CAPITAL STOCK

Machinery, buildings and some other fixed produced assets collectively referred to as capital stock are used in the production of goods and services, and are an important repository of national wealth. Most (96%) of Australia's produced asset value is made up of capital stock, with the value of inventories making up the balance.

Net capital stock, that is the net present value of the future capital services to be provided by these assets, grew on average by 2.3% per year on a per capita basis between June 1999 and June 2009, increasing from $138,200 to $173,500 (in 2007-08 prices). In June 2009, fixed assets accounted for 45% of the total value of Australia's assets, up from 43% in June 1999.

The increase in capital stock has in turn led to an increase in capital services used per unit of labour input (a process known as 'capital deepening'). During the past decade, Australia's capital-labour ratio rose by 33% (averaging 2.9% per year). This has contributed to an increase in labour productivity.

The growth of a nation's net capital stock depends on the relative pace of two offsetting factors – investments (or 'capital formation') which increase the stock, and retirements and depreciation which reduce it.

Diverse trends may underlie the aggregate growth pattern, such as shifts in the composition of economic activity toward industries that are more or less capital intensive, or more or less rapid capital deepening in individual industries. Technological changes – for example, the recent rapidly increasing importance of computer and communications hardware and software – have been a major driver of such trends.

Between June 1999 and June 2009, the types of capital showing the most rapid growth on a per capita basis were computer software (up 9.6% per year), machinery and equipment (up 5.5% per year) and research and development (4.4%).

Between June 1999 and June 2009, the industries showing the most rapid growth in net capital stock were professional, scientific and technical services (up 8.1% per year), rental, hiring and real estate services (up 6.7% per year), mining (up 6.2% per year) and other services (up 11.9% per year).

Net capital stock(a) per capita

	30 June 1999	30 June 2009	Average annual growth rate
	$	$	%
Dwellings	52 710	62 784	1.8
Non-dwelling construction	58 668	68 989	1.6
Machinery and equipment	14 086	23 950	5.5
Research and development	2 071	3 176	4.4
Mineral and petroleum exploration	1 788	1 975	1.0
Computer software	787	1 961	9.6
Cultivated biological resources	1 040	844	-2.1
Ownership transfer costs	8 517	8 675	0.2
All assets(b)	138 209	173 459	2.3