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 increase in 2008‑09, primarily reflecting growth in defence net capital investment. Estimates of net capital investment, net of non‑financial asset sales and depreciation, remain significantly positive over the forward estimates period to 2011‑12 (Table 18).
Table 18: Estimates of total net capital investment
- As published in the Pre‑Election Economic and Fiscal Outlook 2007, in accordance with the ABS GFS standard.
- Real growth is calculated using the Consumer Price Index.
The estimates of net capital investment presented in Table 18 have been significantly affected by the adoption of the new government accounting standard, AASB 1049, for the first time in the 2008‑09 Budget. In particular, the acquisition of specialist military equipment is now recorded as a capital investment. Previously, expenditures relating to specialist military equipment were classified as expenses, even though the equipment, including aircraft and ships, may have an effective life spanning several decades (this previous treatment was, nevertheless, consistent with the ABS and international Government Finance Statistics standard). The change in the accounting classification of specialist military equipment has increased net capital investment significantly in all years. Further information on this change in accounting treatment is provided in Appendix A of Statement 3 and in Statement 9.
Reconciliation of net capital investment since the 2007‑08 Budget
A reconciliation of the 2007‑08 Budget, 2007‑08 MYEFO, PEFO 2007 and 2008‑09 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2007‑08 Budget, is provided in Table 19.
Table 19: Reconciliation of net capital investment
- Excludes the public debt net interest effect of policy measures.
In 2008‑09, forecast net capital investment has increased by $2,106 million since the PEFO 2007. This increase is due to the combined effect of new policy decisions, resulting in an increase in expenditure of $136 million and parameter and other variations of $1,970 million. The parameter and other variations are almost entirely due to the change in accounting classification of specialist military equipment since the PEFO 2007.
Discussion of changes between the PEFO 2007 and the 2008‑09 Budget, shown in the table above, can be found in Statement 3 (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 2008‑09.
Net capital investment estimates by function
Estimates for Australian Government general government net capital investment by function for the period 2007‑08 to 2011‑12 are provided in Table 20.
Table 20: Estimates of net capital investment by function
- Purchases of specialist military equipment are now treated as net capital investment rather than as expenses. See Appendix A of Statement 3 and in Statement 9 for further details.
Net capital investment in 2007‑08 is estimated to be $2.9 billion, principally driven by defence capital expenditure. Other areas of major net capital investment in 2007‑08 include — the construction of the National Portrait Gallery, the Christmas Island Immigration Reception and Processing Centre and various other construction projects managed by the Department of Finance and Deregulation; the continuing refurbishment and relocation of various overseas missions by the Department of Foreign Affairs and Trade; investment in information technology by several agencies including the Australian Taxation Office, Centrelink and the Department of Immigration and Citizenship.
Net capital investment is expected to increase in 2008‑09 and the out years. The increase in net capital investment across the forward estimates is dominated by projected growth in defence capital investment. As discussed earlier in this statement, defence capital expenditure is subject to fluctuations across years associated with the delivery of large military capability projects. There has also been a pattern of major defence capital expenditures slipping relative to earlier delivery schedules. Since the Mid Year Economic and Fiscal Outlook 2007‑08, Defence has reprogrammed $812 million of capital expenditure from 2007‑08 to beyond the forward estimates. In addition, $923 million of capital expenditure previously scheduled for 2008‑09 has been reprogrammed principally to beyond the forward estimates period.
As noted earlier in this statement, defence net capital investment in 2008‑09 is boosted by the scheduled completion of the new Joint Operations Command Headquarters and single living accommodation project. Under the accrual accounting standards used in preparing the budget estimates, this is recorded as an increase of some $500 million in capital investment in 2008‑09, with cash payments to be made over a period of up to 30 years under finance lease arrangements.
The impact of the projected growth in defence capital expenditure is partially offset by the progressive conclusion of various construction projects, including the Christmas Island Immigration Reception and Processing Centre (completed in 2007‑08), the finalisation of a significant overseas land purchase in Jakarta and other procurements associated with the upgrade to the security of a number of overseas posts managed by the Department of Foreign Affairs and Trade, and the completion of major information technology projects by various agencies including the Department of Immigration and Citizenship.
Significant factors contributing to net capital investment by function include:
- General public services — investment in major projects including the National Portrait Gallery, the Christmas Island Immigration Reception and Processing Centre and future new accommodation for the Australian Security Intelligence Organisation and the Office of National Assessments, refurbishment and relocation 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, Centrelink and the Department of Immigration and Citizenship;
- Defence — the investment by the Department of Defence on various capital projects including the construction of the new Headquarters Joint Operations Command facility near Bungendore, New South Wales, and base infrastructure upgrades at Lavarack Barracks, Queensland, Enoggera, Queensland, and the Royal Australian Air Forces bases in Amberley, Queensland, Darwin and Tindal, Northern Territory, and Pearce in Western Australia;
- Public order and safety — investment by the Australian Federal Police in specialist equipment and operational and training facilities to accommodate international deployment group, increased investment by the Australian Security Intelligence Organisation in information technology and expansion of infrastructure to support growth in staff and operations and fit‑out of its central office accommodation in Canberra, and increased capital funding in the Australian Secret Intelligence Service to enhance counter‑terrorism capabilities;
- Health — continuing investment in the National Medical Stockpile to protect against possible disease outbreaks such as a pandemic influenza or biosecurity incidents;
- Social security and welfare — investment in general technology infrastructure and improvements in office accommodation including Customer Services Centres and the National Support Office for Centrelink;
- Housing and community amenities — mainly reflects net capital investment by Defence Housing Australia;
- Recreation and culture — refurbishment and enhancement of the National Gallery of Australia, establishment of the Gallery of Australian Democracy and refurbishment of the south east wing of Old Parliament House, investments by the Director of National Parks in upgraded facilities and rehabilitation of sites within Australia's national parks, and management and rehabilitation of buildings and land around Sydney Harbour by the Sydney Harbour Federation Trust; and
- Other economic affairs — the transition of a number of major information technology projects in the Department of Immigration and Citizenship from a capital intensive development phase to an operational phase.
Net capital investment is broadly defined as acquisitions of non‑financial assets less depreciation expenses. It provides a measure of the overall growth in capital assets (including buildings and infrastructure, specialist military equipment, and computer software) after taking into account depreciation and amortisation as previously acquired assets age. Table 21 below reports the acquisition of non‑financial assets by function before taking into account depreciation or amortisation.
Table 21: Australian Government general government purchases of
non‑financial assets by function
- Purchases of specialist military equipment are now treated as net capital investment rather than as expenses. See Appendix A of Statement 3 and in Statement 9 for further details.
Trends in Australian Government Staffing
This section provides estimates of the annual average staffing level (ASL)3 of agencies in the Australian Government General Government Sector. It is a comprehensive data source of people employed by the Australian Government, including all Defence Force personnel and those employed by Statutory Authorities.
ASL data was first collected and published in the Budget papers for 2001‑02. Since that time there has been a sizable increase in the average staffing levels. For example, figures reported in the 2002‑03 Budget papers show an average annual staffing level of 212,784 for the 2001‑02 financial year whereas in the 2008‑09 Budget papers the estimate for 2007‑08 is 248,233 — an increase in excess of 35,000 over that period (see Table 22 below).
Table 22 shows steady and relatively small increases in the financial years 2001‑2002 to 2005‑2006 and a sharp increase in 2006‑2007 and 2007‑2008. Savings measures for the 2008‑09 Budget will result in a modest net decrease across the General Government Sector of close to 1,200 ASL. The Government has established the Career Transition and Support Centre in the Australian Public Service Commission to assist affected staff and agencies with the downsizing process.
Table 22: Estimates of Average Staff Levels (ASL)
| 2001‑02 | 2002‑03 | 2003‑04 | 2004‑05 | 2005‑06 | 2006‑07 | 2007‑08 | 2008‑09 |
|---|---|---|---|---|---|---|---|
| 212,784 | 217,284 | 223,134 | 225,914 | 227,013 | 238,623 | 248,233 | 247,081 |
Chart 1: Estimates of Average Staff Levels (ASL)
2001‑2008
Appendix C5 provides detail of ASL at Portfolio and Agency level. Comparisons across years should take account of the significant changes resulting from the machinery of government changes in December 2007.
3 ASL figures reflect the average number of employees receiving salary or wages over the financial year, with adjustments for casual and part-time staff, to show the average full time equivalent (FTE). ASL figures also include non-uniformed staff and overseas personnel.
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