Australia Yearbook - 2001

Chapter 30—International accounts and trade 1021
Coghlan records the annual servicing of this
debt at £13m, a rate of 4% per annum.
In 1901 the public sector received 60% of the
foreign investment, while the private sector
received 40%. While we do not know much
about the composition of this foreign
investment beyond the public/private split,
Butlin 2 has published data on flows which tell us
that, of new debt being incurred in 1900,
64% was public borrowing. Of the remainder,
the most significant flow was investment in the
mining industry.
Throughout the century, Australia continued to
rely on overseas funds to finance investment.
During the first half of the century, the sources
of these funds were limited, with most
continuing to come from the United Kingdom.
It was not until the late 1940s that the first
reasonably comprehensive surveys of
investment in Australia and by Australia overseas
were conducted by the Commonwealth
Statistician. 3 While the scope and definitions
differ considerably and we are unable to
compare the data directly with today’s data,
they give us a reasonable picture of the situation
about half way through the century, and we can
make some indicative comparisons using
proportions. Table 30.16 shows the proportion
of equity investment in Australia by country in
1949 and 1999, using the set of countries
published for 1949.
30.16 FOREIGN INVESTMENT IN AUSTRALIA,
Equity—1949 and 1999
1949 1999
% %
Country of investor
United Kingdom 73.3 35.1
New Zealand 5.4 3.5
Canada 2.0 0.7
United States of America 15.1 32.4
Other countries 4.2 28.3
Total 100.0 100.0
Source: The Australian Balance of Payments 1928–29 to
1948–49 (Commonwealth Bureau of Census and Statistics);
International Investment Position, Australia, 1998–99:
Supplementary Country Statistics (5352.0).
In 1999 the main contributors to ‘Other
countries’, were Japan, with 5.4% of total
foreign investment, the Netherlands 3.2%,
Germany 2.2% and Switzerland 2.1%.
Table 30.17 shows the proportion of equity
investment by Australia abroad by investee
country in 1949 and 1999, using the 1949 set of
countries.
30.17 AUSTRALIAN INVESTMENT ABROAD,
Equity—1949 and 1999
1949
1999
% %
Country of investee
United Kingdom 29.9 24.4
New Zealand 41.3 5.5
Canada 2.5 1.5
United States of America 1.0 41.0
Other countries 25.3 27.6
Total 100.0 100.0
Source: The Australian Balance of Payments 1928–29 to
1948–49 (Commonwealth Bureau of Census and Statistics);
International Investment Position, Australia, 1998–99:
Supplementary Country Statistics (5352.0).
Of Australian investment in ‘Other countries’ in
1999, the main investee countries are Japan,
with 4.6% of total Australian investment abroad,
Hong Kong (SAR of China) 2.8%, and
Netherlands 2.6%.
As well as the main source of equity funding, the
United Kingdom remained the main source of
debt funding throughout the first half of the
century. As an example, of the overseas public
debt liabilities in 1949, 90% was domiciled in
London, with the remainder domiciled in New
York. In 1999 the main sources of debt
financing (both public and private) were from
the United States of America, with 22.8% of total
debt, the United Kingdom 18.1%, International
Capital Markets 15.7%, Japan 8.6%, Singapore
4.4% and Hong Kong (SAR of China) 4.3%.
The second half of the century was typified by a
diversification of the sources of both equity and
debt funding and by increasing levels and
diversity of Australian investment abroad.
During the 1920s and again during the 1980s, a
political issue was debt incurred to pay for levels
of imports which could not be sustained using
only receipts from exports, with many claiming
that we were “living beyond our means”. This
debate is alive again in the year 2000, and one
wonders, if Coghlan were still with us, to what
extent he would worry about “the tribute paid
yearly by Australia to New York and Tokyo”.