Statement 6: Expenses and
Net Capital Investment
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 significantly in 2009‑10 and 2010‑11. This increase reflects the higher investment in defence capital projects, Commonwealth Government capital components of the Nation Building and Jobs Plan and Nation Building Plan for the Future. Despite falling slightly in 2011‑12 and 2012‑13 net capital investment remains at a historically high level. Details of movements are explained below.
Table 18: Estimates of total net capital investment
- As estimated at February 2009 Updated Economic and Fiscal Outlook.
- Real growth is calculated using the Consumer Price Index.
Reconciliation of net capital investment since the 2008‑09 Budget
A reconciliation of the 2008‑09 Budget, 2008‑09 MYEFO, UEFO 2009 and 2009‑10 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2008‑09 Budget, is provided in Table 19.
Table 19: Reconciliation of net capital investment
- Excludes the public debt net interest effect of policy measures.
Forecast net capital investment for 2009‑10 has increased by $292 million since the UEFO 2009. This increase is driven by the effect of new policy decisions of $438 million, partly offset by parameter and other variations of $146 million.
Major policy decisions since UEFO include the purchase of assets as part of the National Broadband Network regional backbone blackspots program and investment as part of the Government's Nation Building Plan for the Future. This latter package includes investment in additional facilities for the Australian Nuclear Science and Technology Organisation, additional tropical marine research facilities for the Australian Institute of Marine Science and the replacement of the Australian National Marine Facility, the RV Southern Surveyor, operated by the CSIRO.
Discussion of changes between the UEFO 2009 and the 2009‑10 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 UEFO can be found in Budget Paper No. 2, Budget Measures 2009‑10.
Net capital investment estimates by function
Estimates for Australian Government general government net capital investment by function for the period 2008‑09 to 2012‑13 are provided in Table 20.
Table 20: Estimates of net capital investment by function
Net capital investment in 2009‑10 is estimated to be $5.5 billion. This is significantly higher than forecast in the 2008‑09 Budget, as a result of higher investment in defence, health, public order and safety and agriculture, forestry and fishing.
As in previous years, the most significant component of net capital investment in 2009‑10 is that reported under the defence function. This investment reflects the acquisition of military equipment and the construction of support facilities. As with all investment, the growth of defence capital investment can experience significant annual fluctuations, including as a result of slippage in expenditure. Also, large defence capital projects can involve uneven expenditures throughout the life of the project that can contribute to fluctuations in levels of net capital investment from year to year.
The reduction in net capital investment in 2012‑13 is in part due to completion of construction, managed by the Department of Finance and Deregulation, and subsequent transfer to the Australian Security Intelligence Organisation (ASIO) of new accommodation.
A significant change to net capital investment from that reported in previous years is the inclusion of investment in water entitlements under the Water for the Future package recorded under the agriculture, forestry and fishing function. This investment reflects accelerated investment in water entitlements resulting from the bring forward of funding from beyond the forward estimates. Further information can be found in Budget Paper No. 2, Budget Measures 2009‑10.
Other items of major net capital investment impacting the budget and forward years include investment in the Australian Federal Police's new headquarters; the new central office for the Attorney General's Department; investment by the Indigenous Land Council in a range of new property acquisitions; and business investments in information technology by several agencies.
Significant factors contributing to net capital investment by function include:
- General public services — investment in major projects managed by the Department of Finance and Deregulation including the Villawood Immigration Detention Centre and new accommodation for the Australian Security Intelligence Organisation; the 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 and Centrelink.
- Defence — investment by the Department of Defence on various capital projects including facility and base infrastructure upgrades at Lavarack Barracks, (Townsville), Gallipoli Barracks, (Enoggera), Simpson Barracks, (Watsonia) and the Royal Australian Air Force bases at Amberley, Queensland and Pearce in Western Australia.
There are also a number of construction projects related to the introduction of Defence capabilities including Enhanced Land Force Facilities Stage 1, Heavy Airlift Capability Permanent Facilities, Australian Super Hornets Facilities, Hardened and Networked Army Facilities and the Multi Role Helicopter Facilities projects. Construction will occur at various Defence sites and locations across Australia.
Defence is continuing with a major equipment acquisition program, which will keep capital equipment expenditure at a high level over the forward estimates. Major equipment which is expected to be delivered over this period includes airborne early warning and control aircraft, air‑to‑air refuelling aircraft, Super Hornets, Tiger and MRH‑90 Helicopters, Upgraded M113 Armoured Personnel Carriers, Bushranger vehicles, and Submarine, ANZAC and FFG Ship Upgrades.
- Public Order and Safety — major construction projects including fit out of the Australian Federal Police's new headquarters, the Edmund Barton Building, and completion of a new central office for the Attorney‑General's Department.
- 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 — Indigenous Land Council investment in a range of new property acquisition and business investments, including the creation of two cultural sites, the Black Theatre and the National Indigenous Development Centre, in Sydney, and an ongoing upgrade of capital development on remote pastures (mainly fencing).
- Housing and Community Amenities — investment by Defence Housing Australia (DHA) in the construction of 802 houses across Australia in 2009‑10 and 2010‑11. As part of the Government's Nation Building and Jobs Plan, DHA received an additional $252 million of which approximately $201 million will be spent in 2009‑10. The Nation Building and Jobs Plan construction package is in addition to DHA's current capital program.
- Recreation and Culture — the establishment of Collection Development Acquisition Budgets (CDABs) to provide an equivalent funding stream in lieu of previously agreed depreciation funding for heritage and cultural assets. CDABs will assist these agencies to maintain their heritage and cultural asset acquisitions. Other investments include the refurbishment and enhancement of the National Gallery of Australia, rehabilitation of buildings and land around Sydney Harbour by the Sydney Harbour Federation Trust, and the National Capital Authority upgrading roads in Canberra. These are partially offset by the sale of buildings and property in Perth by the Australian Broadcasting Corporation.
- Agriculture, Forestry and Fishing — accelerated investment in water entitlements under the Water for the Future package brought forward from beyond the forward estimates to expedite the return of water to the environment in the Murray‑Darling Basin.
- Other Economic Affairs — the completion by the Bureau of Meteorology of the tsunami warning system and enhancements to meteorological radar systems in 2008‑09. From 2009‑10, net capital investment declines primarily reflecting the expected completion of the development stage of the 'Systems for People' IT program within the Department of Immigration and Citizenship.
Table 21 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
Trends in Australian Government Staffing
Trends in the estimated annual average staffing level (ASL)1 for all agencies in the Australian Government general government sector are reported in Table 1 below. These data provide a summary 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 significant growth in the number of ASL (19 per cent, or over 40,000). Table 1 also shows that, following sharp increases in 2006‑07 and 2007‑08 (around 10,000 ASL year on year), growth since 2007‑08 has been relatively moderate (around 2.1 per cent).
Table 22: Estimates of Average Staff Levels (ASL)
While the 2008‑09 Budget Papers estimated a slight decrease in ASL in 2008‑09 (reporting 247,081), the expected ASL outcome for 2008‑09 is approximately 2,300 higher. The 2009‑10 Budget is expected to result in a modest net increase of around 2,750 ASL (1.1 per cent) across the general government sector.
Appendix C5 provides details of ASL at the portfolio and agency level.
1 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).
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