Housing and community amenities
Table 10: Summary of expenses
Nature of expenses and major trends
The housing and community amenities function includes the Australian Government’s contribution to the Commonwealth State Housing Agreement, expenses of the Defence Housing Authority and various regional development and environment protection programmes.
The moderate growth in the housing sub-function in 2006-07 and 2007-08 is primarily due to the increased expenditure relating to Defence housing requirements, in support of the personnel to be assigned to the Headquarters Joint Operation Command to be located in Bungendore NSW.
The increase in the urban and regional development sub-function in 2005-06 primarily reflects an expansion of the Sustainable Regions Programme. The decrease from 2005-06 to 2007-08 reflects the finalisation of the pilot Sustainable Regions programme and lower expenses under the Regional Partnerships programme.
Expenses under the environment protection sub-function decrease between 2007-08 and 2008-09 due to the termination of funding for the Natural Heritage Trust in 2007-08. The remaining decrease over the two years 2007-08 and 2008-09 reflects the termination in 2007-08 of some measures announced as part of the Climate Change Strategy. These measures are expected to be reviewed and considered in the 2008‑09 Budget.
Recreation and culture
Table 11: Summary of expenses
- There has been some reclassification of expenditure that was previously reported under the Aboriginal advancement nec sub-function (Social Security and Welfare) to other primary functions.
Nature of expenses and major trends
Recreation and culture function expenses support: public broadcasting; the regulatory framework for Australia’s broadcasting sector; cultural institutions; funding for the arts and the film industry; assistance to sport and recreation activities; and the management and protection of national parks and other world heritage areas. This function also includes expenses relating to the protection and preservation of historic sites and buildings, including war graves.
Total expenses for the recreation and culture function fluctuate over the period from 2004-05 to 2008-09. Expenses under the national estate and parks sub-function decrease between 2007-08 and 2008-09 due to the cessation of funding for the Natural Heritage Trust in 2007-08. The growth in the arts and cultural heritage sub-function in 2005-06 reflects in part, increased funding associated with the election commitment A World Class Australian Film Industry.
Higher expenses in the sport and recreational sub-function in 2005-06 primarily reflect a direct payment to the Victorian Government to assist with costs associated with staging the Melbourne 2006 Commonwealth Games. It also reflects additional funding under the programme Building a Healthy, Active Australia — Active After-school Communities. This programme concludes in 2007-08, contributing to the declining trend over the forward years for this sub-function. This trend is partially offset by the additional funding provided for elite sport initiatives in the 2005‑06 Budget.
Fuel and energy
Table 12: Summary of expenses
Nature of expenses and major trends
This function includes expenses for the Energy Grants Credits Scheme, Cleaner Fuels Grants Scheme and the Fuels Sales Grants Scheme, which are administered by the Australian Taxation Office. The Business Credits Scheme will replace the Energy Grants Credits Scheme on 1 July 2006.
This function also includes expenses of the Department of the Environment and Heritage for programmes funded under A New Tax System — Measures for a Better Environment package, the Climate Change Strategy measures and the Securing Australia’s Energy Future measures. Also included within this function are expenses for programmes relating to the production of alternative fuels including ethanol and biodiesel, which are administered by the Department of Industry, Tourism and Resources and the Australian Taxation Office respectively.
Expenses within this function increase in 2005-06 due to the introduction of the Government’s initiative Securing Australia’s Energy Future, and an expected increase in outlays in the Energy Grants Credits Scheme as a result of expected improvement in mining production and increases in rail and road transport activity. Following the replacement of the Energy Grants Credits Scheme with the Business Credits Scheme on 1 July 2006, the function is expected to have significant growth from 2006-07 to 2008-09. However growth in 2006-07 will be offset by the cessation of the Fuel Sales Grant Scheme.
Agriculture, forestry and fishing
Table 13: Summary of expenses
Nature of expenses and major trends
Agriculture, forestry and fishing function expenses support assistance to primary producers, forestry, fishing, land and water resources management, quarantine services and contributions to research and development.
Expenses within this function are expected to increase in 2005-06 and 2006-07 driven by substantial increases in expenditure in the natural resources development sub-function largely due to the expenditure of the Australian Water Fund in 2005-06. The Australian Water Fund will provide $2 billion over six years with significant funding in 2005-06 until 2007-08. The Australian Water Fund will support investment in water infrastructure, improved water management and better practices in the stewardship of Australia’s water resources.
The 36 per cent decrease in expenses over the four year period from 2005-06 to 2008-09 reflects the expected cessation of drought related measures within the rural assistance sub-function, due to an assumed return to normal seasonal conditions in Australia. The decrease is also attributable to the termination of funding for the Natural Heritage Trust and the National Action Plan on Salinity and Water Quality under the natural resources development sub-function.
Other significant expenses on conservation and sustainable use and repair of Australia’s natural environment are included in the environment protection sub-function (housing and community amenities function) and the national estate and parks sub‑function (recreation and culture function).
Manufacturing and mining
Table 14: Summary of expenses
Nature of expenses and major trends
Expenses under this function relate to the manufacturing and export sectors, and are designed to improve the efficiency and competitiveness of Australian industries. Major expenses include programmes specific to the automotive, textile clothing and footwear and pharmaceutical industries. Expenses also include Australian Government assistance to exporters through direct financial assistance for the development of export markets, information and promotional assistance, finance and insurance services, and the development of trade policy, and programmes providing research and development assistance grants and a programme of strategic investment incentives.
The introduction of a new textile clothing and footwear Strategic Investment Programme in 2006-07 will provide a more strategically targeted level of assistance than the current textile clothing and footwear programme over the forward estimates.
The slight decline in expenses from 2006-07 to 2007-08 reflects a lower number of projects being funded under the strategic investment coordination process. Increased expenditure in 2008-09 includes higher grant payments under the Commercial Ready Programme.
Transport and communication
Table 15: Summary of expenses
Nature of expenses and major trends
Transport and communication function expenses support the infrastructure and regulatory framework for Australia’s transport and communications sectors.
Expenses in some sub-functions fluctuate from 2004-05 to 2008-09 reflecting the irregular expenditure patterns associated with the commencement and/or completion of major programmes and one-off projects. The function includes expenses associated with the Government’s AusLink national land transport network, involving expenditure on both road and rail.
The decline in the communication sub-function over the period to 2008-09 reflects the conclusion of programmes associated with several Australian Government telecommunication and information technology initiatives, including the Telstra Social Bonus 2, the response to the Telecommunications Service (Besley) Inquiry and the Building on IT strengths Programme.
The increase in the 2005-06 rail transport sub-function reflects rail funding under AusLink and the payment made by the Government to the Australia Rail Track Corporation for new rail infrastructure projects on the interstate rail system.
The high level of expenses in the air transport sub-function in 2004-05 and 2005-06 is primarily due to a one-off funding boost to regional airport security.
The overall increase in the road transport sub-function from 2004-05 to 2008-09 is primarily a result of expenses associated with AusLink. Since the last budget, the Government has increased funding for land transport by approximately $1.2 billion for the five years to 2008-09.
The Government also provides untied funding to local government through Financial Assistance Grants that are identified for roads — see the general purpose inter-government transactions sub-function (other purposes function).
Major components of the road transport sub-function are outlined in further detail in Box 6.2 below.
Box 6.2: Components of road transport funding
Table 15.1: Trends in major components of the road transport sub-function
- Largely Specific Purpose Payments to the states but with a small additional component for land transport research.
- See Outcome 1 of the Transport and Regional Services Portfolio Budget Statements 2005-06.
Other economic affairs
Table 16: Summary of expenses
Nature of expenses and major trends
The other economic affairs function includes expenses on tourism and area promotion, labour market assistance, immigration, industrial relations and other economic affairs not elsewhere classified.
Estimates for the labour market assistance to job seekers and industry sub-function reflect an overall increase in resourcing to the Job Network, Work for the Dole and other work assistance programs. The Government’s Welfare to Work reform package increases the expenditure on labour market assistance to job seekers although this increase is partially offset by improved efficiencies in Job Network arrangements to be implemented from 1 July 2005.
Continuing growth in the vocational and industry training sub-function is due to an expected increase in apprenticeships/traineeships commencements.
The decline between 2007-08 and 2008-09 in the tourism and area promotion sub-function reflects the conclusion of additional funding arrangements announced in the context of the 2003 White Paper on Tourism.
Other purposes
Table 17: Summary of expenses
- Asset sale related expenses are treated as a component of the contingency reserve.
Nature of expenses and major trends
The other purposes function includes expenses incurred in the servicing of public debt interest, and assistance to the state and territory governments and local government. The function also includes items classified to natural disaster relief, the contingency reserve, and costs of asset sales.
The increase between 2004-05 and 2005-06 in general revenue assistance to the states and territories reflects compensation for GST revenue forgone to the states and territories in allowing some taxpayers who are voluntarily registered for GST to pay and lodge annually. The decline in this sub-function from 2005‑06 reflects the fact that the current National Competition Policy (NCP) agreements only provide for competition payments to 30 June 2006. A Council of Australian Governments (COAG) review of the terms and operation of the NCP arrangements, including an assessment of the future of NCP payments, is scheduled to be completed in 2005. This decline is offset by Budget Balancing Assistance as a result of the Reform of state taxes – payment of Budget Balancing Assistance measure. The Budget Balancing Assistance will facilitate the elimination of a range of inefficient state taxes consistent with the Intergovernmental Agreement on the Reform of Commonwealth–State Financial Relations.
The drop-off in the debt assistance sub-function between 2005-06 and 2006-07 reflects the cessation of the agreed debt redemption arrangements between the Australian Government and the states in 2005-06.
The increase between 2004-05 and 2005-06 in the nominal superannuation interest expense for superannuation reflects the increase in the total unfunded liability for the civilian and military schemes, with the balance represented by the increase in the nominal interest rates used by the actuary in calculating military superannuation liabilities.
The increased expenses in the contingency reserve from 2005-06 over the forward years is largely due to the conservative bias allowance — an allowance that compensates for the trend in expenses on existing Australian Government programmes to be underestimated by agencies in the forward years. The nature of the contingency reserve is discussed in more detail at Appendix B.