Northern Territory Government in financial crisis, will seek bailout from Canberra
The Northern Territory Government is in the throes of a financial crisis, with no immediate plan for fixing the deep fiscal problems.
- The NT’s net debt is forecast to increase tenfold to $35.7 billion by 2029-30
- Treasury officials say the Government is currently borrowing to cover day-to-day costs
- Treasurer Nicole Manison will fly to Canberra for emergency meetings next week
Treasurer Nicole Manison will fly to Canberra for emergency meetings with Federal Treasurer Josh Frydenberg next week.
Treasury officials say the NT Government is currently borrowing to cover day-to-day operational costs such as public servants’ wages and to cover interest on previous borrowings, which they say has led to a budget in “structural deficit”.
The Territory’s net debt has escalated from $1.7 billion in 2016 — when Labor was elected — to around $3 billion this year.
In 2018-19, the Territory is forecast to spend over $1.5 billion, or $4 million a day more than the revenue it collects and is borrowing to meet the shortfall.
A report released today found the Territory’s net debt is projected to increase tenfold from $3 billion in 2017-18 to $35.7 billion by 2029-30.
There is currently no concrete plan to fix the issues, but the Government is seeking public consultation to solve the NT’s financial woes.
Ms Manison said expenditure growth had been at six to seven per cent since 2000, and they now planned to bring it back to a “far more manageable” three per cent — effectively cutting its growth in expenses by half.
But she ruled out many cost saving measures.
“We will not be going down the pathway of sacking public servants, slashing services, about hiking prices around power water sewerage and putting up the cost of living for people,” she said.
“We will not be looking at selling off those public assets.”
‘There doesn’t appear to be too much in their plan’
Ms Manison said the economy and the Government’s financial state were the victim of an economic “perfect storm” that has seen private investment stall with the wind up of the $54 billion Inpex gas project and cuts to the Territory’s take of Federal GST payments.
The recent mid-year financial report showed the Labor Government had a huge cost blowout of more than $350 million in unbudgeted spending and carry-over operational expenses.
Ms Manison said expenditure growth would be brought back to a “far more manageable” 3 per cent. (ABC News: Al Dowler)
“The deterioration in the Territory’s operating balance from 2016-17, following reductions in GST revenue, has placed the Territory in the unsustainable position of needing to borrow to pay for recurrent activities and interest expenses,” the latest report stated.
“Persistent operating deficits, compounded by further borrowing to fund capital expenditure, will result in a rapid escalation in government debt if left unchecked.”
The Territory’s fiscal woes are “not overly good news” for business confidence, according to the NT Chamber of Commerce, who lambasted the Government’s “willy nilly” spending.
“There doesn’t appear to be too much in their plan. It’s go to Canberra, cap in hand to ask for a further handout,” chief executive Greg Bicknell said.
“And what people I think would really like to see is the Northern Territory doing its bit to pull its weight in terms of these expenditure overruns.”
Charles Darwin University associate professor of economics Ram Vemuri said the Labor Government was not prepared to fundamentally change the way it did business, and warned of a “backlash”.
“The Government must change their whole approach to economic management — you can’t just do cosmetic changes,” he said.
“People are saying what has the thunderous [majority] of Labor actually done for the Territory economy?
“And the answer is very, very minimal. There’s been a lot of talk but they’ve been ignoring the warning signs for a long time.”
Deputy Opposition leader Lia Finocchiaro called the financial crisis an indictment on Labor’s “economic mismanagement” and said asking for solutions from the public showed poor leadership.
“They’re crying out to Territorians, saying ‘help us we don’t know what to do’,” she said.
“The Government must lead and they must manage our economy. The Chief Minister and the Treasurer should absolutely resign over these terrifying figures.”
Chief Minister Michael Gunner’s office declined an ABC interview request, saying he was on holidays as of close of business on Friday.