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In 2001-02, forecast net capital investment has fallen by $856 million since the 2000-01 MYEFO, largely reflecting delays in property sales of $362 million from 2000-01 into 2001-02 and a reallocation of capital expenditure to expenses by the Department of Defence. New policy decisions since the 2000-01 MYEFO have led to a reduction in estimated net capital investment of $136 million in 2001-02.
Net capital investment estimates for the period from 2000-01 to 2004-05 are provided in Table 18.
Net capital investment reflects the change in the balance sheet value of non-financial assets (for example: property, plant and equipment), excluding investment in specialist military equipment which is disclosed as an expense.
Table 18: Estimates of total Commonwealth general government net capital investment
(a) As published in the 2000-01 MYEFO on a GFS basis. The corresponding estimates reported in the 2000-01 Budget were on an Australian Accounting Standard No. 31 (AAS31) basis.
(b) Real growth is calculated using the non-farm gross domestic product (GDP) deflator.
Net capital investment is expected to decrease by around $1.2 billion in 2001-02 and fall by a further $866 million over the forward years, largely reflecting the Department of Defence's ongoing property sales programme.
The change in estimated net capital investment from 2000-01 to 2001-02 largely reflects the sale of telecommunications spectrum licenses by the Australian Communications Authority in 2000-01 partly offset by a slippage of Defence property sales from 2000-01 to 2001-02.
Table 19 provides a reconciliation of the 2001-02 Budget, 2000-01 MYEFO and 2000-01 Budget net capital investment estimates, showing the effect of policy decisions and economic parameter and other variations since the estimates were published in the 2000-01 Budget.
Table 19: Reconciliation of Commonwealth general government net capital investment
Policy decisions since the 2000-01 MYEFO affecting net capital investment estimates include: 1
These new policy initiatives will be offset in 2001-02 by an expansion of the Department of Defence's property sales programme, which will increase sales revenue in 2001-02. This additional sales revenue will be offset, in part, by rental supplementation for those properties leased back by Defence.
Since the 2000-01 MYEFO, parameter and other variations have led to a reduction in estimated net capital investment of around $720 million in 2001-02. Variations in the Budget and forward years are largely due to:
Table 20 provides estimates of Commonwealth general government net capital investment by function for the period 2000-01 to 2004-05.
Table 20: Estimates of Commonwealth net capital investment by function
The movement in net capital investment from 2000-01 to 2001-02 largely reflects the sale of telecommunications spectrum by the Australian Communications Authority in 2000-01 (Transport and communications) and a re-phasing and acceleration of Defence's property sale programme in 2001-02 (Defence). Other contributors to movements in net capital investment include:
1 In the calculation of net capital investment, proceeds from the sale of non-financial assets are subtracted from the purchases of non-financial assets. Consequently, an increase in the proceeds from the sale of non-financial assets reduces net capital investment and increases the fiscal balance.
2 An adjustment had previously been made in the Contingency Reserve to reflect an initial conservative bias in agencies' forward net capital investment. However, with the bedding down of the accrual budgeting framework, agencies have now developed robust asset replacement strategies that remove the need for this adjustment.