NO.075

CAPITAL EXPENDITURE SURVEY, JUNE QUARTER 2005

The results of the June quarter 2005 Survey of New Capital Expenditure, released

by the Australian Bureau of Statistics this morning, show continuing strength

in business investment in Australia. In nominal terms, businesses invested more

than $15billion in the June quarter to bring total investment for the 2004-05

financial year to a record $57billion.

In volume terms, total new capital expenditure increased by 7.3percent in

the June quarter to be 17.0percent higher through the year. Both categories

of new capital expenditure have grown very strongly over the past year, with

spending on buildings and structures increasing by 16.0percent and spending

on equipment, plant and machinery increasing by 18.5percent.

Today’s data confirm that businesses are continuing to take advantage

of low interest rates, high levels of profitability and a solid domestic economy

to invest for future growth. It also confirms the strength of data from last

week’s Construction Work Done publication, which showed that non-residential

building construction had increased by 11.5percent through the year to the

June quarter and engineering construction had increased by 13.9percent over

the same period.

Very strong growth in the demand for Australia’s bulk commodity exports

has been an important contributor to business investment growth in recent years.

The mining industry has undertaken more than $10billion of new capital expenditure

in the past year alone and more than $28billion over the past three years.

This is leading to an increase in the volume of exports of Australia’s

bulk mineral commodities and further increases are in prospect.

While mining investment has grown by 29.5percent through the year to the

June quarter in volume terms, substantial growth has also been recorded in other

industries. Today’s data show that new capital expenditure in the manufacturing

sector has grown by 13.7percent over the past year and new capital expenditure

in other surveyed industries has grown by 15.2percent.

The Government’s focus on creating an economic environment conducive

to growth has helped to boost business profits and encourage higher levels of

investment. This has created more employment opportunities for Australian workers.

The growth in the demand for commodities, particularly from China, is helping

to boost the incomes of Australian businesses and workers. However, commodity

prices will not remain high indefinitely, and this is a reminder of the importance

of prudent economic management for Australia’s continued prosperity.

MELBOURNE

1 September 2005

Contact: David Alexander

03 9650 0244