Statement 6 presents estimates of general government expenses and net capital investment on a Government Finance Statistics (GFS) accrual accounting basis. The statement includes information on the allocation of Australian Government funds to the various functions of government. These functions are based on an international standard classification of functions of government that is incorporated into the GFS framework.

The first part of this Statement provides information on trends in expense estimates whilst the second part presents trends in net capital investment estimates. Estimates are on an Australian Government general government sector basis.

Statement 6 focuses on short to medium-term expense trends and their underlying determinants. Consistent with this emphasis, much of Statement 6 explains year-on-year changes across the forward estimates.

Further information on portfolio and agency expenses, capital movements, major outputs and administered items may be found in the respective Portfolio Budget Statements.

The key points are:

• general government expenses are forecast to fall from 22.4 per cent of gross domestic product (GDP) in 2004-05 to 21.9 per cent of GDP in 2007-08;
• in 2004-05, the Social Security and Welfare, Health and Education functions make up just over two-thirds of total expenses — some major trend determinants of long-term growth, for example, population ageing and demand for new technology in the area of health care, were highlighted in the Budget Paper No. 5, Intergenerational Report, 2002-03;
• in real terms, the strongest growth across the Budget and forward estimates years is occurring in the Defence, Education, Social Security and Welfare and Health functions, with other functions in general either being stable or declining; and
• net capital investment is moderately positive in 2004-05 but tends to decline over the forward years as various projects and asset acquisitions come to a conclusion.