Defence: Asset Sales

Mr Beazley asked the Minister representing the Minister for Defence, upon notice, on 30 May 2002:

1. What has been budgeted for, and what outcomes achieved, from the sale of Defence assets in each Budget from 1996-97 to date.
2. What is budgeted for in 2002-2003.
3. In which years has Defence been permitted to retain a proportion of the value of the sales.
4. What was the anticipated return to consolidated revenue in each Budget.
5. What was the actual return.

Mrs Vale - The Minister for Defence has provided the following answer to the honourable member's question:

1. The budgeted plan and subsequent cash proceeds relating to sales over this period are provided in the Portfolio Budget Statements, Portfolio Additional Estimates Statements and Defence Annual Reports relating to those years.
2. Total forecast cash proceeds from asset sales (including property) in the 2002-03 year are $699.8 million.
3. For the period 1996-97 to 1999-2000 Defence operated under a regime whereby it could retain any asset sale proceeds up to a ceiling set at 1% of its total funding envelope.
   
   Defence was permitted to retain the benefit of all its sale activity over the period 1996-97 to 1999-2000 as these proceeds were under the threshold. While the budgeting framework in place over this period did not permit re-spending of funds that were not technically appropriated, the proceeds were used in negotiating Defence's 'net' call on Government resources.
   
   In 2000-01, the 1% ceiling approach was modified to reflect the significant planned property disposal program arising from the Joint Defence/Department of Finance and Administration property review. The proceeds from a subset of the property sales program were to be returned in entirety to consolidated revenue, another subset retained by Defence and, for the remainder, Defence was permitted to retain proceeds from its ongoing asset sales activity (subject to the 1% ceiling).
   
   In 2001-02, it was agreed that Defence could retain a specific targeted amount reflecting the planned property and Information Technology asset disposal program.
   
   In 2002-03, the defined target for return to the Official Public Account is $659.5 million from the sale of Defence owned properties. Any sale proceeds exceeding this amount can be retained by Defence.
4. Over the period 1996-97 to 1999-2000, in line with the 1% retention rule, no returns of sale proceeds from the asset sales program were forecast in the preparation of estimates as proceeds were below the threshold.
   
   For the 2000-01 and 2001-02 financial years returns to consolidated revenue at the Additional Estimates time were forecast at $480.2 million and $71.7 million respectively. The anticipated return to consolidated revenue in the 2002-03 Budget is $659.5 million.
5. As noted above no returns for the period 1996-97 to 1999-2000 were forecast, and no actual payments made, in line with the funding arrangements of those years.
   
   No payments were made to the Official Public Account in 2000-01 due to two factors. Firstly elements of the sales program were re-phased into future years with Government approval. Secondly, the sale proceeds of two significant properties (Defence Plaza buildings in Sydney and Melbourne) were paid directly to the Department of Finance and Administration by the purchaser and did not pass through the Defence financial accounts.
   
   In 2001-02, receipts of $97.2 million relating to the sale of the Hydrographic Office in Wollongong, NSW, Rockbank in Melton, Victoria and Campbell Park in the ACT, have been returned to Government.

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