ARTICLE – FINANCE AND INSURANCE FOREIGN AFFILIATES

The ABS captures Australia’s economic interaction with the rest of the world by measuring trade flows, income flows, financial flows and investment positions through Balance of Payments and International Investment Position statistics. However, these do not cover all aspects of Australian presence in overseas markets, for example the activities of affiliates of Australian resident enterprises domiciled outside of Australia’s economic territory. To partially address this information gap, the ABS conducted a survey with the financial support of the Department of Foreign Affairs and Trade (DFAT). The results of this survey have been published in a new ABS publication, Australian Outward Finance and Insurance Foreign Affiliate Trade, 2009–10 (5485.0).

The survey included finance and insurance foreign affiliates of enterprises located in Australia that had a majority Australian ownership (over 50% or, in a small number of cases, almost 50% ownership in host economies with restrictions preventing 50% foreign ownership). Of the 1,245 finance and insurance affiliates, the majority (1,201) were part of an enterprise group located in Australia, which was Australian-owned, while the minority (44) were part of an enterprise group located in Australia but foreign-owned.

The main findings for 2009–10 include:

• Australian resident enterprises had 1,245 finance and insurance foreign affiliates (table S31.1) which:
  • employed 75,919 staff
  • recorded $28.9 billion in sales of services, of which 97% was finance and insurance services
  • recorded 92% of their sales of finance and insurance services to local residents in the host country of the foreign affiliate, indicating that the foreign affiliates were primarily established to service the markets where they were domiciled.
• Foreign affiliates domiciled in New Zealand, the United Kingdom and the United States of America accounted for the majority of the following key measures for Australian finance and insurance outward foreign affiliates (graph S31.3):
  • number of foreign affiliates (54%)
  • employment (69%), and wages and salaries (76%)
  • sales of services (72%)
  • purchases of services (80%).
• Foreign affiliates in the Insurance and superannuation funds industry had the highest sales of services ($17.9b), while those in the Finance industry were the majority employer, with 53,034 staff and $4.1 billion in wages and salaries (table S31.1).

S31.1 SUMMARY CHARACTERISTICS OF AUSTRALIA’S FINANCE AND INSURANCE FOREIGN AFFILIATES ABROAD—2009–10
		At the end of period		During period
	Number of foreign affiliates	Value of Australian equity in foreign affiliates	Employment by foreign affiliates	Wages and salaries of foreign affiliates	Sales of services by foreign affiliates	Purchases of services by foreign affiliates	Profit of foreign affiliates(c)	Gross value added(d) of foreign affiliates
	no.	$m	no.	$m	$m	$m	$m	$m
By industry(a)
Finance	429	52 908	53 034	4 083	8 701	6 398	4 712	14 628
Insurance and superannuation funds	297	12 864	18 494	1 712	17 864	13 639	1 500	5 662
Auxiliary finance and insurance services	519	5 321	4 391	873	2 295	1 272	253	878
By country group(b)
Americas	439	11 997	9 590	1 714	7 261	5 586	99	3 769
Asia-Pacific	423	30 447	51 513	3 480	14 129	9 553	5 308	14 086
Europe(b)	383	28 650	14 816	1 474	7 470	6 171	1 058	3 314
By ownership
Australian owned parent	1 201	68 119	68 984	6 428	24 801	19 154	5 696	19 433
Foreign owned parent	44	2 974	6 935	240	4 059	2 155	769	1 735
Total	1 245	71 093	75 919	6 668	28 861	21 309	6 465	21 168
(a) Industry statistics according to the Subdivision level of the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (1292.0).
(b) Geographic regions have been grouped according to the Standard Australian Classification of Countries (SACC) (1269.0) groupings. Values for Africa are relatively low and cannot be published for confidentiality reasons. They have been included with Europe.
(c) Profit is on a before tax basis.
(d) Gross value added is the value of output at basic prices minus the value of intermediate consumption at purchasers' prices
Source: Australian Outward Finance and Insurance Foreign Affiliate Trade, 2009–10 (5485.0).

Graph S31.2 shows the percentage contribution of each of the three industries to key measures. There were 92% of sales of services from finance and insurance foreign affiliates attributed to local residents in their host countries. This indicates that they were primarily established to service the markets where they were domiciled.


Of the 1,245 finance and insurance foreign affiliates, 439 were in the Americas region, 423 were in the Asia-Pacific region and 383 were in Europe and Africa. Foreign affiliates domiciled in New Zealand, the United Kingdom and the United States of America collectively accounted for 76% of the wages and salaries of finance and insurance foreign affiliates and 72% of their sales of services (graph S31.3).