NT’s public and private spending’s mixed report in economic measure

New figures show the Territory economy is spluttering its way out of the country’s Covid recession. Find out why.

The Northern Territory economy is the worst performing in the country.

Australian Bureau of Statistics data released on Wednesday shows the Territory’s State Final Demand (SFD) declined by 0.5 per cent in the June quarter, the second decline in the past three quarters.

The latest ABS figures show the Territory economy is spluttering and performing inconsistently since Covid-19 began to disrupt the economy in 2020.

By comparison, Western Australia’s economy was the nation’s next worst with a 0.1 SFD increase.

Tasmania was next with 0.6 per cent, Queensland and WA increased by 1 per cent, South Australia by 1.5 per cent and New South Wales by 1.9 per cent.

Empire Energy’s Alex Underwood with Deputy Chief Minister Nicole Manison on site.

SFD measures the total value of goods and services sold for consumption or that are to be retained as fixed capital assets.

In simple terms, it is public and private sector spending on goods as diverse as fuel or cars as well as investment in buildings, renovations and equipment.

Treasurer Eva Lawler said the Territory economy was still on track to grow to $40bn by 2030.

The decline was led by a 6.2 per cent fall in NT and federal government expenditure led by a 10 per cent drop in Territory and local government expenditure, due to a decrease in Covid-19 spending.

But the increase in private sector expenditure failed to match the government’s post-Covid emergency spending cuts.

A whopping 70.7 per cent surge in interstate and overseas travel underpinned a 1.4 per cent increase in household consumption with hotels, cafes and restaurants enjoying a 9.1 per cent post-Covid increase and surging fuel prices contributing to a 9.6 per cent increase in vehicle operations.

Private gross fixed capital investment increased 5.2 per cent driven by a 5.5 per cent rise in non-dwelling construction on the back of new engineering work and a 14.5 per cent increase in home renovations.

But this was offset by a 7.4 per cent decline in machinery and equipment due to reduced expenditure in the mining sector.

Qantas CEO Alan Joyce, former NT chief minister Michael Gunner and Chief Minister Natasha Fyles ahead of an announcement of new routes out of Darwin. Picture: Glen Campbell

The Territory’s public gross fixed capital investment increased 4.3 per cent driven by a 34.6 per cent increase in utilities investment.

In March, the Territory recorded a 2.2 per cent increase in SFD, following a 1.7 per cent decline in December quarter 2021.

Economists interpret consecutive declines in quarterly SFD as a technical recession.

The result means the Territory’s annualised SFD for 2021-22 was 4 per cent, just short of the 4.3 per cent budget forecast.

In Budget 2022-23, the Territory Government forecast SFD to increase by 5.4 per cent.

Ms Lawler said household consumption (up 1.4 per cent), private investment (up 5.2 per cent) and public investment (up 4.2 per cent) were key components of state final demand that had all reported increases.

“Private investment is key to the Territory achieving a $40bn economy by 2030,” she said.

“In 2021‑22, the Territory recorded a 26.8 per cent increase in private investment, supported by projects such as Barossa, Finniss lithium and the Tanami mine expansion.”

Ms Lawler said the Territory’s SFD increased year-on-year by 8.2 per cent to $27bn, the highest of any jurisdiction.

Originally published as NT’s public and private spending’s mixed report in economic measure