Hi mug, the capital charge is leveled against the assetts of government departments based upon their value. The idea is that departments will better ultilise their assetts, and rid themselves of poor proforming ones. The government pays the charge to itself, so it is basically a bookkeeping entry.
"The intention of the capital charge was to make explicit the true costs of the taxpayers' investment by requiring recognition of those costs."
http://www.nzdf.mil.nz/corporate/defence-expenditure.htm
For 2006/7 total spending is forecast to be $1.749 billion, personel $620 million, operating $552 million, depreciation (ultilised for purchase of capital items) $264 million, and the capital charge of $313 million, the latter is paid to the DF which pays it back to the government.