RDP 2007-09: Private Business Investment in Australia Appendix A: Data Sources

Business confidence: Taken from the ACCI-Westpac survey of manufacturers, expected business conditions, next six months. Net balance (percentage improve minus percentage deteriorate). In order to take logs, the series was transformed by dividing the net balance by 2 and adding 50. The resulting series is between 0 and 100 with net balance being 50.

Business investment: ABS Cat No 5206.0, chain volumes (Table 2) and current prices (Table 3), private, seasonally adjusted (sa). Prior to 1985:Q3, chain volumes series is constructed from component series using chain-linking methodologies.

Business investment excluding computing and livestock: Chain volumes and current prices, private, sa. Chain volumes constructed by removing livestock and computing using chain-linking methodologies. Component data available from ABS Cat No 5204.0, Table 69 (total) and Table 62 (private).

Building investment: ABS Cat No 5206.0 Table 2, chain volumes, private, sa.

Capital stock: ABS Cat No 5204.0 Table 39, total (since public and private are not available separately).

Computing equipment capital stock: ABS Cat No 5204.0, Table 94, public and private.

Computing equipment consumption of fixed capital: ABS Cat No 5204.0, Table 98, public and private.

Computing equipment investment: ABS Cat No 5204.0, Table 96, public & private and ABS special request, private.

Computing equipment prices: ABS unpublished data.

Cost of capital: constructed, see below.

Engineering investment: ABS Cat No 5206.0, Table 2, chain volumes, private, sa.

Equipment investment: ABS Cat No 5206.0, Table 2, chain volumes, private, sa.

Ex-computing equipment investment: constructed, see below.

GDP: ABS Cat No 5206.0, Table 2, chain volumes, sa.

Real trade-weighted index: RBA.

Terms of trade: ABS Cat No 5206.0, Table 1, sa.

Tobin's Q: stock market index divided by the implicit price deflator (IPD) for investment. Equipment numerator is ASX200 Industrials Index post-2000, All Industrials Index pre-2000 and denominator is ex-computing IPD. Engineering numerator is ASX200 Resources Index post-2000, All Industrials Index pre-2000, and denominator is engineering IPD.

Cost of capital: Calculated using Equation (2) (ex-computing equipment and engineering investment) and Equation (5) (building investment), where:

  • PI,t and PY,t are the investment and GDP IPDs respectively;
  • τ is the corporate tax rate, taken from University of Michigan Tax Database (<http://www.bus.umich.edu/OTPR/otpr/introduction.htm>);
  • α is the debt share of financing, calculated as total debt divided by total debt plus equity. Total debt and equity are taken from the Financial Accounts, ABS Cat No 5232.0, Table 2;[27]
  • r is the real interest rate, and is calculated as the weighted-average credit outstanding large business interested rate (post-1994) or business indicator rate (pre-1994), deflated by the year-ended growth rate of the GDP IPD. The interest rates are taken from Reserve Bank of Australia (RBA) Bulletin Table F.5;
  • E/P is the cost of equity capital as proxied by the equity earnings yield (assuming a constant expected growth rate of earnings), see Dews et al (1992) for further discussion. E/P is the inverse price-earnings ratio from the ASX200. Source: RBA Bulletin Table F.7 (post-1982);
  • Z is the present value of depreciation allowances, calculated using the exponential method as discussed in La Cava (2005). The nominal interest rate in this calculation is the 10-year Treasury bond rate. Source: RBA;
  • δ is the depreciation rate, calculated by dividing consumption of fixed capital (ABS Cat No 5204.0, Table 93) by the capital stock for ex-computing equipment and structures. Computing is removed from equipment COFC and capital stock using chain-linking methodologies; and
  • expected capital gain (building) is the 11-quarter-centred moving average of year-end growth rate of real office prices. Real office prices are taken as nominal office prices (source: JLW/JLL Property Digest, prime CBD $/m2, weighted average of capital cities), deflated using the GDP deflator.

Ex-computing equipment investment: Quarterly ex-computing real equipment investment data are calculated using a two-step procedure. First, the annual growth rate of chain volumes ex-computing equipment investment is calculated using Equation (A1), (where Q represents chain volumes, p represent the IPD, E represents equipment (including computing) and C represents computing equipment). Levels are calculated by setting the chain volumes measure equal to the current price measure in the reference year (2004/05). Second, quarterly movements from the chain volumes equipment measure including computing equipment are applied to the annual data excluding computing equipment to give a quarterly series. The new quarterly series are benchmarked to add to the annual ex-computing data using the procedure developed in Denton (1971).

Nominal ex-computing investment is also calculated annually and benchmarked using movements from quarterly nominal aggregate equipment investment. Computing is removed from the capital stock and consumption of fixed capital using the first step above.

Historical Data

Private business investment, dwelling investment, public investment, private capital stock, labour, GDP: 1890–1901: Butlin (1962); 1901–1949/50: Butlin (1977); 1949/50–1959/60: Foster (1996).

Net capital inflow: 1900/01–1948/49: apparent capital inflow from Vamplew (1987), Tables ITFC 101–106 and ITFC 200–210; 1949/50–1958/59: Foster (1996); 1959/60 onwards: ABS Cat No 5302.0.

Non-farm share of GDP (for calculation of non-farm GDP): Vamplew (1987).

Wage rates: 1901–1974: Butlin (1977); 1974–2006: average compensation per employee (adjusted for hours worked), ABS Cat No 5204.0, Table 41.

Hours worked: 1901–1972: Butlin (1977); 1972–2006, ABS Cat No 1364.0.15.003.

Labour force: 1901–1969: Butlin (1977); 1969–2006: ABS Cat No 6203.0.

Depreciation rates (total and by industry): Unless otherwise indicated, a weighted average of depreciation rate by type of capital using data from ABS Cat No 5204.0. Depreciation rates by type of capital are calculated as the real consumption of fixed capital as a ratio to the previous period's real capital stock. Weights are constructed from the previous period's capital stock, rescaled such that the weights sum to one (which otherwise does not hold owing to chain-linking).


Data in the Financial Accounts are only available since 1988. Before this we assume a constant debt share. [27]