General government net capital investment

In 2005-06, forecast net capital investment has increased by $605 million since the 2004-05 MYEFO. This increase is due to the combined effect of new policy decisions of $251 million and parameter and other variations of $354 million.

Net capital investment estimates for the period from 2004-05 to 2008-09 are provided in Table 18.

Table 18: Estimates of total net capital investment

1. As published in the Mid-Year Economic and Fiscal Outlook 2004-05.
2. Real growth is calculated using the non-farm gross domestic product (GDP) deflator.

Net capital investment of $652 million is expected in 2004-05, largely reflecting — various refurbishment/construction projects in the Department of Finance and Administration’s property portfolio (such as the construction of the Immigration Reception and Processing Centre on Christmas Island), as well as activities associated with the construction of a nuclear reactor by the Australian Nuclear Science and Technology Organisation; security enhancements of various overseas diplomatic missions, overseen by the Department of Foreign Affairs and Trade (this is partially offset by the re-phasing of land purchases for chanceries in Bangkok, Jakarta and Kuala-Lumpur from 2004-05 into 2005-06); purchase of equipment by the Australian Federal Police for activities in Papua New Guinea, as well as the establishment of a National Protection Operations Centre for Australian diplomats; purchase of biological and chemical agent screening equipment, cargo management information technology infrastructure and new container x-ray machines by the Australian Customs Service; and investment in computer equipment and software by Centrelink. These investments have been partially offset by property sales by the Department of Defence and the Defence Housing Authority.

Reconciliation of net capital investment since the 2004-05 Budget

Table 19 provides a reconciliation of the 2004-05 Budget, 2004-05 MYEFO and 2005-06 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2004-05 Budget.

Table 19: Reconciliation of net capital investment

Discussion of changes between the 2004-05 MYEFO and the 2005-06 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 2005‑06.

Net capital investment estimates by function

Table 20 provides estimates for Australian Government general government net capital investment by function for the period 2004-05 to 2008-09.

Table 20: Estimates of net capital investment by function

Net capital investment is expected to rise between 2004-05 and 2005-06. This primarily reflects: the construction of the Christmas Island Immigration Reception and Processing Centre, the construction and fit‑out of an extension to the Australian Security Intelligence Organisation’s Central Office building, and various other construction projects managed by the Department of Finance and Administration; investment by the Australian Nuclear Science and Technology Organisation in a new nuclear reactor; the acquisition of land and refurbishment/security upgrades of various overseas missions by the Department of Foreign Affairs and Trade; and investment in information technology by several departments (including rebuilding the superannuation business system for the Australian Taxation Office and the implementation of the Department of Veterans’ Affairs’ information technology application development framework). This is partly offset by receipts from property sales by the Department of Defence and the Defence Housing Authority.

After 2005-06, net capital investment is expected to steadily decrease. This results from the conclusion of various construction projects, as well as the progressive conclusion of the Department of Foreign Affairs and Trade’s overseas mission upgrades and various information technology-based projects.

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 Adelaide Law Courts building, construction and fit‑out of an extension to the Australian Security Intelligence Organisation’s Central Office building, and refurbishment of the Royal Australian Mint buildings and ANZAC Park East and West, investment by the Australian Nuclear Science and Technology Organisation in a new nuclear reactor at Lucas Heights, investment by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in new facilities under the CSIRO Infrastructure Plan, security enhancements, refurbishment and relocation of various overseas missions by the Department of Foreign Affairs and Trade, purchase of equipment by the Australian Federal Police for activities in Papua New Guinea and the Solomon Islands, and the provision of infrastructure in the Indian Ocean Territories by the Department of Transport and Regional Services;
• Public Order and Safety — the investment by the Australian Customs Service in additional cargo screening and x-ray equipment, cargo management information technology infrastructure, as well as equipment for the development of biometrics for border control;
• Health — the development of information technology systems associated with implementing the pharmaceutical provisions of the Australia-US Free Trade Agreement, developing a database register for a bowel cancer screening programme by the Department of Health and Ageing, and for investment in information technology infrastructure by the Health Insurance Commission for a range of measures, including the creation of eight new Medicare offices;
• Social Security and Welfare — the investment in information technology infrastructure for Centrelink;
• Housing and Community Amenities — adjustments to the Defence Housing Authority’s property portfolio, such as revisions to the estimated timing of certain property sales due to changes in the property market outlook;
• Recreation and Culture — the continuation of the facilities upgrade for the Australian Institute of Sport and ongoing capital works at the National Gallery of Australia, offset by the divestment of the Australian Broadcasting Corporation’s Gore Hill property in 2004-05 and the sale of radio broadcasting licences in 2004-05. There is also a capital injection in 2005-06 arising from the establishment of the Australian Communications and Media Authority, which follows a return of capital from the amalgamated agencies in 2004-05;
• Transport and Communications — the development of information technology systems including the replacement of the Australian Transport Safety Bureau’s aviation database and systems for the administration of AusLink; and
• Other Economic Affairs — the ongoing replacement and upgrade of various meteorological radars in the Bureau of Meteorology’s radar network, as well as the replacement of various meteorological field offices and the purchase of ocean tidal gauges (as part of the Tsunami Early Warning measure), and the upgrade and redevelopment of immigration detention facilities by the Department of Immigration and Multicultural and Indigenous Affairs.

---