number and characteristics of Australian exporters covering the 2001-02, 2002-03 and 2003-04 reference periods care should be exercised when comparing these earlier estimates with 2005-06 and 2006-07 data. The reasons for this break in series are outlined in paragraphs 2 and 3.

2 Estimates relating to exporters of merchandise goods are compiled from data sourced from the Australian Customs Service (Customs) and from the Australian Taxation Office (ATO) Australian Business Register (ABR). The methodology used to derive numbers of goods exporters was changed in 2006, and estimates for 2005-06 and 2006-07 cannot be compared to previous years. More details about this revised methodology are contained in the feature article New Methodology for Deriving Counts of Australian Exporters (cat. no. 5368.3) issued on 7 April 2006.

3 Estimates relating to exporters of services are derived from the ABS Survey of International Trade in Services (SITS). The coverage of SITS was improved during 2005-06 with the identified population of businesses exporting and/or importing services increasing from 3,299 to 4,615. For more information about these changes please refer to Changes to International Trade in Services Statistics, August 2006 released with the August 2006 issue of International Trade in Goods and Services (cat. no. 5368.0).

WHAT IS AN EXPORTER?

4 An exporter is defined as the owner of the exported good or the provider of the exported service. Using balance of payments principles, if an export takes place, it must involve a resident selling something to a non-resident (i.e. it involves a change of ownership from an Australian resident to a non-resident). International trade in services statistics are compiled on balance of payments principles and only cover transactions between Australian residents and non-residents.

5 Information on exporters of goods is compiled from merchandise trade statistics and is usually, but not always, consistent with balance of payments principles. In a small number of cases a non-resident may own the goods at the time of departure. As there would usually have been a transaction between an Australian resident and a non-resident prior to the goods physically leaving Australia, it is assumed, for the purpose of these statistics, that all owners of goods at the time of their export are Australian residents and are therefore included in the counts of exporters.

6 There are a number of situations that impact on the interpretation of the count and characteristics of exporters including:

• Exports of goods excludes export consignments with a value of less than $2,000. Prior to July 2002 exports of goods excluded individual transaction lines (within an export consignment) with a value of less than $500
• Australian businesses that sell goods or services to other Australian businesses which undertake the exporting function are excluded, for example:
  • Many agricultural products are exported from Australia by wholesalers (such as commodity marketing boards) rather than by the producer;
  • A principal consultant may export a consultancy service which comprises the work of a number of Australian sub-consultants;
  • A business may export a product which is assembled from components made by a number of Australian businesses
• Some analysts include the individual businesses providing commodities, components, other goods or services for export in their definition of 'exporters' or at least consider them to be involved in export-related activity. However, unless the businesses actually own the goods or provide the service at the time of export, they are not included in the ABS count of exporters
• Service exporters include businesses which provide services from their Australian base to consumers offshore, i.e. supply modes 1 and 4 in the classification used by the World Trade Organisation. However, smaller and/or occasional exporters are unlikely to come to ABS notice and are therefore not included in the estimates. The number of excluded businesses may be significant, but the value of their exports is not thought to be appreciable in the totality of service exports. The ABS continues to try to identify these businesses and incorporate them into its estimates
• Service exporters exclude businesses that only supply goods or services to foreign tourists or students in Australia (supply mode 2), such as hotels, restaurants, retail, tourist facilities, transport, theatres, educational institutions, etc. In concept these businesses should be included in counts of exporters. However, estimates of these services are compiled from information obtained from the consumers of these services rather than from the businesses providing the services
• Goods and services exporters exclude Australian-owned businesses located overseas supplying goods or services in or from the country in which they are located (supply mode 3 and usually called foreign affiliates trade), because their trade does not directly contribute to Australia's exports of goods and services.

CHARACTERISTICS OBTAINED FROM THE ABR

8 To help readers interpret data on the number and characteristics of exporters, the Australian Business Number (ABN) is used to obtain selected information on businesses from the ABR.

9 The information obtained from the ABR includes:

• Industry of the business based on the Australian and New Zealand Standard Industry Classification (ANZSIC)
• Main state of business location, based on main business address
• States in which the business is located
• Number of payees and Goods and Services Tax (GST) turnover range. These indicators are used in determining the size of the business.

• The latest available information was obtained from the ABR for businesses exporting in 2006-07. This means that the location, industry and size information for some businesses may differ between 2005-06 and 2006-07. For example the size category allocated to exporting businesses may be impacted by an increase in GST turnover
• A business may have more than one ABN and the ABN quoted on export documentation may be the ABN of a part of the business not actually producing the exports. As a result, characteristics obtained from the ABR (eg. the main state or the industry of the business) could relate to a corporate head office
• A business located in a state may export goods produced in different states.

12 The ABS is developing a business longitudinal database which should provide a better basis for analysing information about the characteristics of businesses including exporters. Due to the caveats applied to this publication, the ABS plans to undertake a review to determine the best strategy for providing information on exporters and their characteristics. The results of this review should be announced in mid to late 2008.

CHARACTERISTICS OBTAINED FROM THE ACS

13 The following information can be obtained or derived from export documentation for all goods exporters including those without an ABN:

• Value of exports
• State of origin of the commodity
• Industry of origin of the commodity.

15 The industry of origin of the commodity is derived by linking each statistical code in the Australian Harmonised Export Commodity Classification (AHECC) to an ANZSIC industry based on the primary activities of the industries with which they are most commonly associated. These are the industries most likely to have produced the exported goods. Industry of origin of the commodity is a different concept from the industry of businesses recorded on the ABR. While each AHECC statistical code is allocated to one primary industry of origin, commodities can be produced and/or exported by businesses classified to a number of industries.

STATE INFORMATION

16 Two different concepts are used to measure the state distribution of goods exporters in this article.

17 The first measure is a count of the number of businesses which export goods that were produced in a given state based on information supplied to Customs with export documentation. The second measure is a count of the number of businesses engaged in exporting activities within a given state based on state of business location data as supplied to the ATO when the business initially registered with the ABR or subsequently underwent a change in business structure.

18 An exporter is defined as having locations within the state of origin of the exported commodity if

• The postcode of the exporter is in the same state as the state of origin of the export, or
• The exporter has multi-state locations, one of which matches the state of origin of the export.

20 Table 8 shows the distribution of goods exporting businesses by industry of exporter and the exporter's main state of business location as listed on the ABR (please see Explanatory Notes paragraphs 8-11).

INDUSTRY DATA

21 In addition to industry of origin of the commodity, a number of tables show industry of the exporter. This is based on ANZSIC industry of the exporting business as registered on the ABR. The exporting business as defined in this analysis is the owner of the good at the time of export and not necessarily the producer of the exported commodity.

BUSINESS SIZE

22 Exporter counts are presented by business size. The ABS discussed the size classification to be used for counts of businesses in the information paper, A Statistical View of Counts of Businesses in Australia, 2005 (cat. no. 8161.0). The size classification recommended in that information paper only used number of payees. Despite this, additional criteria have been added for the purpose of the exporter data, to cover businesses with large value domestic and/or export sales but relatively few employees. This non-standard definition has been retained to maintain consistency with previous articles and because it caters for exporters that do not have an ABN or have more complex structures, e.g. the ABN reported on the export documentation may not be the same as the ABN used for employment purposes.

23 For the purposes of this analysis, the size of the business has been determined in terms of three variables - its employment and estimated annual turnover (both derived from the ABR) and the value of exports (reported to Customs).

24 The criteria are:

• Small exporters - having fewer than 20 payees and estimated annual GST turnover range less than $1m and exports of less than $1m during the reference period
• Large exporters - having 200 or more payees or estimated annual GST turnover range of $20m or more or exports of $20m or more during the reference period
• Medium exporters - all businesses other than those defined as small or large.

26 All countries with total exports under $1 million have "less than $1m" recorded in the value of exports cell. This diverges from the usual ABS practice of "rounding" values of $500,000 or more up to $1 million and "rounding" values of $499,999 or less down to zero. Total exports for all countries includes the actual value of exports for Australia's less significant export partners.

27 Although in regular published statistics such as the international merchandise exports by commodity tables released each month in International Trade in Goods and Services, Australia (cat. no. 5368.0) the value of exports for some commodities is suppressed to preserve exporter confidentiality, total exports by country can be released for the majority of countries.

28 However, for some countries exports of alumina comprise almost all of the confidential commodities item and it is necessary to apply a secondary embargo on the country of final export destination in addition to the commodity restriction. The countries affected by this secondary embargo in 2006-07 are Bahrain, Egypt and Iceland. As a consequence, the number of exporters, number of export transactions and the total value of exports for all alumina for these countries are excluded from each of these countries and combined in 'Country confidential'.

ROUNDING

29 Where figures have been rounded, discrepancies may occur between sums of the component items and totals. Percentage movements are calculated from data at the level of precision presented in this publication (i.e. $m).