Statement 6: Expenses and Net Capital Investment1
Overview
The Government is committed to holding real spending growth to 2 per cent a year as part of the fiscal strategy. Consistent with this commitment, real growth in cash payments over the forward estimates is expected to be 0.5 per cent in 2011‑12, negative 0.1 per cent in 2012‑13, 1.9 per cent in 2013‑14 and 1.9 per cent in 2014‑15.
Australian Government general government sector accrual expenses are expected to grow by 1.2 per cent in real terms in 2011‑12. Total expenses are expected to decrease as a percentage of GDP over the forward estimates. Average real growth in expenses over the forward estimates is 1.5 per cent.
Table 1: Estimates of general government sector expenses
- Real growth is calculated using the Consumer Price Index.
The historically low rates of real growth reflect a combination of the withdrawal of the Government's stimulus spending and the Government more than offsetting all new spending proposals.
Growth in cash payments can differ from accrual expenses due to the inclusion of capital investment in cash payments, along with timing differences between when expenses and cash payments are recorded.
The difference in real growth in expenses in 2013‑14 from the growth in cash payments largely reflects the recognition of the accrual expenses for the Natural Disaster Relief and Recovery Arrangements in 2013‑14 consistent with the expected timing of the lodgement of claims by the States and their consideration by the Commonwealth. In contrast, cash payments are being reported in 2010‑11 and 2011‑12, reflecting the timing of payments to Queensland and Victoria.
1 The figures in this statement are presented on an accrual basis and may differ from cash payments. The difference between the two approaches is because expenses are recorded when they are incurred (for example when the good or service is received) while payments are reported when the cash is exchanged.
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