The Northern Territory budget is expected to reveal net debt has ballooned to more than $10 billion amid expenditure restraint.

May 4, 2021

The Northern Territory is likely to slip further into the red when Chief Minister Michael Gunner delivers his second budget as treasurer.

The Top End’s net debt was forecast in November to reach a record $8.4 billion this financial year – equivalent to 132 per cent of revenue.

That position is now predicted to further deteriorate in 2021/22, with net debt rising to $10.1 billion or 148 per cent of revenue.

Mr Gunner said the figures would be “eye-watering” but better than expected.

“We’re still in the crunch of the pandemic so we’re not out of it but we are preparing for how we lead the comeback,” he told reporters on Monday.

The budget is expected to reveal the NT will get more GST from the Commonwealth than forecast in November, when a $1.7 billion deficit was predicted for 2021/22.

The improved outlook is due to Australia’s quicker than expected economic recovery from the coronavirus crisis.

Charles Darwin University economist Rolf Gerritsen isn’t convinced, saying the NT is set to economically flounder for some time yet.

“It’ll be a ‘we don’t know what we’re doing but we hope something comes along’, which is a traditional NT budget,” he said.

Prof Gerritsen said it’s unlikely substantial new expenditure will be announced apart from a funding increase for law and justice initiatives.

Additional money for the COVID-19 vaccine rollout and management of the Howard Springs quarantine facility is also likely to be included in the budget.

But the NT’s large public sector is set to continue to hobble its finances, despite a continued wage freeze, he said.

“They’re hoping several mineral projects will get off the ground before the next election,” Prof Gerritsen said.

The NT’s geographic position close to Asia is also likely to see it benefit from further federal and international investment over the next decade.

“There’s a little cloud on the sky about the Territory that says ‘strategic imperative’ … because of the rivalry between the US and China,” Prof Gerritsen said.

The Gunner 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 said the strategy remains the same.

“It’s creating jobs that earn you the money that helps repair the budget,” he said when asked about the balance between spending money to stimulate the economy and falling further into debt.

CommSec’s State of the States report last month commended the NT’s equipment investment and relative economic growth, but ranked it last place for overall economic performance for the 10th consecutive quarter.

A fiscal strategy report in 2019 warned the NT was heading for a $35 billion debt by 2030 unless the government tackled chronic overspending.

A key recommendation was a cap on the growth of the public service staff.

Budgetary measures already announced include $6.5 million to assist mining exploration, $2.8 million in funding to continue a solar battery scheme and $11.9 million for the Aboriginal ranger grants program.

Prof Gerritsen said Mr Gunner’s “surprising” decision to release the budget before the Morrison government’s May 11 budget was a strategic decision.

“The theory is when the federal budget comes down, news of that will wipe any whinging off the front page,” he said.