The Territory is broke

25104 budget repair 2 OKBy ERWIN CHLANDA

 

“If Territory Government spending continues to grow as it has in the past, the Territory’s net debt is projected to increase tenfold from $3 billion in 2017-18 to $35.7 billion by 2029-30.

 

“The net debt to revenue ratio would be increasing to around 320% and the annual interest bill rising to almost $2 billion.

 

“Such an outcome would have severe economic consequences for Territorians,” a government commissioned assessment of the Northern Territory’s fiscal position observes drily.

 

The interim report overview, by “independent experts”  unnamed in the government’s media release, was put out for public comment yesterday by Treasurer Nicole Manison with the kind of spin that has become the hallmark for the Gunner government, “Restoring Trust: A Plan for Budget Repair”.

 

Ms Manison says in a media release that the “hurt” was caused “by unprecedented GST reductions of $500m per annum, the tough economic times with the wind down of the INPEX construction project, and the increasing demand on Government services.

 

“Combined, these mounting pressures are pushing the Territory budget to unsustainable levels and revision of the Government’s fiscal strategy is needed.”

 

She gives no explanation why the Labor Party, while still in Opposition and then in Government, made no provision for the entirely predictable conclusion of the INPEX construction, which the interim report describes graphically: “This fall in GST revenues has also coincided with a pronounced moderation in the Territory economy, reflecting the transition of one of the largest ever projects in the southern hemisphere, the Ichthys liquefied natural gas project, from the construction phase with a peak workforce of over 10,000 to the operational phase with a workforce of around 400.”

 

Instead the new government continued the profligate spending (see table above, expenditure growth over time; excludes depreciation; “other expenses” are primarily tied funds from the Commonwealth).

 

p2168-Nicole-ManisonNext week Ms Manison (pictured) will go to Canberra, asking for a bailout.

 

The report urges substantial public service belt tightening and forecasts, as a possible saviour, in five years’ time, the income from natural gas, at least some if it obtained by fracking, something many Labor voters in 2016 assumed their preferred party was opposed to.

 

Says the interim report: “When the government came to power in August 2016, the Territory had been enjoying the highest level of untied GST revenue since the GST commenced in 2000-01.

 

“However, in the following 18 months, encompassing the 2017 and 2018 Budgets, a total of $3.4 billion was wiped off the Territory’s share of GST between 2017-18 and 2021-22, without a corresponding reduction in the Territory’s expenditure needs.”

 

It says the government yielded to increased demands for government services, “notwithstanding that population growth, and rising community expectations regarding service standards have seen the cost of public services continue to grow despite the revenue declines.

 

“This trend has further compounded the Territory’s fiscal challenges. The current Territory Government has also faced unexpected expenditure demands such as the need to respond to the Royal Commission into the Protection and Detention of Children in the Northern Territory.

 

“The culmination of these events has placed the Territory Budget on a debt and deficit trajectory which is unsustainable.

 

“In 2018-19, the Territory is forecast to spend over $1.5 billion, or $4m a day more than the revenue it collects, and is borrowing to meet the shortfall.”

 

The report says there have been budget repair measures of around $830m between 2017-18 and 2021-22. Despite these measures, significant budget deficits are forecast across the forward estimates.

 

“Delivering meaningful and sustainable fiscal reform will require a reduction in the Northern Territory Public Sector’s operating cost growth,” says the report.

 

“This can be achieved through reorganising how the public sector operates, enforcing greater discipline around meeting budget targets at the agency level, and looking at greater technological means to deliver services more efficiently.

 

“These reforms can be achieved while maintaining public sector employment levels and service delivery to remote areas.

 

“Scenario 2 assumes a new fiscal strategy is implemented, which restrains expenditure growth over the projection period to around 3% per annum (reflecting CPI plus long-term population growth less a reform dividend).

 

“As in scenario 1, growth in Territory revenue is assumed in five years’ time when onshore gas operations commence.”

 

Meanwhile Deputy Opposition Leader Lia Finocchiaro says the Labor leadership team must take responsibility for plunging the Territory into financial oblivion and resign.

 

“The government is borrowing on the credit card to pay wages. [Labor’s] own Mid-Year Report said the single biggest reason for the deterioration in the budgetary position is ‘policy changes’ to the tune of $354 million.

 

“We don’t deny the impact of reduced GST receipts and the movement of the Inpex project into operational phase. But one of the fundamental roles of Government is to manage through the down times, to spend wisely and invest in wealth creation and to incentivise business and investment.

 

“Instead, Labor has implemented the world’s worst mining tax and an unreasonable property levy, spent widely on consultants, reviews and reports and museums which were shelved and dithered on allowing gas exploration in the Territory.”

 

 

 

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Erwin Chlanda, Editor


9 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. David
    Posted December 20, 2018 at 12:32 pm

    Both Labor and CLP need to stop going on overseas junkets as well, costing heaps, with little results to show any benefit to the NT.
    Most of the untied GST revenue that the NT got because of the large Aboriginal population would have been spent on Darwin, again by both parties.
    Labor needs to forget about Boundless Possible, there is no money to pay people to come here, let alone employ them.

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  2. Al
    Posted December 19, 2018 at 11:59 am

    For comparisons sake, Origin energy is roughly $6.5 billion in debt.
    Are we really going to trust them to provide value to NT economies?

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  3. James T Smerk
    Posted December 17, 2018 at 10:08 am

    I agree. This government is doing a not so great job (to put it nicely), but blaming them for the next 10 years’ worth of continued debt along the same lines is sensationalising the issue.
    I’m pretty sure they won’t be in government for that length of time and who knows what changes to the economy may happen over that period.
    The NT needs new industry developments, especially if they don’t care about our tourism industry which is obvious with the extreme crime in Darwin and Alice.
    So get ready Hippies, the government will most likely open up a lot more mining and other stuff in the coming years.

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  4. Fred the Philistine
    Posted December 16, 2018 at 8:05 am

    It’s laughable as the Territory wanted to become a state. So much for self governing. Nothing has been achieved. Too much money wasted.

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  5. John Bell
    Posted December 15, 2018 at 11:57 pm

    The NT under Gunner is spending like a crazy person with 10 arms.
    It is in Labor’s DNA – they can’t change.
    Look at Andrews in Victoria doubling debt overnight $25 billion to $48 billion and rapidly climbing with union demands … and the promises made by Shorten … and Queensland has lost the plot altogether.

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  6. Paul Parker
    Posted December 15, 2018 at 10:31 pm

    The NT needs to be re-united with South Australia to enable better management and self-government.

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  7. Ken
    Posted December 15, 2018 at 8:14 pm

    Politically there is great “Sovereign Risk” in the Northern Territory.
    An example is the gallery standoff by the NT Government.
    With the land ownership … the CLC (lawyers) … and the incompetence of the resources bureaucracy (intelligence?), there is virtually no mining in the NT (compare to WA and Qld).
    No group or company can stand up to 25+ years gaining land exploration rights when the bureaucratic demands exceed reality.
    It is sovereign risk. Massive mineral income is needed. My company discovered a diamond field in 2010 but the Central Land Council vetoed its development and the license ran out in 2013.
    Imagine how incompetance lost NT royalties income.
    No group or company can stand this or the veto of the CLC, intent on its own agenda, [such] delay in discovery and finding mineral exploration from vetoed and land access.
    The Lasseter’s Reef rediscovery is a case in point, where bureaucratic intransigence and the Central Land Council prevents mineral exploration and development of the frontier town of Alice Springs.
    The Aboriginal art gallery in Alice Springs will go the same usual way. The kiss of death has already been applied.

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  8. Fred the Philistine
    Posted December 15, 2018 at 1:14 pm

    It’s no surprise. Never seen a state / territory run so poorly.

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  9. Psuedo Guru
    Posted December 15, 2018 at 8:52 am

    Federal takeover imminent. NT finances chaotic. Anarchy looms. Law and Order out of control.

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