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 while 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 22.6 per cent of gross domestic product (GDP) in 2004-05 to 22.2 per cent of GDP in 2005-06 and then rise slightly to 22.3 per cent of GDP in 2008-09;
• in 2005-06, the social security and welfare, health, education and defence functions together account for approximately 76 per cent of total expenses with social security and welfare itself accounting for approximately 42 per cent of total expenses;
• in real terms, the strongest growth across the Budget and forward estimates years is occurring in the health, education, social security and welfare and defence functions, with other functions either being stable or declining; and
• net capital investment in 2005-06 largely reflects increased investment in the Department of Finance and Administration’s construction and refurbishment projects, and the purchase of land and security upgrade of various overseas missions by the Department of Foreign Affairs.