AUSTRALIAN INVESTMENT OUTLOOK SEEN AS UNCERTAIN
The outlook for Australian industrial
investment is uncertain, with capital spending at an historical
low and business overly dependent on domestic demand, the
Australian Chamber of Manufactures and the National Institute
of Economic and Industry Research said.
    The organizations were commenting in their monthly Economic
Focus on a survey commissioned by the Australian Council of
Trade Unions concluded.
    Private investment as a proportion of gross domestic
product fell to 9.8 pct in 1985/86 from 15 pct in 1981 and is
forecast to decline to 8.8 pct in 1987/88, the Focus said.
    Earlier studies indicated private investment could sustain
a two pct long-term economic growth rate, but the latest
figures suggested this could not be maintained, it said.
    The Australian dollar's depreciation, coupled with research
incentives, is increasing the profitability of investment for
exports but several factors inhibit growth. These include weak
commodity prices, high fixed capital costs, uncertain domestic
economic policy and corporate debt.
    Firms have tended to finance expansion with debt rather
than equity, leading to a 39 pct rise in the ratio of interest
payments to gross cash flow between 1980/85, the survey found.
    Economic Focus said many companies looked for a 2.5 to 4.5
year payback on capital investment or export development --
often too short a period to secure markets.
    The relatively low incentive to produce for export in part
reflected the ownership of Australian industry, they said.
    Sixty-seven pct of Australian-owned companies said external
demand was conducive to investment against only 27 pct for
foreign-owned companies.
    The survey covered 45 companies accounting for about 25 pct
of total investment, Economic Focus said.
 REUTER
