Australia’s Northern Territory Economy Recovers Quicker Than Expected
DARWIN, Australia — A massive increase in Goods and Services Tax revenue forecasts is likely to result in Australia’s Northern Territory’s economic recovery happening quicker than expected.
The 2021/22 budget released on May 4 revealed an AUD 1.35 billion ($1.04 billion) deficit and net debt of AUD 9 billion ($6.94 billion) the equivalent to 122 percent of revenue.
It’s an AUD 1 billion ($771 million) improvement on last year’s forecast for 2021/22, which predicted the deficit to be AUD 1.7 billion ($ 1.31billion), with net debt of AUD 10.1 billion ($7.79 billion)
But the Top End remains in the red and is likely to slip even further, with net debt expected to climb to AUD 11.4 billion ($8.79 billion) by 2024/25.
“We’re coming back hard, but we’re not there yet,” Chief Minister Michael Gunner said.
A bigger-than-expected cut of the Goods and Services Tax is behind the improved outlook.
It’s likely to see the Northern Territory receive AUD 2.9 billion ($2.23 billion) in 2020/21 and AUD 3.16 billion ($2.43 billion) in 2021/22, an increase on projections of $379 million ($292 million) and AUD 359 million ($276 million) respectively.
Growth is forecast to be 4.7 percent this year and 2.3 percent in 2021/22, up from last budget’s prediction of -0.1 percent growth.
Measures aimed at growing the economy include AUD 60 million ($46.2 million) to boost local jobs and businesses, with a further AUD 60 million ($46.2 million) promised the following year.
A further AUD 26.3 million ($20.2 million) was allotted to support the tourism sector, with AUD 7.8 million ($6.01 million) to fund resource exploration and AUD 400 million ($308 million) for Territory-funded capital projects.
The Gunner government has also responded to ongoing community concerns about crime with AUD 23 million ($17.73 million) for police recruitment, more CCTV, and improving emergency services.
Ratings agency Moody’s gave the budget a favorable review.
“Despite pandemic-driven economic disruption from border closures, the recovery in NT revenues has exceeded our initial expectations,” Investors Services Vice President John Manning said.
But professional accounting body Certified Practising Accountant (CPA) Australia was less enthusiastic, saying the Northern Territory’s future growth may be limited by a lack of expenditure.
“With the cost of borrowing so low at present, we don’t consider the size of the Territory’s debt concerning,” general manager Jane Rennie said.
“Additional borrowing to properly fund some of the budget measures is preferable to under-investing.”
Opposition Leader Lia Finocchiaro disagreed, saying the Gunner government was saddling Territorians with “decades of economic annihilation”.
“Interest payments continue to balloon and debt per Territorian will be close to AUD 50,000 ($38,554),” she said.
“Labor is still putting AUD 3.7 million ($2.85 million) on the credit card every single day just to keep the lights on.”
The Northern Territory Council of Social Service was also unimpressed, saying the budget had cut funding to already stretched services across the not-for-profit and community sector.
(Edited by Vaibhav Vishwanath Pawar and Nikita Nikhil)