BUSINESS investment is set to accelerate in the years ahead, as reported in the quarterly investment monitor from Deloitte Access Economics. But, partly due to slower economic growth and a softening of investment conditions in the non-mining sector, the recovery will be slower than previously expected.

“The pace of growth in Australia’s economy has slowed in recent quarters. That matters for investment because businesses are more willing to invest in increasing their production capacity if demand is strong,” Deloitte Access Economics partner and report lead author, Stephen Smith, said.

“Although mining profits grew by more than one quarter in 2018, profits in other sectors fell for the first time since 2011. The strength in the mining sector compared to the non-mining sector is likely to filter through to investment.

“The latest capital expenditure survey by the Australian Bureau of Statistics shows that although investment intentions have grown, the improvement is being solely driven by the mining sector.”


According to the report, there are still a number of positives that will see investment eventually lift, including the record infrastructure spend by governments – especially in New South Wales and Victoria – which has both direct and indirect benefits across the business investment landscape.

Another positive is that measures of capacity utilisation remain relatively tight and the report notes, interest rates are low and credit is still readily available for large businesses.

 “So the backdrop for investment remains supportive,” Smith said. “An example of this is office construction, where robust gains in white-collar employment are encouraging commercial developments of new office space – particularly in Melbourne.

“Deloitte Access Economics is forecasting private business investment to remain relatively flat in 2019, before recovering to grow at a faster rate than overall real GDP in 2020 and 2021.”

Major road and rail projects
Source: Deloitte Access Economics

Key figures for the March quarter include:

  • The value of projects in the database rose by $10.4bn to $689.5bn – a 1.5% increase from the previous quarter;
  • The value of definite projects (those under construction or committed) increased by $12bn over the quarter, as work commenced on a number of projects in the transport and utilities sectors. That said, the value of definite activity remains around one fifth lower over the year following the earlier completion of large LNG developments; and
  • The value of planned projects (those under consideration or possible) decreased by $1.6bn over the quarter. Despite this, planned work has grown by 2.4% over the past year.