Inpex, defence boosted state product, but what next?

p2215-Robyn-Lambley-SMSir – I would like to contribute to your article “Territory Beats China: Yeah right”.

 

A 10.5% increase in Gross State Product from 2013/14 to 2014/15 can be attributed in part to good management and in part to good luck.

 

A spending boom primarily in mining and construction by government and the private sector, and significant new defence spending, largely explains this unexpected increase in the GSP.

 

But there is no doubt the extent of the increase came as a surprise to everyone, particularly within government.

 

The broader economic outlook for the NT, however still remains uncertain. The Japanese Inpex project continues to be our saving grace.

 

But with the projected “economic precipice” approaching next year with this massive constructive project concluding, Territorians are asking “what next”?

 

In our boom and bust economy it is difficult to see what the future holds. The new gas pipeline will apparently not commence construction until 2018 with no guarantee that there will be any gas to put in it.

 

Mining will take another 10 to 15 year cycle to bounce back to the recent halcyon days. Stabilising economy growth and employment in the NT beyond Inpex will be the Government’s real test of economic credibility.

 

The NT receives 80% of its revenue from the Federal Government. The new Prime Minister and Federal Treasurer have already eyed off the projected surpluses of various prudent States and Territories with the view to correcting their own deficit.

 

The national economy will only get tighter with greater pressure on the NT Government to generate more of their own source revenue, something the NT has never done well.

 

The NT is a financially dependent jurisdiction (a mendicant state) that will continue to struggle despite the seemingly positive economic figures used advantageously by politicians.

 

With a minuscule population and a vast geographical, there are few economies of scale in the NT. Our population growth is the slowest in the country. Attracting people to live, work and contribute to the social and economic fabric of the Territory remains one of our greatest challenges.

 

The CLP Government should be commended for their success in turning around the dire fiscal position they inherited from Labor in August 2012.

 

As the Treasurer for the first seven months, I well remember our aggressive approach to reining in excessive government spending and trying to increase our own source revenue.

 

A major focus of the CLP fiscal strategy was the Power and Water Corporation. The government owned corporation was in serious trouble, dragging the Territory into spiraling deficit and debt.

 

A surplus is now achievable within the forward estimates, which in real terms for the average Territorian means less money paid on interest for Government loans and more on schools, health services and roads.

 

So, let’s see what the new year brings. With the lower Aussie dollar we are all hopeful tourism picks up and provides some welcome relief, particularly to our local economy in Alice Springs.

 

Robyn Lambley MLA
Member for Araluen

 

Ps.: For the record, this letter was written entirely by Robyn Lambley, the Independent Member for Araluen.

 

 

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5 Comments (starting with the most recent)

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  1. Ian Sharp
    Posted December 3, 2015 at 5:50 pm

    Good analysis Bob, but substitute “charging what the market will bear” for “vendor and agent greed”.
    Price signals drive the free market, up to governments to intervene in our mixed economy if they think there is a need. Don’t knock price signals.

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  2. Bob Durnan
    Posted December 3, 2015 at 5:25 pm

    To Trevor Shiell (Posted December 3, 2015 at 3:39 pm): Maybe the Inpex investors were taking the long view, and simply saw big tanker ships out of Darwin as a much better long term strategic guarantee for the major gas buyers than pipelines out of Kazakhstan?
    Also, I don’t get the connection you seem to be assuming between Darwin’s Inpex boom and Alice Springs’s years of sky-rocketing house prices.
    Surely our gigantic housing price bubble was driven by a combo of scarcity of large-scale construction companies in Central Australia; the huge but relatively sudden and very poorly planned Commonwealth spending on the NTER; the increasingly expensive nature of extending essential services such as sewerage lines, drains and roads in restricted areas around Alice Springs’s rocky ridges; the difficulty, and expense, of developing small new subdivisions during the period of Native Title negotiations; and good old vendor and agent greed.

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  3. Trevor Shiell
    Posted December 3, 2015 at 3:39 pm

    I suggest to all pollies that they read the international investment community’s brutal assessment of Inpex as stated in last year’s annual report of Platinum Asset Management fund.
    It sold out of Inpex saying that it was not viable and Shell could have done the same thing for a tenth of the price as they have done in central Asia.
    All of this should have added a note of caution to Government not to put all their eggs in the one container.
    Inflated house prices both here and in Darwin were a direct result of this political spin, and we will now pay the price.
    In addition, comments from the real estate lobby in Darwin on oversupply were entirely predictable to the business community over a year ago, (Macrobusiness Magazine) but again the Government closed its eyes to the reality of over exposure as interest rates rise next year, and the position of over committed investors.
    The real estate industry must shoulder a share of the blame for this as well as the Government, as the spiraling input from Government into Kilgarriff continues, while several potential developers in the Emily Valley languish, having been gazumped by the Government.
    Again it got the cart in front of the horse and has not looked at new world industries – particularly food production to provide economic growth.
    Guyra for example in NSW – the Cost Group of companies has an intensive tomato production unit covering 20 ha and produces employment for 300 people in a rural community of around 400.
    Towoomba has an economic base around their new airport based on exporting commodities by air to Asia. We are so busy building houses for non existent people to notice these things, and the new proposals for land use here completely missed the need for research facilities to catch up with the rest of the world and intense food production in particular.
    They might start by looking at the role of the gas inter-connector from Tennant Creek, and the future phasing out of fossil fuels. How difficult would it be to create a utilities corridor containing initially gas and rail and then solar electricity for 50 or so hectares of up to date solar panels at Tennant to replace the Queensland coal industry and dirty electricity? Unfortunately not a part of Adam’s vision.

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  4. Roger W Miller - Darwin.
    Posted November 28, 2015 at 8:44 pm

    I vividly recall that first seven months of your “aggressive approach” to reining in excessive government spending.
    Such as, an extreme aggressive stripping of seniors’ entitlements and left very few of those with much less than 30% of the original amounts.
    I have personally written to you on a number of occasions for your apology to seniors for deliberately omitting the word “seniors” from that first mini budget that you, as treasurer were left with whilst CM Mills went on a “jaunt to Indonesia” with Chandler and Van Holthe. Free bus fare for seniors or the junket trip for three politicians, which one was the most excessive?

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  5. Gordon
    Posted November 28, 2015 at 2:03 pm

    Yes, we know all this, Robyn Lambley.
    You have completely ignored the fact that the CLP government you were once part of has succeeded in accumulating a large development fund.
    We expect our politicians to show leadership by coming up with positive and workable ideas to grow the economy.
    So how should the development funds be spent to achieve that purpose?

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