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 main trends are:

• general government expenses are forecast to rise from 21.6 per cent of gross domestic product (GDP) in 2005-06 to 21.8 per cent of GDP in 2006-07 and then increase to 21.9 per cent of GDP in 2009-10;
• in 2006-07, the social security and welfare, health, defence and education functions together account for approximately 76 per cent of total expenses with social security and welfare accounting for approximately 42 per cent of total expenses;
• in real terms, the strongest growth across the budget and forward estimates is occurring in the health, social security and welfare, general public services, education and other purposes functions, with growth in other functions either being largely stable or declining; and
• net capital investment in 2006-07 largely reflects increased investment in construction projects, security enhancements, refurbishment and relocation of various overseas missions, and increased Defence Housing Authority property holdings.