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SAI Global - ACCI Survey of Investor Confidence

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					       SAI Global - ACCI
 Survey of Investor Confidence
                                                                                       Release Date: 9 October 2007




AUSTRALIAN CHAMBER OF
C O M M E R C E A N D I N D U S T RY




FAVOURABLE CONDITIONS DESPITE
INTEREST RATE CONCERNS
The October 2007 SAI Global - ACCI Survey of Investor Confidence shows trading conditions for
Australian businesses are improving. However, labour market issues and the most recent interest rate
hike appear to be putting downward pressure on sales and profits.

The index for National Economic Conditions continued to improve, with the index level giving an
indication of a vibrant and robust outlook. The October survey reveals a slight decrease in Level of
Sales and Level of Profits.

The index for Interest Rates as a constraint on investment reached eighth position, an all time high
since the survey began in 1994. This appropriately reflects business feelings towards the effects of the
August interest rate rise by the RBA as business considers investment decisions.

The Expected Growth in Output index rose to a 13 year high. The Australian economy is expected to
shrug off the recent financial market turmoil, and seems to be going full steam ahead. Much of this
expected benefit from output growth will flow to workers with the Growth in Wages index at its highest
in six years and Expected Number of Full-Time Employees index at a record high. Tight labour market
conditions will likely persist given strong business hiring intensions.

The Availability of Suitably Qualified Employees remained as the largest constraint on business investment
for the third consecutive quarter, while Government constraints again featured prominently in the top
ten. Business Taxes and Government Charges was the second most critical investment impediment
while State and Local Government Regulations ranked highly as constraints on investment.




                                       SAI Global-ACCI Survey of Investor Confidence
SAI Global-ACCI Survey of Investor Confidence                                                              October 2007




CONTENTS                                                      FOREWORD
National Economy                                     3        The SAI Global-ACCI Survey of Investor Confidence
                                                              is a national survey undertaken through the Australian
   National Economic Conditions                      3        Chamber of Commerce and Industry’s member
   Trend in National Economic Conditions             3        associations.
   Climate for Investment                            4
   Trend in Climate for Investment                   4        The data in this survey covers the months of July, August
                                                              and September 2007 and had 1149 respondents.
Expectations for the National Economy                5
                                                              This survey covers the following industries: mining,
   Expected GDP Growth                               5        manufacturing, construction, retail/wholesale trade,
   Expected Business Investment                      5        accommodation, cafes and restaurants, finance/
   Expected Movement in Prices                       6        insurance/property/business services and personal
   Expected Unemployment Rate                        6        services.
   Expected Wages Growth                             7
   Expected Interest Rates                           7        For further information contact:
   Expected Exchange Rate                            8
   Expected Current Account Deficit                  8        Greg Evans, Director of Industry and Innovation, ACCI
                                                              on (02) 6273 2311.
Own Business                                         9

   State Within Own Business                         9
   Trend in Own Business Conditions                  9
   Sales                                            10
   Trend in Own Sales                               10
   Profitability                                    11
   Trend in Own Profits                             11

Expectations for Own Business                       12

   Expected Level of Activity                       12
   Expected Level of Investment                     12
   Expected Number of Full-Time
   Employees                                        13
   Expected Capacity in Relation to
   Demand                                           13
   Actual Sales Compared with the Level
   Expected Six Months Ago                          14
   Actual Profits Compared with the Level
   Expected Six Months Ago                          14

Constraints on Investment                           15




                                     SAI Global-ACCI Survey of Investor Confidence                                   2
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                     October 2007




                                                                                                                                                                   NATIONAL ECONOMY




National Economic Conditions

                                                                                       --- SA — Trend                                                                                                                                Oct   July     Oct
              80                                                                                                                                                                                       80                           2006   2007    2007
                                                                                                                                                                                                            Excellent                2.4   11.5     4.3
              70                                                                                                                                                                                       70
                                                                                                                                                                                                            Very Good               20.5   25.8    25.5
INDEX LEVEL




                                                                                                                                                                                                            Good                    39.5   33.4    34.0
              60                                                                                                                                                                                       60
                                                                                                                                                                                                            Satisfactory            22.9   23.6    30.3
                                                                                                                                                                                                            Poor                     9.5    4.5     5.3
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Very Poor                5.1    1.0     0.4

              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Deeply Depressed         0.1    0.1     0.3
                                                                                                                                                                                                            Original                61.4   68.7    65.2
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                                                                                                                                                                                                            Seasonally Adjusted     61.5   69.6    65.3
                                                                                                                                                                                                            Trend                   60.1   66.0    68.0

The index of National Economic Conditions, which measures business’ evaluation of the general state of the
national economy, rose to 68.0 in the September quarter from 66.0 in June quarter. The index remains firmly
in positive territory, showing that conditions remain first-rate. However, there is a rather large divergence in the
movement of the seasonal adjusted series and the trend series, possibly an indication of a turning point if the
seasonally adjusted series continues to fall.




Trend in National Economic Conditions

                                                                                       --- SA — Trend                                                                                                                                Oct   July    Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                    2006   2007   2007

              60                                                                                                                                                                                       60
                                                                                                                                                                                                            Improving Rapidly        2.5    5.1     4.0
                                                                                                                                                                                                            Improving Slowly        23.7   37.4   39.1
INDEX LEVEL




              50                                                                                                                                                                                       50   No Change               28.1   39.0   34.7
                                                                                                                                                                                                            Deteriorating Slowly    45.6   17.3   22.0
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Deteriorating Rapidly    0.1    1.2     0.2
              30                                                                                                                                                                                       30   Original                45.7   57.0   56.1
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                                                                                                                                                                                                            Seasonally Adjusted     46.3   57.5   56.8
                                                                                                                                                                                                            Trend                   48.8   57.3   58.3




The index of Trend in National Economic Conditions increased notably over the quarter. Business is forecasting
economic conditions to improve considerably over the next twelve months. The index was recorded at 58.3 for
October 2007 after being 57.3 in July.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                       3
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                       October 2007




National Economy cont.




Climate for Investment

                                                                                       --- SA — Trend                                                                                                                                Oct    July      Oct
              70                                                                                                                                                                                       70                           2006    2007     2007
                                                                                                                                                                                                             Excellent                0.0     2.0     1.2
              60                                                                                                                                                                                       60    Very Good                9.9   24.2     16.5
INDEX LEVEL




                                                                                                                                                                                                             Good                   28.7    30.5     33.0
                                                                                                                                                                                                             Satisfactory           40.3    28.8     35.3
              50                                                                                                                                                                                       50
                                                                                                                                                                                                             Poor                   17.9    13.1     12.8
                                                                                                                                                                                                             Very Poor                3.1     0.9     1.2
              40                                                                                                                                                                                       40
                                                                                                                                                                                                             Deeply Depressed         0.0     0.4     0.0
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                                                                                                                                                                                                             Original               53.5    61.5     58.9
                                                                                                                                                                                                             Seasonally Adjusted    54.0    62.4     59.4
                                                                                                                                                                                                             Trend                  54.8    59.3     61.0

The index of the business Climate for Investment improved from 59.3 to 61.0 over the quarter. The index is
now significantly higher than the October 2006 low of 54.8 and the second highest level since July 2004. The
seasonal adjusted series is moving in the opposite direction to the trend series, this may indicate a turning point
in the trend series if the seasonally adjusted series continues to fall.




Trend in Climate for Investment

                                                                                       --- SA — Trend                                                                                                                                Oct    July     Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                    2006    2007    2007
                                                                                                                                                                                                            Improving Rapidly        0.0     2.8     3.7
              60                                                                                                                                                                                       60   Improving Slowly        14.3    35.1    31.7
INDEX LEVEL




                                                                                                                                                                                                            No Change               49.2    46.5    44.8
                                                                                                                                                                                                            Deteriorating Slowly    29.6    13.0    17.9
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Deteriorating Rapidly    6.8     2.6     1.8
                                                                                                                                                                                                            Original                42.8    55.6    54.4
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Seasonally Adjusted     43.5    56.4    55.4
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                                                                                                                                                                                                            Trend                   47.2    54.7    56.7




The index of Trend in Climate for Investment in the Australian economy rose strongly, reaching 56.7 in the
current survey. This shows that business is expecting that economy-wide conditions for investment will improve
significantly over the next twelve months.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                         4
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                   October 2007




                                                                                           EXPECTATIONS FOR THE NATIONAL ECOMONY
This section presents business expectations for the next twelve months on a range of economic indicators for
the national economy.



Expected GDP Growth

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              60                                                                                                                                                                                       60                         2006   2007   2007
                                                                                                                                                                                                            Much Higher            2.1    1.8    0.4
              50                                                                                                                                                                                       50   Somewhat Higher       22.7   25.4   32.5
INDEX LEVEL




                                                                                                                                                                                                            About the Same        48.6   57.5   47.2
                                                                                                                                                                                                            Somewhat Lower        26.6   14.6   19.4
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Much Lower             0.0    0.8    0.6
                                                                                                                                                                                                            Original              43.5   53.2   53.2
              30                                                                                                                                                                                       30
                                                                                                                                                                                                            Seasonally Adjusted   44.4   52.5   54.4
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                                                                                                                                                                                                            Trend                 46.5   53.7   54.9




The index of Expected GDP Growth rose moderately from 53.7 to 54.9 over the quarter. The index level for
expected GDP growth is at its highest for the last 13 years. This suggests that business is very optimistic about
the growth of the overall economy.




Expected Business Investment

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              60                                                                                                                                                                                       60
                                                                                                                                                                                                                                  2006   2007   2007
                                                                                                                                                                                                            Much Higher            0.0    0.7    2.8
                                                                                                                                                                                                            Somewhat Higher       14.3   26.8   32.1
INDEX LEVEL




              50                                                                                                                                                                                       50
                                                                                                                                                                                                            About the Same        56.3   54.0   42.7
                                                                                                                                                                                                            Somewhat Lower        22.6   14.9   20.9
                                                                                                                                                                                                            Much Lower             6.9    3.7    1.5
                                                                                                                                                                                                            Original              44.5   51.5   53.5
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Seasonally Adjusted   44.9   51.4   54.0
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                                                                                                                                                                                                            Trend                 45.4   51.1   54.5




The index of Expected Business Investment for the next twelve months rose strongly to an all time high during
the September quarter from 51.1 to 54.5. Given the level of optimism shown in both the Trend in Climate for
Investment and Expected Business Investment, overall investment growth will likely accelerate over the next
twelve months.



                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                     5
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                   October 2007




Expectations for the National Economy cont.




Expected Movement in Prices

                                                                                       --- SA — Trend                                                                                                                              Oct   July     Oct
              80                                                                                                                                                                                       80                         2006   2007    2007
                                                                                                                                                                                                            Much Higher            1.0    4.4     3.8
              70                                                                                                                                                                                       70   Somewhat Higher       61.5   52.6    65.0
INDEX LEVEL




                                                                                                                                                                                                            About the Same        36.4   39.6    29.4
                                                                                                                                                                                                            Somewhat Lower         1.1    2.7     1.8
              60                                                                                                                                                                                       60
                                                                                                                                                                                                            Much Lower             0.0    0.7     0.0
                                                                                                                                                                                                            Original              65.3   64.3    67.3
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Seasonally Adjusted   64.2   62.4    66.1
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                                                                                                                                                                                                            Trend                 63.6   62.6    64.6




The index of Expected Movement in Prices rose strongly from 62.6 to 64.6 in the September quarter. The price
indicator shows that moderate inflation growth is being factored into business decision making.




Expected Unemployment Rate

                                                                                       --- SA — Trend                                                                                                                              Oct   July     Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                  2006   2007    2007
                                                                                                                                                                                                            Much Higher            3.9    0.8     1.6
              60                                                                                                                                                                                       60   Somewhat Higher       19.3   24.4    26.1
INDEX LEVEL




                                                                                                                                                                                                            About the Same        64.5   62.0    61.2
                                                                                                                                                                                                            Somewhat Lower        11.1   10.8     9.3
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Much Lower             1.2    1.9     1.9
                                                                                                                                                                                                            Original              53.4   52.9    54.0
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Seasonally Adjusted   53.7   53.0    54.3
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                                                                                                                                                                                                            Trend                 55.4   53.7    53.7




The index of Expected Unemployment Rate remains unchanged at 53.7 in the September quarter. The index
level suggests that business believes that unemployment may increase slightly over the next twelve months.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                     6
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                   October 2007




Expectations for the National Economy cont.




Expected Wages Growth

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                  2006   2007   2007
                                                                                                                                                                                                            Much Higher            2.9    0.0     4.4
              60                                                                                                                                                                                       60   Somewhat Higher       38.8   32.0   42.7
INDEX LEVEL




                                                                                                                                                                                                            About the Same        52.5   58.5   47.2
                                                                                                                                                                                                            Somewhat Lower         5.8    9.5     5.4
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Much Lower             0.0    0.0     0.4
                                                                                                                                                                                                            Original              58.3   53.3   61.3
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Seasonally Adjusted   59.3   52.5   62.4
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                                                                                                                                                                                                            Trend                 57.5   56.2   59.1




The index of Expected Wages Growth increased considerably from 56.2 to 59.1 over the quarter to the highest
level in six years. Businesses are expecting moderate to high wage growth over the next twelve months.




Expected Interest Rates

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              80                                                                                                                                                                                       80
                                                                                                                                                                                                                                  2006   2007   2007
              70                                                                                                                                                                                       70   Much Higher            3.6    3.2     7.3
                                                                                                                                                                                                            Somewhat Higher       80.1   69.3   80.9
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                            About the Same         9.8   21.7     9.4
              50                                                                                                                                                                                       50   Somewhat Lower         4.3    4.6     1.6
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Much Lower             2.2    1.2     0.8
                                                                                                                                                                                                            Original              69.6   67.2   73.1
              30                                                                                                                                                                                       30
                                                                                                                                                                                                            Seasonally Adjusted   70.3   64.0   73.7
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                                                                                                                                                                                                            Trend                 66.7   65.9   70.7




The index of Expected Interest Rates, which asks business about their twelve month interest rate expectations,
showed that business believes that interest rates are more likely to rise, with only a minority believing that it will
be lower or stay the same. The index rose sharply from 65.9 to 70.7 over the quarter.




                                                                                                                                    SAI Global-ACCI Survey of Investor Confidence                                                                         7
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                   October 2007




Expectations for the National Economy cont.




Expected Exchange Rate

                                                                                       --- SA — Trend                                                                                                                              Oct   July     Oct
              70                                                                                                                                                                                       70                         2006   2007    2007
                                                                                                                                                                                                            Much Higher            0.0    1.9     1.5
              60                                                                                                                                                                                       60
                                                                                                                                                                                                            Somewhat Higher       30.2   28.6    32.9
INDEX LEVEL




              50                                                                                                                                                                                       50
                                                                                                                                                                                                            About the Same        46.2   36.0    36.7
                                                                                                                                                                                                            Somewhat Lower        21.0   33.0    28.1
              40                                                                                                                                                                                       40   Much Lower             2.5    0.5     0.8
                                                                                                                                                                                                            Original              51.0   49.6    51.5
              30                                                                                                                                                                                       30
                                                                                                                                                                                                            Seasonally Adjusted   51.5   48.8    52.0
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                                                                                                                                                                                                            Trend                 47.3   50.5    51.3




The index of the Expected Exchange Rate (measured against the US dollar) increased slightly over the quarter
from 50.5 to 51.3. The index suggests business expects a reasonably stable Australian dollar relative to the US
dollar over the next twelve months.




Expected Current Account Deficit

                                                                                       --- SA — Trend                                                                                                                              Oct   July     Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                  2006   2007    2007
                                                                                                                                                                                                            Much Higher            0.0    1.6     6.9
                                                                                                                                                                                                            Somewhat Higher       40.5   45.8    42.9
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                            About the Same        45.2   42.0    39.3
                                                                                                                                                                                                            Somewhat Lower        14.3   10.5    10.6
                                                                                                                                                                                                            Much Lower             0.0    0.0     0.3
                                                                                                                                                                                                            Original              53.0   57.0    61.4
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Seasonally Adjusted   54.4   56.4    63.0
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                                                                                                                                                                                                            Trend                 57.6   59.2    59.9




The index of the Expected Current Account Deficit increased slightly to 59.9 from 59.2 over the three months to
September 2007. The index level shows that business expects Australia’s current account deficit over the next
twelve months to continue to increase at roughly the same pace as the June quarter.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                     8
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                        October 2007




                                                                                                                                                                              OWN BUSINESS
This section presents an analysis of the assessments businesses have made about their own firm’s current
performance.



State Within Own Business

                                                                                       --- SA — Trend                                                                                                                                 Oct    July     Oct
              80                                                                                                                                                                                       80                            2006    2007    2007
                                                                                                                                                                                                            Excellent                 2.4    14.2      4.3
              70                                                                                                                                                                                       70   Very Good                23.9    20.2    24.7
INDEX LEVEL




                                                                                                                                                                                                            Good                     33.9    33.8    31.6
                                                                                                                                                                                                            Satisfactory             24.4    26.5    32.2
              60                                                                                                                                                                                       60
                                                                                                                                                                                                            Poor                     13.0     4.2      5.1
                                                                                                                                                                                                            Very Poor                 2.4     0.1      2.0
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Deeply Depressed          0.1     1.0      0.0
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                                                                                                                                                                                                            Original                 61.8    68.2    64.1
                                                                                                                                                                                                            Seasonally Adjusted      61.8    68.9    64.1
                                                                                                                                                                                                            Trend                    61.3    66.5    66.4

The index of State Within Own Business, which asks respondents to make a general evaluation their own
businesses, fell marginally to 66.4 from 66.5. Despite the drop, the index is still strongly positive indicating
favourable conditions.




Trend in Own Business Conditions

                                                                                       --- SA — Trend                                                                                                                                 Oct    July      Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                     2006    2007     2007
                                                                                                                                                                                                             Improving Rapidly         4.2    13.5      7.8
                                                                                                                                                                                                             Improving Slowly         32.8    49.2     53.4
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                             No Change                40.2    27.4     31.5
                                                                                                                                                                                                             Deteriorating Slowly     22.7     9.7      7.1
                                                                                                                                                                                                             Deteriorating Rapidly     0.1     0.2      0.3
                                                                                                                                                                                                             Original                 54.6    66.5     65.3
              50                                                                                                                                                                                       50
                                                                                                                                                                                                             Seasonally Adjusted      56.0    66.2     66.9
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                                                                                                                                                                                                             Trend                    59.3    66.1     67.2




The Trend in Own Business Conditions index continued to strengthen, with the index increasing to 67.2 from
66.1. Despite the significant decline in 2006, the index has recovered and has risen to an eight year high, which
indicates that businesses are very confident about their prospects for the next three months.




                                                                                                                                    SAI Global-ACCI Survey of Investor Confidence                                                                              9
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                        October 2007




Own Business cont.




Sales

                                                                                       --- SA — Trend                                                                                                                                 Oct    July     Oct
              70                                                                                                                                                                                       70                            2006    2007    2007
                                                                                                                                                                                                            Excellent                 2.2    11.4      4.3
              60                                                                                                                                                                                       60   Very Good                23.1    13.3     15.2
INDEX LEVEL




                                                                                                                                                                                                            Good                     27.5    27.5     33.6
                                                                                                                                                                                                            Satisfactory             30.8    39.9     31.7
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Poor                     14.4     7.6     13.4
                                                                                                                                                                                                            Very Poor                 2.0     0.2      1.8
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Deeply Depressed          0.0     0.0      0.0
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                                                                                                                                                                                                            Original                 60.0    63.3     59.7
                                                                                                                                                                                                            Seasonally Adjusted      59.9    63.8     59.6
                                                                                                                                                                                                            Trend                    59.0    62.0     61.6

The index of Sales, which shows the rate of growth of sales, fell marginally over the quarter from 62.0 to 61.6.
Despite the fall, the index remains well above 50, indicating healthy growth in sales.




Trend in Own Sales

                                                                                       --- SA — Trend                                                                                                                                 Oct    July      Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                     2006    2007     2007
                                                                                                                                                                                                             Improving Rapidly         3.1    10.2      8.5
                                                                                                                                                                                                             Improving Slowly         43.7    62.3     56.6
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                             No Change                32.0    24.5     28.6
                                                                                                                                                                                                             Deteriorating Slowly     19.5     2.7      5.9
                                                                                                                                                                                                             Deteriorating Rapidly     1.7     0.2      0.4
                                                                                                                                                                                                             Original                 56.7    69.9     66.7
              50                                                                                                                                                                                       50
                                                                                                                                                                                                             Seasonally Adjusted      57.8    69.1     67.9
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                                                                                                                                                                                                             Trend                    58.7    67.3     69.5




The index of Trend in Own Sales rose over the quarter with the trend index up from 67.3 to 69.5. This is the
highest index level recorded since this survey’s inception in 1994. The current index level indicates business
expects continued strong sales growth.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                         10
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                       October 2007




Own Business cont.




Profitability

                                                                                       --- SA — Trend                                                                                                                                Oct    July      Oct
              70                                                                                                                                                                                       70                           2006    2007     2007
                                                                                                                                                                                                            Excellent                 5.6     9.3     3.5
              60                                                                                                                                                                                       60   Very Good               19.5      9.1    12.1
INDEX LEVEL




                                                                                                                                                                                                            Good                    23.8    28.1     26.5
                                                                                                                                                                                                            Satisfactory            24.2    29.8     34.9
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Poor                    20.6    21.7     20.6
                                                                                                                                                                                                            Very Poor                 2.5     1.7     1.8
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Deeply Depressed          3.9     0.4     0.6
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                                                                                                                                                                                                            Original                57.1    58.0     55.8
                                                                                                                                                                                                            Seasonally Adjusted     56.9    58.5     55.7
                                                                                                                                                                                                            Trend                   55.4    58.2     57.3

Profitability declined slightly over the quarter, with the index falling to 57.3 from 58.2 in July. Despite the fall, the
index remains considerably higher than 50, indicting increasing profitability.




Trend in Own Profits

                                                                                       --- SA — Trend                                                                                                                                Oct    July     Oct
              70                                                                                                                                                                                       70
                                                                                                                                                                                                                                    2006    2007    2007
                                                                                                                                                                                                            Improving Rapidly        6.0     8.3      7.2
                                                                                                                                                                                                            Improving Slowly        26.6    43.2    44.9
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                            No Change               38.4    29.9    30.5
                                                                                                                                                                                                            Deteriorating Slowly    26.5    16.6    14.8
                                                                                                                                                                                                            Deteriorating Rapidly    2.5     2.1      2.5
                                                                                                                                                                                                            Original                51.8    59.8    59.8
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Seasonally Adjusted     52.6    59.8    60.9
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                                                                                                                                                                                                            Trend                   53.8    60.2    61.0




The index of Trend in Own Profits increased over the quarter rising from 60.2 to 61.0. The rise of the index
shows that business expects sustained improvements in profit growth over the next three months.




                                                                                                                                    SAI Global-ACCI Survey of Investor Confidence                                                                            11
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                   October 2007




                                                                                                                      EXPECTATIONS FOR OWN BUSINESS
In addition to asking firms to evaluate their current business conditions, the survey also asks respondents to
provide an indication as to the expected level of activity in the business over the next six months. The relevant
data is presented in this section.


Expected Level of Activity

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              70                                                                                                                                                                                       70                         2006   2007   2007
                                                                                                                                                                                                            Much Higher            9.4   11.5   10.7
                                                                                                                                                                                                            Somewhat Higher       36.0   46.9   40.7
INDEX LEVEL




              60                                                                                                                                                                                       60
                                                                                                                                                                                                            About the Same        42.8   35.3   39.8
                                                                                                                                                                                                            Somewhat Lower        11.7    5.9    6.9
                                                                                                                                                                                                            Much Lower             0.1    0.4    1.9
                                                                                                                                                                                                            Original              60.7   65.8   62.9
              50                                                                                                                                                                                       50
                                                                                                                                                                                                            Seasonally Adjusted   61.1   64.6   63.3
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                                                                                                                                                                                                            Trend                 58.9   63.6   64.8




The index of Expected Level of Activity increased over the September quarter to a record of 64.8. Businesses
are optimistic and expect higher levels of activity due to favourable economic conditions.




Expected Level of Investment

                                                                                       --- SA — Trend                                                                                                                              Oct   July    Oct
              60                                                                                                                                                                                       60
                                                                                                                                                                                                                                  2006   2007   2007
                                                                                                                                                                                                            Much Higher            4.1    4.6    5.5
              50                                                                                                                                                                                       50   Somewhat Higher       19.1   30.8   23.7
INDEX LEVEL




                                                                                                                                                                                                            About the Same        57.1   49.8   52.9
                                                                                                                                                                                                            Somewhat Lower        11.1   12.0   12.4
              40                                                                                                                                                                                       40
                                                                                                                                                                                                            Much Lower             8.6    2.8    5.4
                                                                                                                                                                                                            Original              49.7   55.6   52.9
              30                                                                                                                                                                                       30
                                                                                                                                                                                                            Seasonally Adjusted   49.7   56.3   52.8
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                                                                                                                                                                                                            Trend                 49.6   54.5   54.8




The index of Expected Level of Investment rose marginally from 54.5 to 54.8. The index level is at its highest in
13 years. Improved perceptions in the climate for investment over the six months are encouraging businesses
to increase their level of investment.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                    12
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                    October 2007




Expectations for Own Business cont.




Expected Number of Full-Time Employees

                                                                                       --- SA — Trend                                                                                                                               Oct   July     Oct
              60                                                                                                                                                                                        60                         2006   2007    2007
                                                                                                                                                                                                             Much Higher            0.0    2.0     1.2
                                                                                                                                                                                                             Somewhat Higher       33.5   21.3    23.7
INDEX LEVEL




              50                                                                                                                                                                                        50
                                                                                                                                                                                                             About the Same        53.5   71.0    69.7
                                                                                                                                                                                                             Somewhat Lower        11.3    5.7     4.2
                                                                                                                                                                                                             Much Lower             1.7    0.0     1.3
                                                                                                                                                                                                             Original              54.7   53.5    54.8
              40                                                                                                                                                                                        40
                                                                                                                                                                                                             Seasonally Adjusted   54.0   53.6    54.1
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                                                                                                                                                                                                             Trend                 53.6   53.9    54.4




The index of Expected Number of Full-Time Employees increased slightly over the quarter, from 53.9 to 54.4.
The index is at a record high and points to sustained growth in employment taking place over the next six
months.




Expected Capacity in Relation to Demand

                                                                                       --- SA — Trend                                                                                                                               Oct   July     Oct
              70                                                                                                                                                                                        70
                                                                                                                                                                                                                                   2006   2007    2007
                                                                                                                                                                                                             More than Adequate    30.7   21.6    25.0
              60                                                                                                                                                                                        60   Adequate              55.7   61.3    64.8
INDEX LEVEL




                                                                                                                                                                                                             Less than Adequate    13.5   17.1    10.2
                                                                                                                                                                                                             Original              58.6   52.2    57.4
              50                                                                                                                                                                                        50
                                                                                                                                                                                                             Seasonally Adjusted   58.0   51.3    56.8
                                                                                                                                                                                                             Trend                 56.9   54.2    54.7
              40                                                                                                                                                                                        40
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Capacity in Relation to the Expected Level of Demand rose marginally over the quarter from 54.2 to 54.7. The
current index level is representative of additional capacity usage being available, meaning most firms are able
to meet current demand without expanding capacity.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                     13
SAI Global-ACCI Survey of Investor Confidence                                                                                                                                                                                                    October 2007




Expectations for Own Business cont.




Actual Sales Compared with the Level Expected Six Months Ago

                                                                                       --- SA — Trend                                                                                                                               Oct   July    Oct
              60                                                                                                                                                                                        60                         2006   2007   2007
                                                                                                                                                                                                             Much Higher            6.4    0.9     8.0
                                                                                                                                                                                                             Somewhat Higher       14.9   12.5   23.4
INDEX LEVEL




              50                                                                                                                                                                                        50
                                                                                                                                                                                                             About the Same        39.4   47.8   38.4
                                                                                                                                                                                                             Somewhat Lower        33.7   29.5   25.5
                                                                                                                                                                                                             Much Lower             5.6    9.3     4.8
                                                                                                                                                                                                             Original              45.7   41.6   51.1
              40                                                                                                                                                                                        40
                                                                                                                                                                                                             Seasonally Adjusted   45.2   42.9   50.5
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                                                                                                                                                                                                             Trend                 45.7   47.1   47.5




Sales generally did not meet projections, with the index of Actual Sales Compared With Expected recorded at
47.5 The index has been recorded at consistently low levels since July 2005.




Actual Profits Compared with the Level Expected Six Months Ago

                                                                                       --- SA — Trend                                                                                                                               Oct   July     Oct
              60                                                                                                                                                                                        60
                                                                                                                                                                                                                                   2006   2007    2007
                                                                                                                                                                                                             Much Higher            2.2    0.4     3.9
              50                                                                                                                                                                                        50   Somewhat Higher       18.7   15.8    19.1
INDEX LEVEL




                                                                                                                                                                                                             About the Same        40.9   35.7    39.1
                                                                                                                                                                                                             Somewhat Lower        29.4   38.0    30.5
              40                                                                                                                                                                                        40
                                                                                                                                                                                                             Much Lower             8.8   10.1     7.5
                                                                                                                                                                                                             Original              44.1   39.6    45.4
              30                                                                                                                                                                                        30
                                                                                                                                                                                                             Seasonally Adjusted   44.1   40.5    45.5
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                                                                                                                                                                                                             Trend                 44.1   43.2    43.3




The data on expected versus actual profits showed actual profits continued to fall short of expectations. The
index rose slightly to 43.3 in the September quarter.




                                                                                                                                        SAI Global-ACCI Survey of Investor Confidence                                                                     14
SAI Global-ACCI Survey of Investor Confidence                                                         October 2007




                                     CONSTRAINTS ON INVESTMENT

The Survey of Investor Confidence seeks information from respondents on the importance of a list of twenty
factors as constraints on the level of investment. The overall average index level for all constraints showed that
there was a greater overall constraint on investment with the index rising from the 36.5 recorded in the previous
survey to 37.7 in the most recent survey.

The table presented below shows the ten most important constraints on business investment and shows that the
current major impediments to investment flow from three main sources: government taxes and regulations, the
labour market and interest rate issues.

Availability of Suitably Qualified Employees remains the single most binding constraint on investment for the
third consecutive quarter with its index rising to an all time high. While finding staff still remains a critical
concern, Wage Costs and Non-Wage Labour Costs also presented difficulties, recording third and fifth positions
respectively.

Business Taxes and Government Charges was the second most important constraint on investment. Government
regulation in general featured prominently in the top ten with State Government Regulation and Local Government
Regulation ranked fourth and seventh respectively. In addition Federal Government Regulation was ranked
tenth. Overall, the inclusion of government regulation at all levels reiterates the call on government to address
business regulations to encourage investment.

Level of Interest Rates as a constraint on investment increased to eighth position, the highest rank since this
survey began in 1994. This result is inline with the RBA’s decision in August to increase interest rates again.
Furthermore, the effect of Charges by Lending Institutions has risen to ninth position. Thus, compounded by
lending charges, further interest rate rises will magnify the detrimental effects of interest rates on investment.

TOP TEN CONSTRAINTS ON INVESTMENT - October 2007

1.    Availability of Suitably Qualified Employees (1)
2.    Business Taxes and Government Charges (2)
3.    Wage Costs (4)
4.    State Government Regulations (3)
5.    Non-Wage Labour Costs (5)
6.    Local Competition (7)
7.    Local Government Regulations (8)
8.    Interest Rates (9)
9.    Charges by Lending Institutions (10)
10.   Federal Government Regulations (7)

The figures in brackets show the ranking in the previous survey.

Note on Interpreting the Data
An index level of 50.0 indicates that there is a balance between those who responded that conditions were
improved and those that replied that conditions had declined. Thus any level below 50 indicates that conditions
are deteriorating, and conversely, a reading above 50 indicates conditions on average are improving.

The October 2007 SAI Global - ACCI Survey of Investor Confidence encompasses responses sought during
September 2007 about current conditions and future expectations and had 1149 respondents.




                                     SAI Global-ACCI Survey of Investor Confidence                             15
SAI Global-ACCI Survey of Investor Confidence                                        October 2007




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                                     SAI Global-ACCI Survey of Investor Confidence            16

				
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