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REPEAT:RBA Ellis:Public Investmt Helping Pvt Non-Mining Invest

Repeats Story Initially Transmitted at 02:01 GMT Oct 17/22:01 EST Oct 16
By Sophia Rodrigues
     SYDNEY (MNI) - There is a great deal of investment occurring in the
Australian economy at the moment, with growth in public sector investment
helping to stimulate a pickup in non-mining business investment, Reserve Bank of
Australia Assistant Governor Luci Ellis said Tuesday.
     Ellis was speaking at a panel discussion at an investment conference
organized by Citigroup in Sydney.
     The June quarter national accounts data show non-mining business investment
is picking up, Ellis said, adding, there is lot of synergy between the public
infrastructure investment pickup and non-mining private sector investment.
     "Lot of infrastructure is build by private firms on behalf of the
government, Ellis noted.
     The minutes of the RBA's October board meeting, published earlier Tuesday,
contained considerable discussion of public demand in the economy.
     "Public consumption had increased solidly and new public investment had
risen very strongly across most states. This recent strength had been supported
by a number of large infrastructure projects, especially related to the
construction of roads and railways," the RBA minutes said.
     On the question of whether Australia will be able to attract foreign
capital, Ellis said that the exchange rate will fall if investors are not able
to attract capital at the prevailing exchange rate.
     Ellis was asked a question on the energy sustainability and availability in
Australia -- which has been a key topic of discussion in recent months due to
concerns about rising costs -- and at what point it would affect the RBA's
growth projections.
     Ellis said the RBA has a reasonably good feel on how rising electricity
costs will impact headline inflation in the third quarter but has less clarity
on how it will affect investment decisions.
     This is the reason the RBA is engaging very intensively with its liaison
partners. The RBA is aware that electricity costs may not be a significant
proportion of a firms' overall costs but it may have a greater impact on
margins.
     At this point the RBA doesn't think it will impact its growth projections,
Ellis said, but the central bank is alert to the risk that this could have
"significant impact."
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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