Intergovernmental Review of Business Investment

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This paper was prepared jointly by Heads of Treasuries, in consultation with small, medium and large businesses and peak industry bodies across a range of industries, to inform the Commonwealth and State and Territory Treasurers on impediments to business investment.

In recent years, business investment in Australia outside the mining sector, has underperformed relative to expectations given the trajectory of the broader economy. While lacklustre business investment has been a global issue, it is important to understand the domestic context because business investment is critical to economic growth. As such, in December 2016, the Council on Federal Financial Relations tasked Heads of Treasuries with exploring factors that might be impeding a broader recovery in business investment.

The paper reveals a complex mix of structural and cyclical factors as well as institutional and policy factors that are influencing business investment in Australia.