, canada, etc. received funds from europe and later the united states. another comparison, which takes in private capital flows as well as the current account, is to look at the accumulation of international reserves by asian countries. in 2004, they added us $ 508 billion to reserves, which amounts to over 75 per cent of the us current account deficit. there are a number of explanations for this unusual pattern of capital flows. many people attribute it to the desire by asian countries to keep their exchange rates low in order to maintain competitiveness. i do not wish to argue that this has not been a factor, but i think there is a more important explanation. there are two relevant facts about this pattern of capital flows. the first is that it is a relatively recent phenomenon. table 2 below compares the pattern in 1996 – the year before the asian crisis – with the pattern now. in all cases, the asian current account surpluses were much smaller ( or were deficits ) in the earlier period than now. this pattern is not consistent with the view that competitiveness considerations were the main driver, because if that were so, asian countries would not have waited until the past five years to put them into effect. table 2 : current account per cent of gdp 1992 - 1996 2000 - 2004 source : imf japan 2. 4 2. 9 china 0. 4 2. 7 other east asia - 0. 7 5. 7 united states - 1. 3 - 4. 6 the second fact is that, as shown in table 3, the predominant change in economic behaviour by the asian countries between the two periods has not been to increase saving, but to reduce investment. in the case of japan, investment has fallen by 5. 2 per cent of gdp since 1996, and in the rest of asia ( excluding china ), it has fallen by 8. 7 per cent of gdp over the same period. china is different, in that both savings and investment have not changed by much. table 3 : saving and investment in asia per cent of gdp japan saving investment 31. 5 29. 2 1992 - 1996 27. 6 24. 8 2000 - 2004 * * data for china only available till 2003 sources : ceic ; imf ; rba saving 40. 8 41. 9 china investment 40. 2 39. 7 other east asia saving investment 32. 9 33. 6 30. 6 24. 6 my conclusion is that because of the timing and the composition of the change in the asian current account position

the interests of the community to be recognised and was looking for ways that its members could benefit from the new bauxite mine at gove. tomorrow, i will have the great honour of being able to travel to east arnhem land and yirrkala just as nugget coombs did. i am incredibly pleased to be accompanied on this trip by susan moylan - coombs. susan was born in darwin and is part of the group known today as the stolen generations and was adopted by nugget ’ s oldest son, john, and john ’ s wife, jan. susan is continuing her grandfather ’ s work as a tireless advocate for the welfare and prosperity of indigenous australians. we will be accompanied by two members of the reserve bank board : phil gaetjens, who is also secretary of the australian treasury, and catherine tanna, who is also chief executive of energy australia. we are all greatly looking forward to the visit. we want to pay our respects to the traditional owners of the land and to learn from their wisdom. we will also unveil a plaque to nugget coombs, whose ashes are buried both at yirrkala and the australian national university in canberra, which he helped found in 1946. i am hopeful that our visit will help keep alive the long relationship between the rba and the people of east arnhem land. turning back to today ’ s board meeting, we had a thorough discussion of the northern territory economy. we discussed the difficulties that you have faced as investment has fallen following the completion of the lng plant. the effects of this decline in investment are evident right across the economy : in the housing market ; in retail spending ; in the labour market ; and in public sector finances. as we reviewed these indicators, though, we were struck by the fluidity of the labour market and the population here in the northern territory. despite employment falling significantly over the past year, the unemployment rate remains below the national rate. at our board meeting we also discussed the future opportunities facing the northern territory economy, including in the areas of defence infrastructure, tourism, the cattle industry, and in minerals and gas. in addition, we considered the progress that has been made in addressing the sources of disadvantage for indigenous australians. there are many areas where nugget coombs would have been pleased to see the progress that has been made. but, regrettably, there are too many areas where not enough progress has