of the investment in physical infrastructure during the boom. see, for example, bishop j, c kent, m plumb and v rayner ( 2013 ), “ the resources boom and the australian economy : a sectoral analysis ”, rba bulletin, march, pp. 39 – 49. arsov i, b shanahan and t williams ( 2013 ), “ funding the australian resources investment boom ”, rba bulletin, march, pp. 51 – 61. arsov et al describe the exact methodology that has been used here. bis central bankers ’ speeches graph 1 funding the boom given that the vast bulk of the investment has been carried out by listed companies, we were able to use the financial statements of the relevant companies, both australian and foreign, to estimate how the investment was actually funded. this exercise involved examining the financial accounts of all the listed australian resources companies ( around 900 ) and 37 foreign companies. this analysis shows that since the start of the resources boom in 2003, australian companies have raised no equity in net terms. while they raised substantial amounts of equity in 2009, the australian companies have been returning greater amounts of capital to shareholders since 2011. the foreign companies have been consistently returning large amounts of capital to their shareholders, and, as a group, have not resorted to external equity funding during the resources boom. the funds raised by these resources companies have been used overwhelmingly to make new physical investments, with australian and foreign companies using around 80 per cent of their funding for this type of spending ( graph 2 ). the rest of the funding has been used primarily to acquire existing assets from other companies, while funding for other investment purposes has been negligible. bis central bankers ’ speeches graph 2 in general, companies ’ funding is fungible. however, certain types of funding are more suited to specific purposes. in particular, this is the case for acquisitions that are usually large relative to the acquirers ’ balance sheets, and require large one - off payments. these types of transactions are often funded with syndicated loans. given their distinct funding requirements, funding for these acquisitions has been excluded. that is, debt raised to fund takeovers is excluded from the subsequent analysis. graph 3 bis central bankers ’ speeches in terms of the sources of funding, the analysis shows that 80 per cent of investment spending by australian - listed resources companies, and over 90 per cent by foreign companies, has been funded through internal sources ( graph 3 and table 1 ). operating cash flow has been the predominant

do not wish to re - open it. with those preliminaries, let us see what can be said about recent trends. the trade arithmetic is wellknown. it may therefore be of more interest to examine the financial counterparts - that is, to look at the changes in saving and investment behaviour. the table examines, from this perspective, the six episodes of current account widening over the past 25 years. cyclical changes in australia ’ s saving - investment position per cent of gdp ∆saving ∆investment of which dwellings ∆net ∆cad dec - 79 to dec - 81 – 0. 9 3. 9 0. 7 – 4. 8 – 4. 8 dec - 83 to jun - 86 – 1. 0 1. 9 0. 2 – 2. 9 – 3. 1 mar - 88 to mar - 90 0. 3 1. 5 0. 7 – 1. 2 – 3. 1 dec - 93 to mar - 95 – 0. 8 0. 7 0. 2 – 1. 5 – 3. 5 jun - 97 to mar - 99 – 1. 4 2. 9 0. 7 – 4. 3 – 4. 0 sep - 01 to sep - 04 – 1. 3 3. 0 1. 7 – 4. 3 – 4. 7 source : abs in the majority of episodes, the share of national income being saved declines. in every episode, investment increases. in each case, part of the rise in investment is dwelling investment. but what is striking is the prominence of dwelling investment in the latest episode. the size of the run - up is much larger than in the other five episodes. as of the middle of 2004, moreover, according to the national accounts, dwelling investment was almost 7 per cent of gdp, 3 higher even than the feverish pre - gst peak, and a full percentage point of gdp higher than at the other peaks in the past 40 years. graph 4 this figure excludes the transfer expenses associated with investment activities, which for dwellings grew to be about 1½ per cent of gdp by mid 2004 ( but has since fallen due to the decline in real estate turnover ). 5 / 7 click to view larger this was not obviously related to population growth, which was not unusually high in the recent period. the number of new dwellings constructed was not unusual compared with previous booms. what is new is that the quality and size of dwellings, both new dwellings and those being renovated, are higher than