Where our lopsided economy is really at

COMMENT by DON FULLER

Chief Minister Lia Finocchiaro has been trumpeting the economic information provided by the latest CommSec State of the States Economic Report, claiming that this was clear evidence of the government’s success in rebuilding the NT economy.

The latest report showed that in a ranking of Australian States and Territories, the NT had gone from eighth to fourth place in overall economic performance.

It was claimed by the Chief Minister that "the Territory is leading the nation in economic growth, population growth, housing finance and dwelling starts".

In fact, once again, Western Australia has been named as the best performing economy. Queensland moved into second place, with South Australia third.

However, there are known to be "lies, damned lies and statistics" and that as Mark Twain famously suggested, statistics can be manipulated to mislead and bolster weak arguments.

And so it appears with the latest claim on the NT economy by the Chief Minister.

What the CommSec report is actually measuring needs to be made clear.

As pointed out by her own Department of Treasury and Finance, CommSec's State of the States publication produced on a quarterly basis, attempts to track how each state and territory economy is performing against its own "average past performance".

Each jurisdiction is assessed on eight key indicators: State final demand (including exports less imports); retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.

The economies of each jurisdiction are ranked by comparing current activity levels with decade averages from the same jurisdiction.

The overall rankings measure how each economy is performing relative to its own decade average or “normal” level of activity.

Just because this increases faster than the other States therefore, doesn’t indicate much at all about the relative strength of the economy – just that it is better than before – even if this was very poor, which in the case of the Territory, it has been!

Therefore it is more correctly seen as a comparison with one’s self rather than a comparison compared with the actual economic performance of others.

Many would argue that this is not a particularly helpful insight by itself, into how an economy is performing, particularly in the case of a small, lopsided, mainly public sector driven economy, such as the NT.

In a competitive economic environment it is also important to consider the economic performance of the NT relative to other states against key absolute economic indicators such as employment, unemployment, industry structure and overall size of the economy and through measures such as Gross State Product, for example.

This problem is acknowledged in CommSec reports but not mentioned by the Chief Minister.

Nor are the very serious economic problems that continue to confront the current NT government which appears to have no policies or programs in place to overcome these.

Such major problems include a bloated and inefficient public sector with very high levels of government debt.

A lopsided economy, dependent on mining with low levels of growth in the key areas of manufacturing, agriculture, tourism and high tech sectors, continues to be a major problem for economic development and growth.

It has been known for a long time that there is a priority need to diversify the NT economy, but successive governments have shown themselves not up to this important challenge.

The NT also continues to face serious skilled labour shortages in key areas which prevents existing businesses reaching their full potential. This problem is worsened by continuing levels of net out-migration from the Territory.

This is likely to continue as governments fail to successfully deal with high levels of crime and very high incarceration rates without supporting programs. Such an approach is expected to lead to even higher levels of social dislocation and levels of crime in the future.

The Territory is largely presenting as a bankrupt, and socially conflicted jurisdiction, completely economically dependent on the rest of Australia, for its survival.

While it continues to trumpet major projects these often stall, such as the Core Lithium project, Sun Cable renewable project and the SeaFarms Project Sea Dragon.

The projects that survive are often characterized by huge cost blow-outs, such as the Darwin Ship Lift.

Additional major cost blowouts appear to be on a slow, but serious burn, such as the gas deals negotiated for Beetaloo Basin.

Such damaging economic results reflect a disturbing lack of commercial competence in both the public and private sectors within the NT.

This appears to many to be worsening, rather than improving.

IMAGE: The Territory's economy is lopsided economy, dependent on mining with low levels of growth in the key areas of manufacturing. Tamboran plant at Beetaloo.