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 decline in 2007-08 following a significant peak in 2006-07. Estimates of net capital investment, net of non-financial asset sales and depreciation, remain significantly positive over the forward estimates period to 2010-11 (Table 18).
Table 18: Estimates of total net capital investment
- As published in the Mid-Year Economic and Fiscal Outlook 2006-07.
- Real growth is calculated using the non-farm GDP deflator.
A reconciliation of the 2006-07 Budget, 2006-07 MYEFO and 2007-08 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2006-07 Budget, is provided in Table 19.
Table 19: Reconciliation of net capital investment
In 2007-08, forecast net capital investment has increased by $693 million since the 2006-07 MYEFO. This increase is due to the combined effect of new policy decisions of $352 million and parameter and other variations of $341 million.
Discussion of changes between the 2006-07 MYEFO and the 2007-08 Budget, shown in the table above, can be found in Statement 2 (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 2007-08.
Estimates for Australian Government general government net capital investment by function for the period 2006‑07 to 2010-11 are provided in Table 20.
Table 20: Estimates of net capital investment by function
Net capital investment of $2.0 billion is expected in 2006-07, largely reflecting several major projects, including — 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 Administration; 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; and various Defence capital projects.
Net capital investment is expected to decline in 2007-08 following a significant peak in 2006-07 as a result of the progressive conclusion of various construction projects including the Christmas Island Immigration Reception and Processing Centre. It also reflects the finalisation of a significant overseas land purchase 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.
Significant factors contributing to net capital investment by function include:
- General Public Services — the investment by the Department of Finance and Administration in its property portfolio, including construction of the National Portrait Gallery and the new accommodation for the Australian Security Intelligence Organisation and the Office of National Assessments, and the refurbishment of the Royal Australian Mint building;
- 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 in Holsworthy, New South Wales, the Royal Australian Air Force bases in Amberley, Queensland, East Sale, Victoria, Wagga Wagga, New South Wales, and the Royal Australian Navy base in Cairns, Queensland;
- Public order and safety — investment by the Australian Security Intelligence Organisation in information technology and expansion of infrastructure to support growth in staff and operations and increasing technical and surveillance capability for national security-related purposes, as well as improvements in office accommodation. Also, investment by the Australian Federal Police in information technology and fit out of purpose-built office, operational and training facilities to accommodate all elements of the Unified Policing Model at airports. The capital investment associated with the Unified Policing Model forms part of the Government's response to the Wheeler Report into airport security and policing arrangements;
- Health — continuing investment in the National Medical Stockpile in 2006-07 and 2007-08 to protect against possible disease outbreaks such as pandemic influenza or biosecurity incidents;
- Social security and welfare — the investment in general information technology infrastructure in Centrelink and information technology related investment for the health and social services access card in Centrelink and the Department of Human Services;
- Housing and community amenities — adjustments to Defence Housing Australia's (DHA) property portfolio including, increased inventory holdings due to fewer property sales, variations to the forecast sale and leaseback programme and changes to DHA's capital programme for construction and replacement of Australian Defence Force housing;
- Recreation and culture — investment by the Australian Broadcasting Corporation for replacing and upgrading its technical asset base, the refurbishment of the National Gallery of Australia and the National Library of Australia buildings, and capital acquisitions to fit out the National Archives of Australia new storage facility; and
- Other economic affairs — the continuing development of information technology systems to ensure well trained and supported staff for the Department of Immigration and Citizenship and the continuing upgrade and replacement of various meteorological radar in the Bureau of Meteorology's radar network, as well as the upgrade of computer infrastructure, satellite receiving stations for imagery and data, and a radar rainfall network (as part of the National Plan for Water Security measure).