Statement 6: Expenses and Net Capital Investment

Statement 6 presents estimates of general government expenses and net capital investment on an 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 Government Finance Framework (GFS) framework.

The first part of this statement provides information on trends in estimated expenses 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 trends in estimated expenses and their underlying determinants.

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 shown in this statement include:

• general government expenses are forecast to decline by approximately 1.1 percentage point to 23.8 per cent of Gross Domestic Product (GDP) in 2008‑09 and then remain roughly steady as a percentage of GDP through to 2011‑12;
• in 2008‑09, the social security and welfare, health, defence and education functions will together account for an estimated 63.3 per cent of total expenses, with social security and welfare comprising 35 per cent of total expenses;
• in real terms, the strongest growth across the Budget and forward estimates period is expected to occur in the other purposes, defence, education, health and social security and welfare functions; and
• net capital investment is expected to increase in 2008‑09 and the out years. The increased net capital investment across the forward estimates is dominated by projected growth in defence capital investment.