2003-04 Commonwealth Budget – Budget Paper No. 1

General government net capital investment

In 2003-04, forecast net capital investment has increased by $51 million since the 2002-03 MYEFO. This increase is largely due to new policy decisions that increase net capital investment by $65 million, including funding to increase Centrelink's capacity to deliver services online.

Net capital investment estimates for the period from 2002-03 to 2006-07 are provided in Table 18.

Table 18: Estimates of total net capital investment

As published in the Mid-Year Economic and Fiscal Outlook 2002-03.
Real growth is calculated using the non-farm gross domestic product (GDP) deflator.

Negative net capital investment of $417 million is expected in 2003-04, largely reflecting the ongoing property sales programmes of the Department of Defence and the Defence Housing Authority (DHA).

Reconciliation of net capital investment since the 2002-03 Budget

Table 19 provides a reconciliation of the 2002-03 Budget, 2002-03 MYEFO and 2003-04 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2002-03 Budget.

Table 19: Reconciliation of net capital investment

Policy decisions

Policy decisions since the 2002-03 MYEFO affecting net capital investment estimates include a number of initiatives associated with the improved security and border control arrangements:

additional funding of $55.2 million over four years for the construction of the Christmas Island Immigration Reception and Processing Centre, with the funding being provided to the Department of Finance and Administration (to oversight construction) and the Department of Transport and Regional Services (DoTRS - to construct services infrastructure). The Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) will manage the completed centre;

provision of $5.6 million to DIMIA to enhance fire compliance and detainee management options at the Baxter immigration detention facility (near Port Augusta) and to support alternative detention arrangements for those considered at risk;

provision of $13.1 million over three years to the Department of Finance and Administration for the refurbishment and enhancement of the Ministerial Communications Network to ensure a secure, reliable and up-to-date communications network, particularly given the current heightened security environment;

provision of $3.5 million to the Australian Secret Intelligence Service in 2003-04 to sustain and further enhance Australia's counter-terrorism capability;

provision of $3.3 million in 2003-04 and 2004-05 to DoTRS to meet the fitout and information technology costs involved in implementing the International Maritime Organisation's new International Ship and Port Facility Security Code;

provision of $7.9 million over four years to DIMIA to enhance and develop systems to more accurately verify the identity of persons of concern thereby reducing the risk of unlawful entry to Australia;

provision of $9.9 million in 2003-04 to the Department of Foreign Affairs and Trade for the infrastructure and support costs for an expansion of Australia's secure diplomatic network to cover an additional 23 locations in Australia and overseas; and

provision of $11.1 million to the Australian Nuclear Science and Technology Organisation in 2003-04 and 2004-05 to enhance the security of its facility.

Other policy decisions since the 2002-03 MYEFO affecting net capital investment estimates, include:

$120.7 million over five years ($105.7 million over the Budget and three forward years and $15 million in 2007-08) for Centrelink to purchase hardware and develop software to ensure information technology reliability and improve service delivery;

$3.9 million to Centrelink to facilitate specific improvements in information technology-based service delivery: $1.5 million (over 2003-04 and 2004-05) for the development of software and addition of storage capacity to support an increase in investigations into identity fraud; $0.4 million in 2003-04 for the development of software to improve the operation of the Assurance of Support Scheme; $1.8 million in 2003-04 for the purchase of equipment and development of software to facilitate the monitoring of concessional pharmaceutical benefits entitlements; and $0.2 million in 2003-04 to equip 50 new Centrelink access points in rural and remote Australia;

$48.4 million over five years (including $9.6 million in 2007-08) for a Bureau of Meteorology asset replacement programme which will enable the Bureau to maintain and enhance its meteorological forecasting capacity. The Bureau will purchase fifteen new meteorological radars as replacements for its oldest radar assets, and a further six selected radars with enhanced Doppler capability;

$67 million capital works programme (from 2003-04 to 2006-07) for the Sydney Harbour Federation Trust. This is part of the eight year, $115.5 million Commonwealth contribution to the Trust's business masterplan for remediation and rehabilitation of the Trust's Sydney Harbour properties, to protect and conserve environmental and heritage values of Trust lands and enhance public access to sites;

$37.6 million over four years for refurbishment or construction or rectification at a variety of Australian overseas posts: Geneva, Baghdad, New Delhi, Paris, Washington and Wellington. The bulk of this investment will be funded by the Department of Foreign Affairs and Trade.

In addition to the costs mentioned above, depreciation flows associated with these projects would also have an impact on the overall level of net capital investment.

Parameter and other variations

Since the 2002-03 MYEFO, parameter and other variations have led to an decrease in estimated net capital investment of $14 million in 2003-04. Variations in the Budget and forward years are largely due to:

revised forecasts of proceeds from planned Defence property sales; and

revised levels of net property investment proceeds from the DHA.

Net capital investment estimates by function

Table 20 provides estimates for Commonwealth general government net capital investment by function for the period 2002-03 to 2006-07.

Table 20: Estimates of net capital investment by function

Net capital investment is expected to fall between 2002-03 and 2003-04. This is partially offset by net increases between 2002-03 and 2003-04 for the Defence and Housing and Community Amenities functions reflecting higher inventory purchases by Defence, offset by lower expected property sales, and the DHA's building and sales programme, as well as a net increase for the General Public Services Function.

Most of the remaining functions are expected to record positive net capital investment in 2003-04, including:

General Public Services, for the investment by the Department of Finance and Administration for its property portfolio including construction of the Adelaide Law Courts building; investment by the Australian Nuclear Science and Technology Organisation in a new nuclear reactor at Lucas Heights, refurbishing of overseas posts by the Department of Foreign Affairs and Trade and updating of secure communications systems;

Public Order and Safety, for investment in equipment and facilities by the Australian Customs Service and the Australian Federal Police;

Health, for investment in information technology infrastructure by the Department of Veterans' Affairs and the Health Insurance Commission;

Social Security and Welfare, for investment in information technology infrastructure for Centrelink;

Recreation and Culture, for implementation of the masterplan for rehabilitation and remediation of Sydney Harbour Federation Trust sites, the completion of ABC building works at East Perth, the divestment of ABC properties at Adelaide Terrace in Perth and at Gore Hill in Sydney, the ongoing digital television conversion programme being carried out by the ABC and SBS, and capital works at the Australian Institute of Sport;

Transport and Communications, for the construction of common use infrastructure by the Department of Transport and Regional Services, to support the Asia Pacific Space Centre project on Christmas Island; and

Other Economic Affairs, for investment by the Bureau of Meteorology in replacing older equipment with new meteorological radars and the construction of the Christmas Island Immigration Reception and Processing Centre.