The Northern Territory’s economic recovery is happening quicker than expected but the budget remains deep in the red despite the government reining in spending.
The 2022/23 budget released on Tuesday revealed a $1.11 billion deficit and net debt of $8.7 billion, the equivalent to 115 per cent of revenue.
It’s a $1.4 billion improvement on last year’s forecast for 2022/23, which predicted the deficit to be $1.2 billion, with net debt of $10.1 billion.
The trend is set to continue, with the 2024/25 deficit predicted to fall back to just $17 million. However, net debt will grow to $9.3 billion, or 121 per cent of revenue, due to the NT’s infrastructure loans.
Chief Minister Michael Gunner says the budget reflects the territory’s journey through the tough days after the INPEX gas project construction boom ended, and the COVID-19 pandemic.
“Despite the very real impact these challenges had, the 2022 budget clearly shows that the territory economy is strong and getting stronger,” he told parliament.
“The budget is on the right track. Our budget discipline will continue.”
The recovery is primarily due to revenue growing more quickly than expenses, with the government’s operating costs expected to fall from a $253 million deficit this year to a $60 million surplus by 2024/25.
The largest savings measure was the enforcement of the vaccine mandate, which led to about 400 public servants being sacked and projected savings of $108 million over four years.
Construction projects, like the Santos-led Barossa offshore gas development, the Finniss lithium project and US defence fuel storage facility, are expected to boost economic growth to 3.7 per cent in the coming financial year.
As is Territorians spending their savings after two years of saving amid the pandemic.
A “significant” improvement in GST revenue, the territory’s primary source of income, since the 2021 budget has also also helped reduce the estimated deficits over the coming four years.
The total commonwealth funding to the NT in 2022/23 is estimated to be $5.28 billion or 69 per cent of total revenue, with $1.7 billion tied to projects. $3.58 of this is GST revenue.
“While our spending stays under control, the strong economic recovery is boosting the NT’s own taxation revenue, as well as our GST revenue,” Mr Gunner said.
Despite this, revenue in 2022/23 is expected to fall $300 million to $7.6 billion compared to the year prior, but this is due to the commonwealth’s COVID-19 funding ending.
Budget expenditure included $510 million for the territory’s police force – $6.4 million more than last year’s police budget.
Another $690 million has been allocated for housing in remote areas to help ease chronic overcrowding in Indigenous communities.
The territory’s Labor government has also promised $58 million to the tourism sector to help lure domestic and international visitors and hospitality workers to the NT.
Heath will receive $2 billion, including $8 million for additional capacity at Royal Darwin Hospital and $60 million to address COVID-19 pressures in the public health sector.
Another $113.1 million will be allocated to sealing, strengthening and widening strategically important roads.
Key projects include an $86 million upgrade of Tanami Road to Western Australia and $104 million for gas industry road upgrades.
More than $80 million will be spent on works between Alice Springs and Darwin along the Stuart Highway.
NT BUDGET 2022/23
Deficit: $1.11 billion
Revenue: $7.6 billion
Expenditure: $7.86 billion
Net debt: $8.71 billion
GST revenue: $3.58 billion
Unemployment: 4.2 per cent
Growth: 3.7 per cent
Population growth: 0.6 per cent of about 246,500 people
Interest payments: $436 million or $1.19 million per day.
