General government net capital investment

Net capital investment comprises acquisitions of non-financial assets (including inventories) less non‑financial asset disposals and depreciation.

Australian Government general government net capital investment is expected to rise in 2006-07 and remain positive, net of non-financial asset sales and depreciation, over the forward estimates period until 2009‑10 (Table 18).

Table 18: Estimates of total net capital investment

1. As published in the Mid-Year Economic and Fiscal Outlook 2005-06.
2. Real growth is calculated using the non-farm gross domestic product (GDP) deflator.

Reconciliation of net capital investment since the 2005-06 Budget

A reconciliation of the 2005-06 Budget, 2005-06 MYEFO and 2006-07 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2005-06 Budget, is provided in Table 19.

Table 19: Reconciliation of net capital investment

In 2006-07, forecast net capital investment has increased by $780 million since the 2005-06 MYEFO. This increase is due to the combined effect of new policy decisions of $398 million and parameter and other variations of $382 million.

Discussion of changes between the 2005-06 MYEFO and the 2006-07 Budget, shown in the table above, can be found in Statement 2 (in the section titled Variations in net capital investment estimates). Further information on capital measures since MYEFO can be found in Budget Paper No. 2, Budget Measures 2006‑07.

Net capital investment estimates by function

Estimates for Australian Government general government net capital investment by function for the period 2005-06 to 2009-10 are provided in Table 20.

Table 20: Estimates of net capital investment by function

Net capital investment of $881 million is expected in 2005-06, largely reflecting — the construction of the Christmas Island Immigration Reception and Processing Centre and various other construction projects managed by the Department of Finance and Administration; investment by the Australian Nuclear Science and Technology Organisation in a new nuclear reactor; the acquisition of land and refurbishment/security upgrades of various overseas missions by the Department of Foreign Affairs and Trade; and investment in information technology by several agencies including the Australian Taxation Office, the Department of Employment and Workplace Relations and the Department of Veterans' Affairs.

Net capital investment is expected to rise between 2005-06 and 2006-07. Factors contributing to net capital investment, by function, include:

• General Public Services — the investment by the Department of Finance and Administration in its property portfolio, including construction of the Christmas Island Immigration Reception and Processing Centre and the National Portrait Gallery and security enhancements, refurbishment and relocation of various overseas missions by the Department of Foreign Affairs and Trade;
• Housing and Community Amenities — adjustments to the Defence Housing Authority's property portfolio including, increased inventory holdings due to fewer property sales, higher than anticipated finance leases and changes to Defence requirements affecting the Defence Housing Authority capital programme for construction and replacement of Australian Defence Force housing;
• Health — investment in pandemic influenza preparedness, including investment in anti-viral medication to protect against possible disease outbreaks such as avian influenza, infrastructure for Medicare Australia to establish the health and social services access card system and telephone counselling, self‑help and support programmes for mental health services;
• Social Security and Welfare — the investment in information technology infrastructure for Centrelink including, enhancing the capability to detect and investigate social security fraud, opening additional Remote Area Service Centres, the establishment of the health and social services access card system and system changes for the Child Support Agency and Centrelink to implement the Child Support reforms;
• Other Economic Affairs — the development of information technology systems to ensure well trained and supported staff for the Department of Immigration and Multicultural Affairs;
• Public Order and Safety — investment by the Australian Security Intelligence Organisation in information technology, including expanding infrastructure to support growth in staff and operations and increasing technical and surveillance capability for counter-terrorism and counter-espionage related purposes, the relocation of state offices for the Australian Security Intelligence Organisation, and increased investment by the Australian Secret Intelligence Service to enhance counter-terrorism capabilities and help increase national security; and
• Recreation and Culture — increased capital for the Australian Broadcasting Corporation for replacing and updating its technical asset base, announced in the context of the Australian Broadcasting Corporation triennial funding arrangements. Also, revision to the Australian Broadcasting Corporation's estimates to reflect a delay in expenditure related to the digital television rollout from 2005‑06 to 2006‑07.

After 2006-07, net capital investment is expected to decrease. This results from the conclusion of various construction projects, as well as the progressive conclusion of the Department of Foreign Affairs and Trade's overseas mission upgrades and various information technology-based projects.