RDP 9106: The Direction of Australian Investment from 1985/86 to 1988/89 3. Disaggregated Results
August 1991
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The CAPEX survey covers approximately 8,200 private businesses (or 1.6 per cent of the total number of private businesses represented by the survey) and is supplemented by data on management units outside the sample which have large capital expenditure. Investment is classified by its final form, that is, into investment in building and structures or plant and equipment. It is also classified on the basis of the output of the individual production unit according to the Australian Standard Industrial Classification 1983 (ABS (1985)). Since 1985, the Australian Bureau of Statistics has allocated capital expenditure by user rather than owner in order to avoid the problems created by finance leases where the user is not the owner.[6] However, capital expenditure is allocated by owner where “… expenditure [is] on new tangible assets for rental, hire or lease (operating lease only) to another related or unrelated enterprise.” (ABS (1990a), p. 2)
The unpublished data is at a highly disaggregated level, divided into 59 groups called “estimation industries”. Our data includes investment in 48 estimation industries, which are listed in Appendix 1. The ABS withheld investment data on six estimation industries to ensure confidentiality[7] and another five industries are excluded as data on the construction industries was considered by the ABS to be unreliable at the time work on this paper began. Despite these exclusions, for the period 1985/86 to 1988/89 we have investment data at the estimation industry level which represents 96.3 per cent of the published CAPEX total (this is an average of the coverage for each year in the period). The percentage contributions to growth in real investment over the period 1985/86 to 1988/89 were calculated for the 48 estimation industries. These calculations are reported in Appendix 1.[8]
Table 1 shows the 10 industries which contributed most to the growth in investment over this period. In total, these ten estimation industries accounted for just over three-quarters of the growth in total real investment between 1985/86 and 1988/89. One estimation industry, real estate operators and developers, accounted for more than one quarter of the total growth, although there is evidence to suggest that some proportion of this investment was replacing investment previously undertaken by other industries (Section 4 deals with this issue).
| Rank | Estimation Industry | % contribution to growth in real total private non-rural investment |
|---|---|---|
| 1 | real estate operators & developers | 27.5 |
| 2 | mining metallic minerals | 13.5 |
| 3 | insurance (which includes superannuation funds) | 7.2 |
| 4 | finance includes all bank, non-bank financial institutions, stock exchanges and services to finance and investment | 6.1 |
| 5 | other property & business services (including plant hire and leasing) | 5.2 |
| 6 | manufacturing basic chemicals | 4.7 |
| 7 | food, milk & bread vendors | 4.0 |
| 8 | manufacturing paper and paper products | 3.9 |
| 9 | manufacturing non-metallic mineral products | 3.1 |
| 10 | manufacturing fabricated metal products | 2.3 |
Table 2 shows the other side of the story – the five industries which made the largest negative contributions to growth in capital expenditure.
| Rank | Estimation Industry | % contribution to growth in real total private non-rural investment |
|---|---|---|
| 1 | mining coal, oil and gas, construction materials and services to mining including mineral exploration | −3.5 |
| 2 | transport and storage including road, air & rail. Includes pipeline operations, travel agency services, grain storage etc | −3.2 |
| 3 | manufacturing basic iron & steel | −3.0 |
| 4 | new motor vehicle dealers, motor cycle dealers etc | −2.7 |
| 5 | road freight transport, including long distance interstate road freight transport and intrastate and short distance road freight | −1.7 |
The estimation industry shares in total CAPEX in 1985/86 ranged up to 11.4 per cent for estimation industry number 2 – mining coal, oil and gas – though only 7 of the estimation industries had shares greater than 3 per cent. The growth in investment levels from 1985/86 to 1988/89 ranged from −59.4 per cent up to 467.0 per cent (see Appendix 1); the total CAPEX grew by 36.0 per cent over the same period. Thus there were wide divergences in growth rates of investment in different industries, and the industries contributing the most to total growth in investment were often not especially large industries with regard to investment shares in the base year, 1985/86.
Footnotes
The ABS define a finance lease/leveraged lease as referring to “… those arrangements which effectively transfer from the lessor to the lessee substantially all the risks and benefits incident to ownership. Generally these would be leases which are virtually non-cancellable and/or where legal ownership transfers to the lessee at the end of the lease term.” (ABS (1990d), p. 2) [6]
Investment data for industries dominated by a few firms (such as air transport, tobacco and rail transport) were withheld by ABS to maintain confidentiality. Other estimation industries are made “consequentially” confidential to prevent investment in confidential estimation industries being derived using published CAPEX sector totals. [7]
Estimation industry contributions are to the growth in total real private new capital expenditure published in the CAPEX survey. The contributions reported in Appendix 1 do not sum to 100 per cent due to the exclusion of some industries to ensure confidentiality and/or to revisions in the CAPEX total which are not recorded at the estimation industry level. [8]