The critical question needs to be what set of policies best maximise social welfare, not what set of policies best minimise the risk of public sector involvement. It may be the case that the answers to these two questions are the same, but I suspect that there are circumstances where they are not. Once again, the challenge is to find the right balance.
As outlined in previous RBA work on the topic, a significant share of the very large increase in investment in resource projects has been funded through foreign direct investment in the form of retained earnings.5 To the extent that resource companies have also used external funding sources, they have generally accessed offshore debt markets directly, rather than obtain funds through the domestic banking sector.6  reflects the fact that Australian banks have higher credit ratings than most other banks, proving attractive to customers whose mandates are rating constrained.