Total accrual expenses were $219.4 billion in 2006-07, $2.3 billion lower than the estimate provided in the 2007-08 Budget. The $2.3 billion decrease in expenses is mainly due to:
- an accounting reclassification of the purchase of C-17 Heavy Airlift aircraft from expenses to net capital investment as these aircraft can be used for non-military purposes, of $826 million. This was partly offset by a reclassification of defence weapon inventories from net capital investment to expenses of $367 million, reflecting an improvement in identifying the military versus non-military components of inventory holdings. These changes in the classification of defence expenditures between expenses and net capital investment have no overall impact on the fiscal balance;
- lower Family Tax Benefit expenses of $416 million due to higher than estimated incomes of recipients and a revision in the level of payments recognised as overpayments;
- a decrease in expenses of $318 million due to delays in some defence acquisition projects; and
- a decrease of $242 million in Age Pension expenses reflecting lower than expected bonus payments under the pension bonus scheme due to Age Pension recipients retiring earlier than anticipated and lower than projected customer numbers and average payment rates.
These reductions were partly offset by a number of smaller increases in expenses, the most significant of which is due to extensions to drought-declared areas, new areas being drought-declared and an increase in the number of eligible farmers taking up Exceptional Circumstances drought assistance, increasing expenses by $87 million.
Table 3 provides information on Government Finance Statistics (GFS) general government sector expenses by function.
Table 3: Australian Government general government sector expenses by function
- The Defence function includes a change in accounting treatment for C-17 Heavy Airlift aircraft as they can be used for non-military purposes, which results in a reclassification from expenses to net capital investment. This is partly offset by a reclassification of defence weapon inventories from net capital investment to expenses.