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26/12/2024

Budgeting and Funding

Budget Requirements

Officials are encouraged to liaise with their Chief Financial Officer (CFO) or relevant financial area to ensure that they are aware of, and comply with, current Finance Estimates Memoranda covering the Capital Budgeting Policy and the Budget Process Operational Rules (BPORs).

Additional information on funding arrangements related to Commonwealth owned and leased property may be provided by Finance from time to time via the GovTEAMS Communities.

Whole-of-Life Costs

Whole-of-Life Costs (WoLC) are a key element of budgeting and value for money. WoLC must be used in the preparation of business cases for property-related plans and proposals.

Section 4.5 and 4.6 of the Commonwealth Procurement Rules provide guidance for assessing value for money and the cost elements that are included in WoLC. The Goods and Services Tax (GST) must be included within all cost elements of the WoLC estimate, along with an indication of what portion is recoverable/non-recoverable if appropriate.

Government and costing requirements for Defence are outlined in the relevant Estimates Memorandum. 

For additional information, Defence should contact its CFO or relevant financial area. 

In relation to property management, WoLC must (where applicable) include:

design, acquisition, construction, lease financial term (including incentives and costs of any extension options), fit-out, ongoing maintenance and environmentally sustainable disposal of end-of-life goods; other costs incurred over the lifetime of the property (examples include demolition, disposal, base building upgrades, security, make-good, etc).

Inclusion of fit-out in WoLC calculation varies between processes. A breakdown is provided below.

ProcessFit-out includedThresholds

Lease Notification and Endorsement

(GST inclusive)

Yes

Notification: 

  • Between $2 million and $30 million (non-Defence), and 
  • Between $2 million and $100 million (NCEs in the Defence portfolio).

Endorsement: 

  • Over $30 million (non-Defence), and 
  • Over $100 million (NCEs in the Defence portfolio).

Parliamentary Standing Committee on Public Works

(GST exclusive)

Yes

Notification: 

  • Between $5 million and
    $15 million (non-defence purposes), and 
  • Between $5 million and $75 million (defence purposes)

Referral: 

  • Exceeding $15 million (non-defence purposes), and 
  • Exceeding $75 million (defence purposes).

Two Stage Capital Works

(GST exclusive)

No

Non-defence: 

An estimated WoLC of $30 million or more.

Defence: 

Defence maintains its own Two Stage Capital Works Approval Process.

New Policy Proposal

The BPORs provide guidance on what constitutes a New Policy Proposal (NPP), including for capital expenditure, and how entities can bring forward a NPP for Government consideration.

NPPs for capital works, which are estimated to have a WoLC of $30 million (GST exclusive) or more (excluding fit-outs), are subject to the Two Stage Capital Works Approval Process. This process includes a Cost Benefit Analysis of options reasonably available to address the entity’s needs, including a preferred approach.

Defence maintains a separate approval process for capital works proposals within the Defence Integrated Investment Program, as outlined in the BPORs. For Defence capital works proposals that fall outside this context, the BPORs apply.

Officials are encouraged to liaise with their CFO, relevant financial area, or Finance Agency Advice Unit on the NPP process and the BPORs.

Guidance on accounting for real property (interests in land and the structures on it) is available in RMG-113 Accounting for subsequent expenditure on property, plant and equipment and in RMG-110 Accounting for leases available under Resource Management Guides.
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