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Infrastructure Statement 2005-06

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Infrastructure Statement 2005-06 Infrastructure Statement 2005-06 New South Wales Budget Paper No. 4 TABLE OF CONTENTS Introduction............................................................................................................... 1 Chapter 1: OVERVIEW 1.1 General .................................................................................................. 3 1.2 Value of Physical Assets ....................................................................... 3 1.3 Capital Expenditure ............................................................................... 5 1.4 Physical Asset Maintenance .................................................................. 8 Chapter 2: POLICIES 2.1 Planning .................................................................................................. 11 2.2 Asset Management and Procurement ..................................................... 16 2.3 Funding of Infrastructure Expenditure ..................................................... 18 2.4 Public Private Partnerships (PPP) .......................................................... 19 Chapter 3: GENERAL GOVERNMENT INFRASTRUCTURE EXPENDITURE 3.1 Overview ................................................................................................. 21 3.2 2004-05 Capital Expenditure ................................................................... 21 3.3 2005-06 Capital Expenditure ................................................................... 22 Chapter 4: PUBLIC TRADING ENTERPRISE INFRASTRUCTURE EXPENDITURE 4.1 Overview ................................................................................................. 37 4.2 2004-05 Capital Expenditure ................................................................... 38 4.3 2005-06 Capital Expenditure ................................................................... 39 Chapter 5: AGENCY PHYSICAL ASSETS AND CAPITAL EXPENDITURE PROGRAMS 5.1 Introduction ............................................................................................. 49 5.2 Actual Value of Physical Assets of Agencies as at 30 June 2004 ........... 51 5.3 General Government Sector Projects ..................................................... 54 5.4 Public Trading Enterprise Sector Projects ............................................... 113 Chapter 6: AGENCY CONTACTS ............................................................................. 139 INTRODUCTION In 2005-06, the State’s capital expenditure will increase by 15.2 percent to $8.2 billion. This level of capital expenditure is the highest ever in the State of New South Wales and continues the upward trend of prior years. Looking forward over the four years to 30 June 2009, the State’s capital expenditure is expected to total $34.7 billion. That is an increase of $8.1 billion, or more than 30 percent, compared with the $26.6 billion expenditure in the four years to June 2005. The $8.2 billion capital expenditure in 2005-06 will be partly funded by a net debt increase of $2.6 billion. In the four years to 30 June 2009, the capital expenditure of $34.7 billion will be partly funded by a net debt increase of $8.7 billion. The capital expenditure program represents planned expenditure at a point in time and, as with any plan, circumstances and priorities may change during the course of the financial year. In past years there have been moderate variations, both increases and decreases, between the budgeted capital expenditure and the actual outcomes. These variations reflect a range of factors including construction delays or advances due to weather conditions, planning delays, price movements varying from those forecast, and revisions to the scope of projects. Infrastructure Statement 2005-06 1 THIS PAGE LEFT BLANK INTENTIONALLY. 2 Infrastructure Statement 2005-06 CHAPTER 1: OVERVIEW 1.1 GENERAL The State’s infrastructure is procured and controlled by both the general government and public trading enterprise sectors. General government sector agencies provide essential public services such as health, education, transport (roads) and public order and safety. Most of the general government agencies are budget dependent. The public trading enterprise (PTE) sector provides major economic infrastructure such as water, power and public transport. Most of the PTE sector agencies have a commercial charter and generate revenue (through user charges) outside the Budget. Some PTEs (for example, the Department of Housing and Rail Corporation New South Wales) are provided with budget funding to undertake services required by the Government for social rather than commercial reasons. The State’s physical assets are valued at fair value, in accordance with accounting policies and standards. Where practicable, an asset’s fair value is measured at its highest and best use. An asset with no feasible alternative use may be valued at fair value for its existing use. A quoted market price for an asset in an active and liquid market is the best indication of fair value, but where this does not exist, market prices for similar assets can be used. Specialised assets are valued using the replacement cost of the remaining economic benefits. It is important to note that the economic benefits of most assets in the public sector do not depend on their ability to generate a net cash inflow. Historical data and forecasts in this Budget Paper are presented on an accrual basis in nominal dollars. 1.2 VALUE OF PHYSICAL ASSETS The State’s physical assets across all sectors are estimated to have a value of $167.8 billion as at 30 June 2005. As shown in Table 1.1, the general government sector ($81.2 billion) and the PTE sector ($86.6 billion) each control about half of the total physical assets. Infrastructure Statement 2005-06 3 The value of physical assets, net of depreciation, is expected to increase during 2005-06 by $1.1 billion in the general government sector and $1.3 billion in the PTE sector. Table 1.1: State Owned Physical Assets: Value by Sector 2002 2003 2004 2005 2006 As at 30 June Actual Actual Actual Estimate Budget $m $m $m $m $m General Government Sector 73,916 78,936 80,402 81,234 82,335 Public Trading Enterprise Sector 62,616 82,892 84,777 86,598 87,939 Public Sector Physical Assets 136,532 161,828 165,179 167,832 170,274 As demonstrated in Chart 1.1, the majority of these assets are land and buildings ($81.1 billion), infrastructure systems ($73.7 billion) and plant and equipment ($10.2 billion). Infrastructure systems include assets such as roads, bridges, sewerage systems, water supply and reservoirs, power generation plants and transmission lines. The value of infrastructure systems does not include the value of land under roads controlled by the Roads and Traffic Authority. The Australian Accounting Standards Board (AASB) has yet to issue guidance on an appropriate, reliable valuation methodology for these assets. Chart 1.1: State Owned Physical Assets: Distribution by Category as at 30 June 2005 Inventories and Other 1.7% Infrastructure Systems 43.9% Land and Buildings 48.3% Plant and Equipment 6.1% 4 Infrastructure Statement 2005-06 The control of the State’s physical assets is concentrated in a relatively small number of agencies. As shown in Chart 1.2, over 80 percent of the total physical assets are controlled by 16 agencies. Chart 1.2: State Owned Physical Assets: Distribution by Agency as at 30 June 2004 (a) Roads and Traffic Authority 21% Department of Housing 17% Department of Education & Training 9% Sydney Water Corporation 7% Rail Corporation 7% Department of Health 4% Crown Entity 3% Energy Australia 3% TransGrid 2% Rail Infrastructure Corporation 2% Macquarie Generation 2% Integral Energy 1% Country Energy 1% Delta Electricity 1% Eraring Energy 1% Department of Corrective Services 1% Other Agencies 18% 0% 5% 10% 15% 20% 25% Source: 2003-04 Agency Annual Reports (a) Excludes the Roads and Traffic Authority’s value of land under roads of $34 billion. If this amount is included, the Roads and Traffic Authority physical assets would be 35 percent of the total State physical assets. 1.3 CAPITAL EXPENDITURE The State’s annual capital expenditure program will exceed $8 billion for the first time in 2005-06. Table 1.2 summarises capital expenditure, by sector, for the current and forward years. Table 1.2: State Capital Expenditure Summary 2004-05 2005-06 2006-07 2007-08 2008-09 Budget Revised Budget Estimate Estimate Estimate $m $m $m $m $m $m General Government Sector 3,614 3,590 3,825 3,950 3,971 4,062 Public Trading Enterprise Sector 3,852 3,575 4,425 4,753 4,999 4,750 State Capital Program (a) 7,463 7,162 8,248 8,701 8,968 8,810 (a) Total State capital expenditure may not total general government and PTE sector acquisitions because of inter-sectoral purchases which cancel out on consolidation. Infrastructure Statement 2005-06 5 Capital expenditure in 2005-06 of $8,248 million represents a substantial increase of 15.2 percent on the level of expenditure in 2004-05. As demonstrated in Chart 1.3, this is part of a strong upward trend in capital expenditure. Over the four years to 30 June 2009, the State’s capital expenditure is expected to total $34,727 million. This is an increase of more than 30 percent or $8,083 million on the $26,644 million expenditure in the four years to 30 June 2005. Chart 1.3: Capital Expenditure Trend $m + 13.3% + 0.1% + 6.8% + 15.2% + 5.5% + 3.1% (-) 1.8% 10,000 + 10.1% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Actual Actual Actual Actual
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