Counting cost of nasty trade balance
Until this week the official count for the past financial year showed four of the 12 months in surplus. A massive series of revisions means none are now in surplus and the total deficit is approaching $18 billion rather than the previously thought $11 billion.
It's both a warning not to take too seriously talk of a deficit or a surplus (something some of our politicians are cottoning on to when discussing the budget) and also an insight into how thoroughly the Bureau of Statistics is attempting to do its job.
The fine print at the end of Wednesday's trade figures explains that until now the bureau had only taken account of imports worth more than $1000. That's the threshold above which it's compulsory to complete a Customs declaration. It's also the threshold above which parcels delivered by the post are subject to goods and services tax.
Work done by the Productivity Commission on the value and volume of under-the-radar imports has enabled it to include a guesstimate of monthly totals for the first time. And it's done it right back to 1998. Those early revisions don't amount to much. Amazon and eBay were in their infancy. But since 2010 the total has been climbing rapidly, from around $4 billion per year to close to $8 billion.
Retailers are certain to jump on the figure and say it shows how much they are being undermined by untaxed and unchecked parcels from overseas. The Bureau believes around 90 per cent of the newly-included low value imports are consumption items.
But $8 billion still isn't much out of total retail sales of $260 billion. And many of the items would still be imported even if the parcels were opened and taxed.
More disturbingly for tax collectors, the ABS hints that many of these physical imports are about to vanish.
The next frontier will be "intangible" imports - books, music, software, online subscriptions, gambling - all delivered without a parcel crossing the oceans.
Frequently Asked Questions about this Article…
The Australian Bureau of Statistics (ABS) revised its counting to include low‑value imports that were previously excluded. That series of revisions removed months that had appeared in surplus and lifted the reported trade deficit to about $18 billion instead of the earlier $11 billion figure.
Work by the Productivity Commission produced estimates of the value and volume of under‑the‑radar imports, enabling the ABS to add a guesstimate of these monthly totals. Previously the ABS only counted imports above the $1,000 customs declaration/GST threshold.
Low‑value imports are parcels and items valued below the $1,000 customs declaration threshold (also the point at which GST applies to post‑delivered parcels). Since about 2010 the total has climbed from roughly $4 billion a year to close to $8 billion a year.
Retailers argue low‑value, often untaxed imports undermine local sales because many are consumption items — the ABS estimates about 90% of the newly included low‑value imports are for consumption. However, $8 billion is modest compared with total retail sales of roughly $260 billion, and many items might still be imported even if parcels were opened and taxed.
The $1,000 threshold is the level above which completing a Customs declaration is compulsory and post‑delivered parcels are subject to GST. Until the recent revisions, the ABS only counted imports above that threshold in trade statistics.
Intangible imports are digital or non‑physical goods and services — for example books, music, software, online subscriptions and gambling — delivered without a parcel crossing borders. The ABS warns these could reduce physical parcel volumes and present new challenges for tax collectors and trade measurement.
The revisions are mainly a measurement change rather than a sudden economic shock. They serve as a reminder not to overreact to headline deficit or surplus claims. Investors should note the thoroughness of ABS revisions but treat the updated deficit figures in the context of broader economic data.
Follow ABS releases and Productivity Commission reports for methodology changes, watch retail sales data to gauge real consumer impact, and pay attention to government discussions on GST and digital taxation — these areas are where policy responses to low‑value and intangible imports are most likely.
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