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Special Article - Ownership characteristics of businesses undertaking capital expenditure in Australia, 1998-1999
Table 1 shows estimates of private new capital expenditure by broad industry for 1998-1999, as already published in Private New Capital Expenditure, State Estimates, 1998-1999 (ABS Cat. no. 5646.0), classified according to the majority ownership (Australian/foreign/unknown) of the business making the capital expenditure. The industries covered are the same as those in the Survey of Private New Capital Expenditure.
The relative importance of investment in private new capital expenditure by majority-foreign-owned businesses was above 18% for all mainland States.
For Australia as a whole, majority-foreign-owned businesses contributed $2.2 billion or 25% of capital expenditure in mining (Table 2). This was mainly in oil and gas mining and coal mining. However, there were differences among the States. In 1998-1999, WA was the state with the greatest investment in capital expenditure by majority-foreign-owned businesses ($846 million, representing 23% of the total capital expenditure in mining for WA). In NSW, most of the mining expenditure by majority-foreign-owned businesses was associated with coal mining.
Table 2 : Mining - Private New Capital Expenditure In Australia by Ownership Group, 1998-1999
At the Australia level, majority-foreign-owned businesses invested $3.9 billion (42%) of the capital expenditure in manufacturing (Table 3). This was mainly in machinery and motor vehicle manufacturing, metal products manufacturing, petroleum products manufacturing, non-metallic mineral products manufacturing and food manufacturing. For the States which could be published, all had majority-foreign-owned investment above 31%. WA had a high level of majority-foreign-owned investment with $699 million or 54% of the total capital expenditure for that State. In dollar terms, most of the capital expenditure by majority-foreign-owned businesses occurred in NSW ($1,236 million, or 43% of capital expenditure in NSW manufacturing) and Victoria (details suppressed for confidentiality reasons).
Table 3 : Manufacturing - Private New Capital Expenditure In Australia by Ownership Group, 1998-1999
OTHER SELECTED INDUSTRIES
At the Australia level, majority-foreign-owned businesses contributed $5.3 billion or 20% of capital expenditure in the other selected industries included in the survey (Table 4). Within this category, majority-foreign-owned businesses made strong contributions in the following areas: communications (private sector only, excluding Telstra); electricity and gas distribution (private sector only - including the newly privatised Victorian utilities) ; machinery and motor vehicle wholesaling; motion picture production, TV and radio; and finance. Most of the capital expenditure by majority-foreign-owned businesses, in dollar terms of capital investment in the industries, occurred in NSW ($2,456 million, or 22%) and Victoria (details suppressed for confidentiality reasons).
Table 4 : Other Selected Industries - Private New Capital Expenditure In Australia by Ownership Group, 1998-1999
Of the 26% of capital expenditure made by majority-foreign-owned businesses, 11 percentage points was incurred by businesses owned from the United States of America, 10 percentage points from the European Union and 5 percentage points from Other countries. The European Union investment was dominated by UK-owned companies, while among the Other countries category, Japanese-owned firms made the most significant contribution.
Table 5 : Private New Capital Expenditure In Australia by Regional Group, 1998-1999
US-owned businesses invested nearly $5 billion, mainly in Victoria ($2.2 billion, or 19% of all capital investment in that State), NSW ($1.3 billion, or 9%) and WA ($1.0 billion, or 15%). Low proportions of capital expenditure by US-owned businesses were seen in Queensland, Tasmania and NT/ACT. European Union-owned businesses invested $3.9 billion. They had a different pattern of investment from US-owned businesses, with most investment in NSW ($1.7 billion, or 12% of capital expenditure in the State) and Victoria ($803 million, or 7%). Other foreign countries invested $2.6 billion, mainly in NSW ($949 million, or 7%), Queensland ($674 million, or 9%) and Victoria ($588 million, or 5%). There was significant Japanese investment in Queensland, but less Japanese investment in other States. UK-owned businesses were significant investors in most States. State details of capital expenditure by UK- and Japanese-owned businesses have been suppressed for confidentiality reasons.
TYPE OF ASSET
Investment in buildings and structures by majority-foreign-owned businesses was 21% of total investment in buildings and structures. Expenditure was greatest in Victoria. For Australia as a whole, majority-foreign-owned businesses invested 28% of total investment on equipment, plant and machinery.
Majority-foreign-owned businesses invested proportionately more capital on equipment, plant and machinery than did Australian businesses. Of the $11.5 billion capital expenditure undertaken by majority-foreign-owned businesses in 1998-99, $8.6 billion (75%) was spent on equipment, plant and machinery and $2.9 billion (25%) was spent on buildings and structures. This compares with investment by Australian-owned businesses of $17.8 billion (64%) on equipment, plant and machinery and $10.1 billion (36%) on buildings and structures.
Table 6 : Private New Capital Expenditure in Australia by Type of Asset, 1998-1999
ANALYSIS OF BUSINESSES WITH UNKNOWN OWNERSHIP
The businesses with unknown ownership were mainly in the smaller size categories in industries with low foreign investment. The main industries were (in descending order of unexplained expenditure): business services; accommodation, hotels and restaurants; road transport; construction trades; personal and household goods wholesaling; printing and publishing; general construction; and property services.
COMPARISON OF RESULTS WITH A PREVIOUS STUDY
The ABS has previously carried out one study, in respect of 1982-1983, of foreign control of new fixed capital expenditure in Australia. In that previous study, a foreign investor was said to have control of a firm if it was the largest investor having an equity of 25% or more. However, for the purposes of this current study, with respect to 1998-1999, a business was said to be majority-foreign-owned if foreign direct investors owned more than 50% of the total equity. The degree of foreign control in Australia of capital expenditure found in the 1982-1983 study (29%) was slightly higher than the level of capital expenditure by majority-foreign -owned businesses in the present study (26%). Further information on the derivation of ownership, and the methodology employed in this study, is available on request from the ABS, and is available from the Statistical Concepts Library on the ABS website (Balance of Payments - Concepts, Sources and Methods (Cat. no. 5331.0)).
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