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Chapter 3

CAPITAL INVESTMENT PROGRAM

This chapter discusses investment in Defence capability through the development and acquisition of major equipment, the provision of buildings and infrastructure, and the purchase of other capital items. This chapter should be read in conjunction with Volume Two—Defence Materiel Organisation.

Capital Receipts (+$36.5M)

The capital receipts program comprises proceeds from property sales which are returned to the Government in the form of equity, and proceeds from the sale of specialised military equipment and commercial vehicles, and other plant and equipment items which are retained by Defence under the Section 31 Agreement.

Net capital receipts for 2005–06 totalled $61.4m, or $36.5m more than the revised estimate. Details are shown in Table 3.8 with an explanation of the variations for each category detailed below.

Property Sales (–$32.9m)

In 2005–06, Defence received $44.0m from the sale of property, which was $32.9m below the revised estimate of $76.9m. This was due to a number of factors, including additional time required to consider State Government priority sale proposals.

Net proceeds of $27.6m were returned to the Government, and $16.4m was retained by Defence to meet disposal costs.

Table 3.8 Defence Capital Receipts 2005–06
  Budget Estimate Revised Estimate Actual Result Variance
Category $m $m $m $m
Proceeds from the sale of land and buildings 88.6 76.9 44.0 –32.9
Less: Capital withdrawal (Net proceeds returned to Government) –70.2 –58.5 –27.6 30.9
Proceeds retained by Defence from sale of land and buildings 18.4 18.4 16.4 –2.0
Revenue from sale of housing – – 19.9 19.9
Less: Capital Withdrawal (net proceeds returned to Government) – – –19.9 –19.9
Proceeds retained by Defence from the sale of housing – – – –
Proceeds from sale of specialist military equipment – – 0.3 0.3
Proceeds from sale of other property, plant and other equipment 6.5 6.5 44.7 38.2
Net Capital Receipts 24.9 24.9 61.4 36.5

Sale of Defence Housing and Annuity (+0m)

Defence received $19.9m from the sale of annuities by the Defence Housing Authority in 2005–06. As required under the Section 31 Agreement that came into effect at the start of 2005–06 Defence has returned these proceeds to Government.

Proceeds from sale of Specialist Military Equipment (+$0.3m)

Defence realised $0.3m from the disposal of Specialist Military Equipment, which included the disposal of eight Container Load Trailers and a 38' Riviera from the VIP Boat Squadron.

Proceeds from sale of Other Property, Plant and other equipment (+$38.2m)

The 2005–06 result was $38.2m more than the revised estimate due to the proceeds for commercial vehicle sales being returned to Defence from the DMO.

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