Australian consumers gave the NT an unexpected financial boost. But the budget remains in a parlous state
Governments like to take credit for good news and deflect blame for the bad.
When the latest budget figures were released in the Northern Territory yesterday — revealing a $934 million improvement in the deficit over two years — there was no shortage of self-congratulations. “We put ourselves in the position to be able do that,” Chief Minister Michael Gunner said.
But a closer look at the budget books shows the real credit should go to the millions of Australians who opened their wallets and took part in a spending splurge during the pandemic.
Through the purchase of everything from new TVs to domestic holidays, the national GST pool expanded beyond expectations at the height of the COVID crisis.
For the NT — which gets around 40 per cent of its overall revenue from GST — it’s been a welcome bonanza.
More than three quarters of the budget’s fiscal improvements stem from the $738 million turnaround in GST forecasts.
As credit ratings agency Moody’s stated, the Territory’s financial results reflect “the strong recovery of the broader Australian economy”.For a government that has long-bemoaned billion-dollar reductions in the amount of GST it expected when it took office in 2016, the latest figures have come as a relief.
“I thank the Australians,” Mr Gunner said yesterday.
Despite his nod to the nation, the Chief Minister was keen to note the NT’s latest GST figures were almost $400 million less than the CLP received when it last held power.
Indeed, the harsh reality is that despite the improved outlook, the NT’s finances remain in a parlous state.
There are no signs of a return to surplus for at least the next decade, and net debt is set to almost double from $7.6 billion in the current financial year to $13.7 billion by 2029-30.
For a jurisdiction with a population of less than a quarter of a million people, that’s the equivalent of more than $50,000 owed by every living Territorian.
“This unprecedented and catastrophic debt blow-out saddles Territorians with an even bigger economic burden and means we will suffer for decades to come,” CLP opposition leader Lia Finocchiaro said yesterday.
Whether the government is doing enough to alter the debt trajectory is a contested question.
But the spending and savings measures announced in this year’s budget provide an important perspective.
Almost $380 million will be spent over four years on new initiatives.
By comparison, a total of $10 million in savings have been outlined.
The Chief Minister said the “heavy lifting” was done in last November’s budget, when the government revealed a wages freeze for public servants, saving $424 million over four years.
Whether the government has the gumption to implement other politically-contentious savings initiatives in the coming years remains unclear.
The government says many of its new spending initiatives are designed to boost the economy.
But with the interest bill on the Territory’s debt continuing to rise, the ongoing reliance on unpredictable GST revenues could hamper hopes of a recovery.