GST speeds Top End's budget repair
The Northern Territory's economic recovery is happening quicker than expected following a massive increase in national GST revenue forecasts.
But the Top End remains deep in the red and is likely to slip even further into debt over the next three years.
The 2021/22 budget released on Tuesday revealed a $1.35 billion deficit and net debt of $9 billion, the equivalent to 122 per cent of revenue.
That is expected to climb to $11.4 billion, or 166 per cent of revenue, by 2024/25 but the deficit is set to fall to $629 million.
Overall, it is a $1 billion improvement on last year's forecast for 2021/22, which predicted the deficit to be $1.7 billion, with net debt of $10.1 billion.
"We're coming back hard but we're not there yet," Chief Minister Michael Gunner told reporters.
A bigger-than-expected cut of the GST is behind the improved outlook, following Australia's speedy economic recovery from the COVID-19 crisis.
It is likely to see the NT given $2.9 billion in 2020/21 and $3.16 billion in 2021/22, an increase on projections of $379 million and $359 million respectively.
The government will also receive $514 million over two years from the Commonwealth to expand the Howard Springs quarantine facility, near Darwin.
Despite the windfalls, Mr Gunner says the government's strategy remains the same as last year when the Territory's already debt-laden economy "received a massive whack from the coronavirus".
"Control the virus, grow the economy and repair the budget," he said.
His Labor government was returned for a second term in August, promising to "save lives and save jobs" during an election largely fought on COVID-19 and border control issues.
The unemployment rate rose to 5.7 per cent in March, up from 4.8 per cent six months earlier, but Mr Gunner says the budget shows the economy is recovering.
"All the stats are quite incredible when you look at growth, which is a tribute to the resilience of this place and the confidence people have," he said.
Growth is forecast to be 4.7 per cent this year and 2.3 per cent in 2021/22, up from last budget's prediction of -0.1 per cent growth.
"This budget is about grinding away and working hard ... It's not flashy, there's not a heap of new spending. It just does what it needs to do," he said.
Measures aimed at growing the economy include $60 million to boost local jobs and businesses, with a further $60 million promised the following year.
A further $26.3 million was allotted to support the tourism sector, with $7.8 million to fund resource exploration and $400 million for Territory-funded capital projects.
The share of the budget allocated to the Territory's COVID-19 health response and vaccine rollout dropped from $25 million in 2020/21 to $15 million next year.
The Gunner government has also responded to ongoing community concerns about crime with $23 million for police recruitment, more CCTV and improving emergency services.
Correctional services will get an injection of $15 million, with an ongoing annual increase of $10 million.
The NT's large public sector is likely to continue to hobble its finances into the future despite a wage freeze and negotiations with its union.
Mr Gunner hopes a new cap on expenditure and a threat to sack overspending chief executives will mitigate the problem, saying government departments will be restrained from exceeding their salary budgets.
Reforms to how the NT manages its finances also included a legislated debt ceiling of $15 billion, which is aimed at keeping the NT within rating agency parameters and the borrowing costs down.
They are expected to save the Top End $424 million over the next four years.
Ratings agency Moody's gave the budget a favourable review.
"Despite pandemic-driven economic disruption from border closures, the recovery in NT revenues has exceeded our initial expectations," Investors Services VP John Manning said.
NT BUDGET 2021/22
Deficit: $1.35 billion
Revenue: $7.4 billion
Expenditure: $7.94 billion
Net debt: $9 billion
GST revenue: $3.16 billion
Unemployment: 5.4 per cent
Growth: 2.3 per cent
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