EXPLANATORY NOTES

INTRODUCTION

1 This publication provides an analysis of the characteristics and international trading activities of Australian exporters commencing with 2006-07. The ABS has released information on the number and characteristics of Australian exporters since 2000-01 but care should be exercised when comparing these earlier estimates because:

• estimates from 2005-06 onwards use the Australian Business Number (ABN)
• the coverage of the Survey of International Trade in Services (SITS) was improved during 2005-06 with the identified frame of businesses exporting and/or importing services increasing from 3,299 to 4,615
• estimates from 2006-07 onwards use the 2006 Australian and New Zealand Standard Industrial Classification (ANZSIC).

2 Estimates relating to exporters of merchandise goods are compiled from data sourced from the Australian Customs and Border Protection Service (Customs) and from the Australian Tax Office (ATO) Australian Business Register (ABR). The total count of all actively trading businesses (whether exporting or not) can be obtained from Counts of Australian Businesses, including Entries and Exits (cat. no. 8165.0). The methodology used to derive numbers of goods exporters was changed in 2006. Further details about this revised methodology are contained in the feature article New Methodology for Deriving Counts of Australian Exporters (cat. no. 5368.0), issued on 7 April 2006.

3 Estimates relating to exporters of services are derived from the SITS.


WHAT IS AN EXPORTER?

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

5 Exporters are identified by their ABN or, for some goods exporters, by their Customs Client Identifier (CCID). The CCID is an identifier provided by Customs to exporting businesses that do not have or do not report an ABN. The ABN or CCID of a goods exporter is that of the owner of goods as provided on the Customs documentation for each export. A company that trades under multiple ABNs and/or CCIDs during a financial year will be counted for each ABN/CCID used. Joint ventures that represent multiple companies but trade under a single ABN/CCID will be identified as a single exporter. Changes to ABNs for administrative or other reasons will also influence counts over time. Therefore care should be taken when analysing changes in counts of goods exporters over time.

6 Information on exporters of goods is compiled from merchandise trade statistics and is usually consistent with balance of payments principles. In a small number of cases a non-resident may own the goods at the time of departure. Generally, there would have been a transaction occurring between an Australian resident and a non-resident prior to the goods physically leaving Australia. Therefore, it is assumed for the purpose of these statistics that all owners of goods at the time of export of the goods are Australian residents and are included in the counts of exporters.

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

• Exports of goods excludes export consignments with a value of less than $2,000.
• Australian businesses, which sell goods or services to other Australian businesses who then undertake the exporting function, are excluded. For instance:
  • 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 that comprises the work of a number of Australian sub-consultants, and
  • a business may export a product that is assembled from components made by a number of Australian businesses.
• Some analysts include the individual businesses providing commodities, components, or 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 significant in the totality of service exports. The ABS continues to try to identify these businesses and incorporate them into its estimates.
• The number of 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 businesses, tourist facilities, transport businesses, 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 the businesses providing the services.
• Goods and services exporters exclude Australian-owned businesses located overseas supplying goods or services to or from the country in which they are located (supply mode 3 - usually called foreign affiliates trade), because their trade does not directly contribute to Australia's exports of goods and services.
• The count of services exporters is derived from a sample survey. Changes in units selected in the sample can impact annual counts of businesses, especially at the type of service level.

8 Apart from the exclusions mentioned above, businesses which export goods or services in a particular year are counted as exporters regardless of the value or frequency of their exports. Tables 1 and 2 in this publication present the number of exporters by a range of export values. In addition, Table 2 presents counts of goods exporters by the frequency of export transactions. This information may be analysed when considering issues such as the identification of businesses with an export focus.

9 Estimates for the value of services exports are compiled according to the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6). Aggregate services data published in Table 1.2 and all services data in Table 10.2 align with values released in Table 9 and Table 11a of the March 2014 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) released on 6 May, 2014. However, the item 'Manufacturing services on physical inputs owned by others' has been excluded from the estimate of total services exports to prevent double counting, as exports of goods include goods exported after they have been processed.


DATA SOURCE

10 Most businesses in Australia need to obtain an Australian Business Number (ABN). These businesses are then included on the whole of government register of businesses, the Australian Business Register (ABR). The results of these studies are based, in part, on tax data supplied by the Australian Tax Office (ATO) under the Taxation Administration Act 1953 and ABR data supplied by the Registrar under A New Tax System (Australian Business Number) Act 1999. The Taxation Administration Act 1953 requires that such data is only used for the purpose of administering the Census and Statistics Act 1905 and the Australian Business Number Act 1999 requires that such data is only used for the purpose of carrying out functions of the ABS. Further information about the two Acts can be found at <www.comlaw.gov.au>. Information about the ABR can be obtained from the ABR website <www.abr.gov.au> or the ATO website <www.ato.gov.au/business>. The ABS uses information from the ABR to populate its internal register of businesses, the Australian Bureau of Statistics Business Register (ABSBR), which is used as a source for business survey frames and business counts.

11 Legislative requirements to ensure privacy and secrecy of these data have been followed. Only people authorised under the Australian Bureau of Statistics Act 1975 have been allowed to view data about any particular firm in conducting these analyses. Results have been confidentialised in accordance with the Census and Statistics Act 1905, to ensure that they are not likely to enable identification of a particular person or organisation.


CHARACTERISTICS OBTAINED FROM THE ABR

12 To help readers interpret data on the number and characteristics of exporters, the ABN is used to obtain selected information on businesses from the ABR.

13 The information obtained from the ABR includes:

• industry of the business based on ANZSIC 2006,
• main State of business location, based on main business address, and
• States in which the business is located.

14 The ABS also receives information on the number of payees and estimated annual Goods and Services Tax (GST) turnover range from the ATO. These indicators are used in determining the size of the business. The characteristics listed above cannot be obtained for exporting businesses without an ABN.

15 The following issues should be considered when interpreting information from the ABR about exporters:

• Information obtained from the ABR for businesses is relevant to the point in time approximately a month after the end of each financial year. This means that the location, industry and size information for some businesses may differ between financial years. For example the size category allocated to exporting businesses may be impacted by an increase in estimated annual GST turnover. Changes may be made as the ABR is updated at any time, so changes to classificatory data retrieved from the ABR as a result of reviews or amendments will impact on the time series. Therefore, care should be taken when analysing time series in this publication.
• 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 (e.g. the main State or the industry of the business) could relate to a corporate head office, and
• A business located in a State may export goods produced in different States.

CHARACTERISTICS OBTAINED FROM CUSTOMS AND BORDER PROTECTION

16 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, and
• industry of origin of the commodity.

17 Wherever possible, the aggregated data for value of goods exports in this publication matches the aggregated data in the January 2014 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) released on 6 March 2014. Table 1.2, Table 2.2, Table 3, Table 4, Table 5.2 and Table 7 in this publication matches Table 14 and Table 15 in publication 5368.0 January 2014.

18 The State of origin of the commodity recorded on export documentation can be used to identify the State from which the exported goods were sourced. State of origin is the State in which the final stage of production or manufacture occurs. Determining a single State of origin is difficult when there may be several stages in the manufacturing process, each of which may take place in a different State. For example, fruit may be grown in one State, canned in another, and exported from another.

19 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 2006 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 business 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

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

21 The first measure is a count of the number of businesses which export goods 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 as supplied to the ATO at the time the business initially registered with the ABR, or as subsequently amended through a change in business structure.

22 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 multiple State locations, one of which matches the State of origin of the export.

23 Table 6 shows the comparison of the two different concepts, 'State of origin of the exported commodity' and 'State of business location on the ABR'. The State of business location is then broken down by 'Main location in the State' and 'Location in State not main location'. The sum of the location numbers in this table exceeds the number of goods exporters because an exporter may export goods which originate from more than one State.

24 Table 7 shows value of exports on a State of origin basis. For confidentiality reasons, exports of Alumina to Bahrain, Egypt and Iceland are excluded from the State totals and included in totals where applicable only until December 2012. Exports data that have the confidentiality restrictions 'No commodity details' or 'No value details' are now aggregated into a single confidential commodity code. For data prior to June 2013, these data are added back into the appropriate State total (i.e. these totals show the correct level of trade). From June 2013 these confidential data are not added back. Instead the confidential data are published as 'Total goods exports'. Therefore, individual State totals from June 2013 may not represent the actual amount of trade in each state but only the trade in commodities without a 'No commodity details' or 'No value details' restriction.

25 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 (see paragraphs 12-15).


INDUSTRY DATA

26 In addition to the industry of origin of the commodity, a number of tables show the industry of the exporter. This is based on the ANZSIC 2006 industry of the exporting business as registered on the ABR. The exporting business as defined in this publication is the owner of the good at the time of export and not necessarily the producer of the exported commodity.

27 ANZSIC 2006 provides a more contemporary and internationally comparable industrial classification system than its predecessor, ANZSIC 1993. One of the impacts of the redevelopment of ANZSIC is an increase in the number of industries at each level of the classification. ANZSIC 2006 separately identifies 19 divisions compared with 17 in ANZSIC 1993. ANZSIC 2006 was introduced to International Trade in Goods data with the release of July 2009 data. For more information about ANZSIC 2006, see Information paper: Changes to International Trade in Goods Industry Statistics, July 2009 (cat. no. 5368.0.55.011).


BUSINESS SIZE

28 Exporter counts are presented by business size. The ABS discussed the size classification to be used for counts of businesses in Information paper: A Statistical View of Counts of Businesses in Australia, June 2005 (cat. no. 8162.0). The size classification recommended in that information paper used the number of payees only. Additional criteria have been added for the purpose of this publication, to cover businesses with large value domestic and/or export sales, but relatively few employees. This definition has been retained to maintain consistency with previous issues of this publication 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.

29 For the purposes of this publication, the size of the business has been determined in terms of three criteria - its number of payees, estimated annual GST turnover (both from ATO information) and the value of exports (reported to Customs). The definitions provided below have been consistently applied over the time series.

30 For exporters who have number of payees and estimated annual GST turnover reported, the criteria to define the size of the business are:

• small exporters - having fewer than 20 payees and estimated annual GST turnover 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 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.

31 There are two types of business which do not have number of payees and/or estimated annual GST turnover reported:

• CCID exporters: The CCID is an identifier provided by Customs to exporting businesses that do not have or do not report an ABN. Therefore, number of payees and estimated annual GST turnover are not available.
• ABNs where number of payees is not reported, but estimated annual GST turnover is reported.

32 For CCID exporters, the criteria to define the size of the business are:

• small exporters - having exports of less than $1m during the reference period
• large exporters - having exports of $20m or more during the reference period
• medium exporters - all businesses other than those defined as small or large.

33 For ABNs where number of payees is not reported, but estimated annual GST turnover is reported, the criteria to define the size of the business are:

• small exporters - none of these businesses are defined as small
• large exporters - having exports of $20m or more or estimated annual GST turnover of $20m or more during the reference period
• medium exporters - all businesses other than those defined as large.

COUNTRY DATA

34 Data cube 11 shows country data by the number of goods exporters, number of transactions, and the value of exports. 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.

35 The value of exports for some commodities is suppressed to preserve exporter confidentiality, but total exports by country can be released for the majority of countries. Exporter counts are suppressed for those countries with fewer than five exporters to preserve exporter confidentiality. In these instances the number of exporters cell is annotated 'fewer than 5' and the corresponding number of export transactions cell is not available and is annotated np (not available for publication).

36 For some countries, exports of alumina comprise almost all of the confidential items 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 are Bahrain, Egypt, and Iceland up to December 2012. 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'.

37 Exports data that have the confidentiality restrictions 'No commodity details' or 'No value details' are now aggregated into a single confidential commodity code. For data prior to June 2013, these data are added back into the appropriate country total (i.e. these totals show the correct level of trade). From June 2013 these confidential data are not added back. Instead the confidential data are published as 'No country details' in the country totals. Therefore, individual country totals from June 2013 may not represent the actual amount of trade in each country but only the trade in commodities without a 'No commodity details' or 'No value details' restriction.


ROUNDING

38 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).