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.
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.
However Ms Manison said expenditure growth had been at 6-7 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.
She 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.
“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 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.”
More to come.