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Budget Repair


The Northern Territory Government has drawn up a disciplined plan to put the budget back in the black within a decade.

Treasurer Nicole Manison says returning to surplus by 2028-29 will take a robust, transparent regime to ensure departments and agencies aren’t overspending – but she strongly believes it can be done. The first step was to carry out a root-and-branch examination of departments to identify savings and efficiencies.

That will save $63.2 million this financial year. The Government also committed to allowing its expenditure to increase by only 3 percent a year, instead of 6 percent, which will save $11.2 billion over the next 10 years. Public service numbers have been capped at 21,118, a figure based on the 2018 average; redundancies and natural attrition – not replacing staff who leave – has begun. Ms Manison says frontline workers, such as nurses, will not be affected.

She says the Government is working hard to introduce efficiencies without reducing the quality of service delivery. Politicians and departmental chief executives will have a three-year pay freeze. The Territory’s budget is $8.264 billion for 2019-20. The net debt is $4.191 billion. Interest is $856,000 a day. Superannuation commitments are $3.6 billion. The Government knows that the only sustainable way to haul the budget back to surplus – and start paying off the multibillion-dollar debt – is through economic growth.

“We’re about to enter a growth period, although some businesses will unfortunately do it tough for a further year or so,” says Ms Manison. Economists believe the future is bright for the Territory. Many major projects – such as multibillion-dollar Defence spending, the $200 million luxury hotel on Darwin’s waterfront and the $200 million City Deal to rejuvenate Darwin CBD are underway. And the $50 million National Aboriginal Art Gallery in Alice Springs is expected to start soon. A string of other massive projects have not been factored into growth estimates because they are not yet absolute certainties.

They include the $1.5 billion Sea Dragon prawn farm, which could rival the Territory’s live cattle export trade in size, and seven mining ventures with Major Project Status.The biggest economic boost on the horizon is onshore oil and gas, which could dwarf all other Territory industries and last for more than a century. Energy companies Origin and Santos plan to start a $160 million drilling operation at the Beetaloo Basin later this year or early in 2020; Pangaea will restart exploration soon afterwards.

Economists estimate that the shale gas industry will create up to 6000 jobs and drive regional growth, especially in Katherine and Tennant Creek. Unlike offshore gas operations, royalties for onshore projects go to the NT Government, which means the Treasury could get at least $220 million a year from the industry. The mining industry is on the up – NT minerals production was a record $4.4 billion last year, which yielded $450 million in royalties to the Territory Treasury.

Exploration is being ramped up at several mining projects. The Territory Government received a brutal shock when coming to power in August 2016 – a $850 million deficit left by the previous administration. But much worse was to follow when the Commonwealth Grants Commission imposed massive cuts to GST payments to the NT of about $500 million a year.

“These are the biggest changes in GST in our history,” says Ms Manison.

The Government is hoping for more sympathetic treatment from the Commission after taking some of its members on a tour of Indigenous communities and town camps to demonstrate the size of the challenges following the NT. “They weren’t very sympathetic in the first year of the cuts, but they seem to be a bit more sympathetic now.”

The Government’s independent budget inquiry made 76 recommendations, most of which were accepted. Key recommendations were: Economic reforms to stimulate private investment. Government fiscal strategy reforms, including greater efficiencies and departments living within their budgets. Inquiry chair John Langoulant says the main cause of the budget crisis is the cut in GST payments from the Federal Government. He says there is no “silver bullet” to balance the budget; he says the package of reforms will demand “resolute commitment” by the Government. TQ