Document Index Budget Paper 2

Part III: Capital Measures

Table 5: Capital Measures since MYEFO^(a)

Totals may not add due to rounding.
* Measure affects more than one portfolio.

Measures Introduced in the 1999-2000 Budget

Data Protection in the Private Sector

Capital ($m)

Explanation

As an integral part of its decision to provide national privacy protection in the private sector, the Government will provide an equity injection to the Human Rights and Equal Opportunity Commission (HREOC).

This equity injection into HREOC will be funded from a reduction in the price of outputs in the Attorney-General’s Department and is, therefore, budget neutral. It will be used for the essential property fitout to accommodate the staff undertaking this role.

See also the related expense measure under the Attorney-General’s portfolio titled Data Protection in the Private Sector.

Tough on drugs - increased search capacity and purchase of x-ray technology to enhance capacity for drug detection at the nation's borders

Capital ($m)

Explanation

The Government has decided to provide an equity injection to invest in latest x-ray technology to improve illicit drug detection, extending the capacity of Customs to examine full shipping containers.

An enhanced x-ray search capacity will allow Customs to:

• better identify which cargo should be subject to physical examination;

• target which part of the container should be searched, minimising the time required to examine the cargo; and

• improve the rate and quality of examinations performed on high risk consignments.

See also the related expense measure under the Attorney-General’s portfolio titled Tough on drugs - increased search capacity and purchase of x-ray technology to enhance capacity for drug detection at the nation's borders.

Building Repairs and Exhibitions - National Science and Technology Centre

Capital ($m)

Explanation

The Government will provide an equity injection to the National Science and Technology Centre to fund essential building repairs and maintenance necessary to halt the deterioration in its structural assets and for the repairs and maintenance of exhibitions which, in their current state, have passed their useful life.

Building repair and exhibition development

Capital ($m)

Explanation

The Government will provide an equity injection to the Australian National Maritime Museum to fund essential building maintenance necessary to halt deterioration in structural assets and for the replacement of exhibitions which are past their useful life.

Phasing out of the Higher Education Equity Merit Scholarship Scheme

Capital ($m)

Explanation

The Government has decided to phase out the Higher Education Equity Merit Scholarship Scheme from the 2000 academic year. To ensure current scholarship holders are not disadvantaged, the Government has decided that the measure will not affect scholarships already awarded.

Students who may otherwise have received a scholarship are expected to participate in the Higher Education Contribution Scheme (HECS). The income-contingent, interest free, deferred payment arrangements available under HECS are an appropriate means of ensuring that disadvantaged students are not discouraged from participating in higher education.

Further Information

Deferral of HECS debts by these students represents an increase in receivables by the Commonwealth. It is shown in financial statements as a capital appropriation, as set out in the above table.

See also the related revenue and expense measures under the Education, Training and Youth Affairs portfolio titled Phasing out of the Higher Education Equity Merit Scholarship Scheme.

Flood Damage Repairs Norfolk Island

Capital ($m)

Explanation

The Government will provide a $3.5 million equity injection in 1999-2000 to repair the main access and other associated roads to Norfolk Island National Park so it can be reopened to the public. Major flood damage in August 1998 forced the permanent closure of the roads.

Equity - Family and Community Services

Capital ($m)

Explanation

The Government is providing an equity injection to the Department of Family and Community Services for the purchase of computer and office equipment, and software requirements, to support the implementation of certain approved measures.

Tax Reform Package

Capital ($m)

Explanation

The Government is providing equity injections to purchase computer and office equipment, and software requirements to support the introduction and implementation of A New Tax System.

This measure delivers on the Government’s election commitment in Not A New Tax – A New Tax System.

Capital ($m)

Explanation

The Government is providing an equity injection to Centrelink for capital purchases to support the implementation of certain approved measures.

Commercialisation of Property Portfolio - Equity Injection

Capital ($m)

Explanation

The Government has decided to provide an equity injection of $37.5 million to fund the refurbishment of the Treasury Building in the Parliamentary Triangle in Canberra. In addition, a $4.5 million equity injection for the Treasury Building is being provided in 1998-99. An equity injection of $36 million has also been provided to meet essential remediation, including Year 2000 compliance and Occupational Health and Safety works necessary to maintain and prepare a large number of Special Purpose and Industrial and Public Interest Estate properties for commercialisation, including sale in some instances.

The Government has also agreed to an equity injection of $73.7 million to fund the construction of a new law court in Adelaide to house the Federal Court, High Court and Family Court.

Further Information

The refurbishment of the Treasury Building was to have been funded through instalment purchase financing. Subsequent analysis of the net present value of the costs of the refurbishment showed that the use of an equity injection is more cost effective than the instalment purchase arrangement previously proposed.

Adelaide is the only State capital without a purpose built Commonwealth courts building. Pursuant to the Commonwealth property principles, ownership of court buildings is in the public interest. This project will provide increased employment opportunities in South Australia and contribute to accessibility to justice.

See the related capital measures under the Finance and Administration portfolio titled Commercialisation of Property Portfolio – Equity Repayment and Commercialisation of Property Portfolio – Payment of Notional Tax and Dividends, and the expense measure titled Commercialisation of Property Portfolio – Reduction in price of outputs.

Commercialisation of Property Portfolio - Equity Repayment

Capital ($m)

Explanation

The Department of Finance and Administration will make an equity repayment to the Budget of some $717.7 million net over the four years (1999-2000 to 2002-03) from its administration of the domestic and overseas property estates. This reflects the Government’s aim to achieve a commercial rate of return on its property portfolio. An additional $10 million return will be made in 1998-99.

Further Information

These repayments will be funded in 1999-2000 to 2002-03 from:

• asset divestments of $564.7 million; and

• surplus cash of $153 million.

See also the related capital measures under the Finance and Administration portfolio titled Commercialisation of Property Portfolio – Equity Injection and Commercialisation of Property Portfolio – Payment of Notional Tax and Dividends, and the expense measure titled Commercialisation of Property Portfolio – Reduction in price of outputs.

Return of surplus cash from Business Services Reserve and Removals Australia

Capital ($m)

Explanation

The Department of Finance and Administration will make an equity repayment to the Budget from surplus cash from the Business Services Reserve following the sales and wind up of residual issues from the former commercial business units of the former Department of Administrative Services. Removals Australia will also make an equity repayment from cash which is surplus to the amount necessary for its effective business operations and cash management operations.

This measure has no impact on the operating result or the consolidated balance sheet; it is a transfer of equity back to the Commonwealth.

Further Information

The business units of the former Department of Administrative Services which comprise the Business Services Reserve were: Works Australia, the Department of Administrative Services Interiors Australia, the Department of Administrative Services Distribution, DASFLEET, Asset Services, the Australian Property Group, the Department of Administrative Services Centre for Environmental Management and Australian Operational Support Services.

Commercialisation of Property Portfolio - payment of notional tax and dividends

Capital ($m)

Explanation

The adoption of commercial practices in the management of the Commonwealth’s Property portfolio will allow the Department of Finance and Administration to make notional tax and dividend payments to the Budget. These payments will be made from the surplus thereby generated, and are classified as equity repayments rather than expenses.

This measure would be offset by the extent of supplementation to some agencies for the payment of commercial rents. Supplementation for those agencies would be by way of a variation of the estimates for the relevant agencies.

See also the related capital measures under the Finance and Administration portfolio titled Commercialisation of Property Portfolio – Equity Repayment and Commercialisation of Property Portfolio – Equity Injection, and the expense measure titled Commercialisation of Property Portfolio – Reduction in price of outputs.

Equity – Sale of Removals Australia

Capital ($m)

Explanation

The Government recently announced that it has decided to sell the Commonwealth’s removals and relocations business, Removals Australia.

In 1997-98, Removals Australia returned an operating profit of $2.5 million and achieved an annual turnover of $95 million.

The sale, which will occur by way of open tender, will be managed on behalf of the Commonwealth by the Office of Asset Sales and IT Outsourcing.

Financial details concerning the sale will not be disclosed in keeping with the Government’s confidentiality provisions.

Further Information

Removals Australia, a business unit of the Department of Finance and Administration, is a relocations brokerage business servicing government acting purely as broker liaising between clients and service providers, rather than conducting removals itself.

Capital ($m)

Explanation

As an integral part of the decision to open an Australian Consulate-General, including an AusAID office, in Dili, East Timor, the Government has provided an equity injection for the acquisition of non-current assets for the mission and for the Australian policy liaison office to be established in Lisbon, Portugal. The main asset purchases will be office fitout, communications and office equipment, furniture (office and residential), and motor vehicles.

See the related expense measure in the Foreign Affairs and Trade portfolio titled Opening of an Australian Consulate-General in East Timor and an Australian Policy liaison Office in Lisbon and the capital and expense measures in the Immigration and Multicultural Affairs portfolio titled Establish an immigration presence at the Australian Consulate-General in East Timor.

Opening of Australian Embassy in Zagreb

Capital ($m)

Explanation

As an integral part of the decision to open an Australian Embassy in Zagreb, Croatia, the Government has provided an equity injection for the acquisition of non-current assets for the mission. The main asset purchases will be office fitout, communications and office equipment, furniture (office and residential), and motor vehicles.

For further information see the related expense measure under the Foreign Affairs and Trade portfolio titled Opening of Australian Embassy in Zagreb.

Establish an immigration presence at the Australian Consulate-General in East Timor

Capital ($m)

Explanation

The Government has decided to open an Australian Consulate-General in Dili, East Timor. It is expected that, once the Consulate-General is open, a significant demand for immigration services will emerge. The Government has determined that an immigration presence is desirable to meet this anticipated demand.

Further Information

The equity injection will be used for set up costs (such as computers and IT equipment and residential furnishings).

See also the related expense and capital measures in the Foreign Affairs and Trade portfolio titled Opening of an Australian Consulate-General in East Timor and an Australian Policy liaison Office in Lisbon.

Sale of Australian Industry Development Corporation shares in Optus

Capital ($m)

Explanation

The payment to the Commonwealth is a return of capital by the Australian Industry Development Corporation (AIDC) following the sale of shares held by the AIDC in Cable & Wireless Optus (CWO). When the listing of CWO was announced in November 1998, the proceeds from the sale of the CWO shares was estimated at $70 million. The increase in share values will return some $90 million from this sale. The Government has requested the AIDC to repay the additional $20 million in 1999-2000 as a return of equity.

Civil Aviation Safety Authority restructuring

Capital ($m)

Explanation

Funding of $8.0 million is being provided in each of 1998-99 and 1999-2000 to finance a major organisational restructure. The restructure will improve CASA's performance through the establishment of clearer lines of accountability, transparency of responsibility and the introduction of new skills and capabilities. This funding is to be repaid from savings which will come from an anticipated reduction in overall establishment positions and improved productivity.

Establishment of the Australian Office of Financial Management

Capital ($m)

Explanation

The Government will establish a new specialist agency, the Australian Office of Financial Management (AOFM), within the Treasury portfolio. The investment in specialist financial management computer software and hardware is necessary to support the operations of this new agency.

The Government will make a capital injection to fund the acquisition of computer equipment for the AOFM.

Further Information

See also the related expense measure under the Treasury portfolio titled Establishment of the Australian Office of Financial Management.

Business taxation reform

Capital ($m)

Explanation

The Government’s reform of business taxation will require the establishment of a legislative basis and supporting administrative systems. The equity injection provided for under this measure will enable the ATO to undertake the capital expenditure necessary to develop this capability.

This measure delivers on the Government’s election commitment in Not A New Tax – A New Tax System.

Equity injection for A New Tax System initiatives

Capital ($m)

Explanation

The Government’s various reform initiatives under A New Tax System will require the establishment of a legislative basis and supporting administrative systems. These systems will involve the creation of major infrastructure items (eg system for new withholding tax arrangements, Australian Business Number register). The equity injection provided for under this measure will enable the ATO to undertake the capital expenditure necessary to develop this capability.

This measure delivers on the Government’s election commitment in Not A New Tax – A New Tax System.

Centenary Project - Outstanding Rolls for Overseas and Peacekeeping Services and Related Mortality/Health Studies

Capital ($m)

Explanation

The Government will fund the development of a database to ensure that information on those who have served in Australia’s defence forces in wars and conflicts is accessible in electronic and printed forms. The database is to be completed by 2003.

Measures Introduced up to the 1999-2000 Budget

National Illicit Drug Strategy - early intervention and diversion

Capital ($m)

Explanation

This measure provides an equity injection to the Australian Federal Police for the purchase of equipment required to implement initiatives to control the supply of illicit drugs. The initiatives are part of a cross-portfolio package totalling $221 million.

See also the following related NIDS expense measures:

• National Illicit Drug Strategy - early intervention and diversion under the Health and Aged Care portfolio;

• National Illicit Drug Strategy - Additional funding for drug treatment under the Health and Aged Care portfolio;

• Enhancement of the National School Drug Education Strategy under the Education, Training and Youth Affairs portfolio;

• Tough on drugs - four mobile strike teams under the Attorney-General’s portfolio;

• Tough on drugs - increased search capacity and purchase of x-ray technology to enhance capacity for drug detection at the nation's borders under the Attorney-General’s portfolio,

and the following related capital measure:

• Tough on drugs - increased search capacity and purchase of x-ray technology to enhance capacity for drug detection at the nation's borders under the Attorney-General’s portfolio.

Internet access for Senators' and Members' of Parliament electorate offices to improve service delivery to the community

Capital ($m)

Explanation

The Government will provide Senators’ and Members’ electorate offices with a research facility through the Internet that will give them better access to information on a local, national and international level. In addition, Internet access will improve the service delivery provided to electorate offices allowing:

• Senators, Members and their staff to lodge entitlement claims, such as leave, travel, overtime etc, electronically rather than through the current cumbersome paper-based process;
• Senators and Members to generate reports on their entitlements usage automatically at any time; and
• video and audio feeds from Parliament House to be distributed should this be required in the future.

This capital is being funded by a reduction in the price of the Department of Finance and Administration’s outputs during 1999-2000.

See also the related expense measure under the Finance and Administration portfolio titled Reduction in the Department of Finance and Administration's price of outputs.

A New Tax System - advances to balance State and Territory budgets

Capital ($m)

Explanation

At the 1999 Premiers’ Conference, the Commonwealth, States and Territories signed the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Arrangements. The Agreement will facilitate the implementation of the reforms proposed in the Commonwealth’s A New Tax System. The new arrangements will provide the States and Territories with all of the revenue from the GST, which will replace the existing financial assistance grants and allow them to remove a range of inefficient taxes.

As foreshadowed previously by the Commonwealth, the Agreement provides for transitional financial assistance to be paid to the States and Territories, in the form of a loan in the first year of reform and grants thereafter, to meet the Commonwealth’s guarantee that the budgetary position of each State and Territory will be no worse off in the initial years following the introduction of the GST.

The loans to be paid to the States and Territories in 2000-01 will be on interest-free terms and repaid to the Commonwealth in the following year.

At the Premiers’ Conference on 9 April, the Commonwealth agreed to allocate additional funding for its guarantee to the States and Territories in relation to:

• the impact on State and Territory budgets over the first three years of reform of the abolition of Wholesales Sales Tax equivalent payments by Government business enterprises; and

• ensuring that the States and Territories will not be disadvantaged over the first three years of reform by the Commonwealth’s undertaking that local government will benefit from the impact of changes to indirect taxes through lower prices on their purchases.

The Commonwealth also agreed to more generous arrangements for guarantee grants in the third year of reform, so that States and Territories with gains to their budgets in that year may retain all of those gains and the Commonwealth will fund those States and Territories with budget shortfalls.

Further to the additional assistance described above, the Commonwealth agreed at the Premiers’ Conference to provide separately extra funding to the States and Territories to meet higher State public housing costs resulting from tax reform (subject to the resolution of the new Commonwealth-State Housing Agreement).

See also the related expense measure under the Treasury portfolio titled A New Tax System – grants to balance State and Territory budgets.

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