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Tuesday, 17 February 1987
Page: 76

(Question No. 4329)


Mr Jacobi asked the Treasurer, upon notice, on 19 August 1986:

(1) Does he agree with estimates by the Australian Insurance Association that annual inflows and outflows of insurance payments for Australia exceed $2800 million.

(2) If so, is it a fact that (a) general insurance is as large as the 3 service industries on which statistics are collected, that is, shipping, transport-other, and travel, (b) insurance balances its account whereas other services in the invisible accounts generally have deficits and (c) the insurance industry receives no Government assistance, not even by way of collecting statistics, whereas these other service industries gain considerable assistance.

(3) If he does not agree with these figures, what is the basis for his disagreement and can he provide alternate figures.

(4) Will the Government look at service industries, such as insurance, to concentrate on ways in which these industries can assist in building up a credit trade balance, if so, will the Government consult insurance industry representatives on these matters.


Mr Keating —The answer to the honourable member's question is as follows:

(1) It is assumed that the estimates of ``annual inflows and outflows of insurance payments for Australia'' referred to by the honourable member relate to the total value of premiums paid and claims received on general insurance business placed by Australian residents with foreign residents and premiums received and claims paid on general insurance business placed by non-residents with Australian residents. Broad information collected by the ABS for purposes of compiling balance of payments statistics suggest that the total value of such premiums and claims would be considerably less than $2,800 million in 1985-86.

(2) The following table provides details of service items in the Australian balance of payments in 1985-86.

SERVICES IN THE BALANCE OF PAYMENTS 1985-86

($million)

Credits

Debits

Net

Shipment...

407

-2,758

2,351

Other transportation...

2,452

2,283

169

Travel...

1,806

2,746

940

Insurance services n.e.c. (*)...

12

216

204

Other services...

1,193

1,726

533

(*) `Insurance services n.e.c.' includes general insurance and life insurance (although the contribution of life insurance is very small). It excludes marine insurance which is classified as part of `Shipment'. The measure of insurance services provided abroad (credits) is premiums received less claims paid. The measure of insurance services received from abroad is premiums paid less claims received.

(a) The above table shows that, in 1985-86, insurance services provided abroad (credits) were not as large as shipment, other transportation or travel services provided abroad (credits). Similarly, insurance services received from abroad (debits) were not as large as shipment, other transportation or travel services received from abroad (debits).

(b) In 1985-86, the deficit (net result) on insurance services was significantly less than the deficits on shipment, travel and other services; the `other transportation' component recorded a surplus.

(c) The ABS collects data on international transactions in insurance, as well as data on transportation, travel and other services, for the purpose of compiling estimates for inclusion in balance of payments statistics. There are several other statistical collections of varying content and detail, relating to transportation, travel, insurance and other services conducted by the ABS and other bodies such as the Australian Tourist Commission and the Insurance Commissioner.

(3) The sources that the ABS uses in compiling insurance estimates in the balance of payments are taxation data and annual surveys of foreign investment. While details of gross premiums and claims relating to international insurance flows are not available, analysis of information from these sources suggests that, in 1985-86, the `annual inflows and outflows of insurance payments for Australia' would have been considerably less than the amount estimated by the Australian Insurance Association.

(4) The Government recognises the need for close consultation with the insurance industry and maintains regular formal and informal contact with industry bodies and individual company representatives. The matter raised by the honourable member has been discussed during such consultations, both at the Ministerial and official level and the Government is always receptive to constructive proposals designed to improve out external trade and service balances. In this connection, I note that the Prime Minister announced recently that the Commonwealth, with the objective of removing impediments to the writing of marine insurance in Australia had decided to remove stamp duty on contracts of international marine insurance written in the ACT and that he has written to the State Premiers and the Chief Minister of the Northern Territory advising them of the Commonwealth's decision and requesting their co-operation in removing the duty Australia-wide.