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3.74. Table 10 shows, for each of the main balance of payments aggregates, counts of positive, negative or zero revisions derived by deducting the initial estimates for each period from the latest available estimates for those periods. Revisions for the months from January 1986 to June 1994 and the quarters from March quarter 1986 to June quarter 1994 have been analysed. (Revisions to annual data are not analysed here because the small number of observations available would be unlikely to yield useful statistics.) For example the first published estimate of merchandise exports (on a shipping date basis) for January 1991 was $3,905 million. In data consistent with the January 1995 issue of 5301.0 that estimate had been revised to $3,969 million. This is counted as one positive revision in Table 10.

	10: DIRECTION OF REVISIONS, INITIAL TO LATEST ESTIMATES - MONTHLY:- JANUARY 1986 TO JUNE 1994 (a) and QUARTERLY:- MARCH QUARTER 1986 TO JUNE QUARTER 1994 (b)
					Number of revisions by direction (c)
	Aggregate				Negative	Zero	Positive	Total
	M O N T H L Y
	Current account
		Merchandise exports			45	1	56	102
		Merchandise imports			54	2	46	102
		Balance on merchandise trade			38	0	64	102
		Non-merchandise credits			15	0	87	102
		Non-merchandise debits			19	1	82	102
		Net non-merchandise			62	0	40	102
		Services credits			6	0	96	102
		Services debits			13	2	87	102
		Income credits			37	1	64	102
		Income debits			32	1	69	102
		Unrequited transfers credits			46	9	47	102
		Unrequited transfers debits			11	2	89	102
		Balance on goods and services			34	1	67	102
		Balance on current account			52	0	50	102
	Capital account
		Official sector transactions			33	0	69	102
			General government transactions		34	0	68	102
			Reserve Bank transactions		8	86	8	102
	Q U A R T E R L Y
	Current account
		Merchandise exports			15	0	19	34
		Merchandise imports			19	2	13	34
		Balance on merchandise trade			13	0	21	34
		Services credits			1	0	33	34
		Services debits			4	0	30	34
		Income credits			12	1	21	34
		Income debits			8	0	26	34
		Unrequited transfers credits			16	3	15	34
		Unrequited transfers debits			1	0	33	34
		Balance on goods and services			8	0	26	34
		Balance on current account			17	0	17	34
	Capital account
		Official sector transactions			9	0	25	34
			General government transactions
				Foreign investment in Australia	8	0	26	34
				Australian investment abroad	14	4	16	34
			Reserve Bank transactions
				Foreign investment in Australia	0	34	0	34
				Australian investment abroad	4	29	1	34
			Non-official sector transactions
				Foreign investment in Australia	6	0	28	34
				Australian investment abroad	7	0	27	34
		Balance on capital account			9	0	25	34
	Balancing item				26	0	8	34
	(a) The latest estimate is consistent with the January 1995 issue of 5301.0. (b) The latest estimate is consistent with the December quarter 1994 issue of 5302.0. (c) Sign convention: A negative direction for revisions to the balance on current account indicates an increase in the deficit. A negative direction for revisions to the other net balances indicates either an increase in the deficit or, in months when surpluses have been recorded, a reduction in the surplus.

Sign of monthly revisions

3.78. Looking first at the monthly data in Table 10, it can be seen that in the long-term revisions to the merchandise trade items show little bias in terms of direction of revision - this is consistent with the statistics on the one-year revisions experience shown in Table 6. Both services credits and services debits are strongly positively biased in Table 10, while in Table 6, the positive direction of revisions in the short term is not nearly as marked. This tends to suggest that positive revisions continue to be made after the end of the first year. This is borne out by an examination of Graphs A.7 and A.8 in Appendix 1. A similar position is evident for income. Table 10 indicates that income credits revisions tend to be positively biased while revisions to income debits are strongly positively biased (more than twice as many positive as negative revisions). Table 6 confirms this picture with the direction of one-year revisions to income debits being positive but for income credits the one-year revisions are not consistently in one direction. Graphs A.5 and A.6 are consistent with these findings from Table 3.1 and Table 10. In particular, Graph A.5 indicates that significant positive revisions to income credits are made after the end of the first year. Table 6 also indicates no clear direction in one-year revisions to unrequited transfer debits, while Table 10 shows a strong positive bias for longer term revisions to these estimates; both findings are in keeping with Graph A.10.

3.79. The overall effect of revisions to current account items is summarised in revisions to the balance on current account. In Table 6 a negative direction to short-term revisions is indicated, confirmed by Graph A.11 in Appendix 1 which shows an increasing median ratio during the first 12 revisions (reflecting an increase in the size of the deficit on current account). Table 10, however, shows that an equal number of positive and negative revisions were required to initial estimates for the period January 1986 to June 1994 to reach the latest estimate published in the January 1995 issue of 5301.0. This is in line with the initial median estimate in Graph A.11 being close to the final estimate, and the boundaries of the second and third quartiles of initial estimates being roughly evenly spread around the median.

3.80. Monthly estimates of capital transactions of the official sector are made up of FIA and AIA transactions of the general government sector and the Reserve Bank. In Table 6, revisions to Reserve Bank transactions have a zero median value indicating no obvious bias in the direction of one-year revisions; this is borne out by Table 10 which shows positive and negative revisions being evenly balanced. On the other hand, general government sector capital transactions have revisions that are strongly positive in direction in both Table 6 and Table 10. The same picture is conveyed in Graph A.13 of Appendix 1.

Sign of quarterly revisions

3.81. Turning to the counts of revisions to quarterly statistics shown in Table 10, it can be seen that in the merchandise trade items there is a tendency toward positive revisions to exports and negative revisions to imports. Table 6 is consistent for exports but indicates no clear direction for imports revisions (the median value being -$2 million) measured one year after the initial estimates. Graph A.16 provides further explanation for these findings, showing that the initial imports estimate is virtually equal to the latest estimate on average and that revisions are insignificant in value terms. In Table 10 revisions to both services credits and debits are strongly positively biased. This is consistent with Table 6 for debits but not so for credits where Table 6 indicates a slight tendency for one-year revision to be negative (-$11 million). This indicates that positive revisions to services credits must predominate after the end of the first four quarterly revisions. Examination of Graph A.21 in Appendix 1 confirms this and it can be seen that, even after 12 quarterly revision cycles (i.e. after three years), the revised estimate still represents on average less than 95% of the latest estimate.

3.82. Positively biased revisions are also indicated in Table 10 for both credit and debit estimates for income and for unrequited transfers debits. This pattern is consistent with Table 6 for one-year revisions to the debit estimates but not for income credit estimates. Table 6 shows a small negative median revision of -$7 million for income credits. Again, this suggests that significant positive revisions to income credits occur after the first four quarters. Graph A.19 confirms this. As with revisions to monthly estimates, Table 6 indicates a negative direction to one-year revisions to the quarterly balance on current account (i.e. the estimate is revised to a bigger deficit) while Table 10 presents a neutral picture. Graph A.25 indicates how these outcomes can be reconciled: further offsetting revisions, both positive and negative, are made well after the end of the first year.

3.83. Revisions are rarely made to quarterly capital account transactions of the Reserve Bank and there is no evidence of bias in either Table 6 or Table 10. For the general government sector capital transactions, Table 3.5 indicates positive bias for revisions to quarterly estimates classified to FIA and a neutral revisions experience for transactions classified to AIA. This pattern is broadly consistent with the combined picture presented by Table 6 and Graphs A.26 and A.27 in Appendix 1.

3.84. Revisions to quarterly estimates of capital transactions of the non-official sector are strongly positively biased for both FIA and AIA, with nearly five times more positive revisions than negative revisions to the FIA series, and nearly four times more positive revisions for the AIA series. This is consistent with the patterns portrayed in Table 6 and Appendix 1.

3.85. Revisions to quarterly estimates of the balance on capital account are also strongly positively biased (i.e. revisions tend to increase the surplus). This is consistent with the pattern presented by Table 6 and Graph A.32. Statistics are also included for revisions to the balancing item but, as it is residual in nature and reflects the net outcome of revisions to other components of the current and capital accounts, these measures are not examined here.