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Statement 6: Expenses and Net Capital Investment

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Part I: Overview of General Government Expenses

Expenses are estimated to decrease by 5.5 per cent in real terms between 1999-2000 and 2000-01. They are projected to increase by 1.5 per cent in 2001-02, decrease by 0.1 per cent in 2002-03, and increase by 1 per cent in 2003-04.

Major movements within the estimates of expenses include a reduction in expenses for the Treasury portfolio as a result of revised Commonwealth-State financial arrangements introduced as part of The New Tax System. Under the new arrangements, Financial Assistance Grants to the States and Territories ($17.3 billion in 1999-2000) have been abolished as a result of the States and Territories receiving all the revenue from the Goods and Services Tax (GST).

This has been partly offset by the following:

Estimates presented in Table 1 above are disaggregated and more fully explained in Part III of this statement, which deals with Commonwealth Expenses and Capital Estimates by portfolio.

Reconciliation of Expenses since the 1999-2000 Budget

Table 2: Reconciliation of Commonwealth General Government
Expenses Estimates

(a) Excludes the public debt net interest effect of policy decisions.

Variations in expense estimates from the 1999-2000 Budget to Mid-Year Economic and Fiscal Outlook 1999-2000 (MYEFO) were discussed in the 1999-2000 MYEFO document. Since MYEFO, however, expenses increase by $1,678 million in 1999-2000 and by $4,059 million in 2000-01. In 2001-02 estimates increase by $4,789 million and, in 2002-03, by $4,984 million.

Policy Decisions

The effect of policy decisions since MYEFO has been to increase estimates in all years - by $25 million in 1999-2000, $872 million in 2000-01, $832 million in 2001-02 and $728 million in 2002-03. These movements are largely due to:

Parameter and Other Variations

Parameter and other variations since MYEFO have increased expenses by $1,654 million in 1999-2000, $3,188 million in 2000-01, $3,957 million in 2001-02 and $4,256 million in 2002-03. These variations are predominantly due to:

Other variations include:

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