Commonwealth would save NT from going broke to save reputation’: Moodys ratings agency

A scenario where the NT is on the brink of going broke would be so embarrassing for the nation that the Commonwealth Government would swoop in to save it, an international credit rating agency has noted

A SCENARIO where the NT is on the brink of going broke would be so embarrassing for the nation that the Commonwealth Government would swoop in to save it, an international credit rating agency has noted.

The NT, Australia’s fiscally weakest jurisdiction, has kept its “stable” Aa3 credit rating according to Moody’s Investors Service latest credit analysis, partly because it expects the Commonwealth to provide “extraordinary support” if the jurisdiction “faced acute liquidity stress”.

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Moody’s analysis also delivered a warning to the NT Government, noting diminished Government “resolve and ability” to stop debt from ballooning out further is one factor that could lead to the credit rating falling further.

An example of this, according to Moody’s, would include “sustained revenue weakness” and “an inability to recover or replace lost GST revenues.

Recent Australian Bureau of Statistics revealed the NT’s economy has shrunk every quarter since September 2017 and national retail spending, which contributes to the GST, fell a historic 17.7 per cent in April.

Treasurer Nicole Manison said NT Labor had “worked hard to boost private investment”, create local jobs and strengthen the economy.

“The Territory Labor Government’s priority is to save jobs – not make deep cuts like the CLP did when they were in office,” she said.

“I will not apologise for doing everything we can to keep Territorians in work.”

The Territory couldn’t even sell or lease major state-owned corporations to help keep debt in check the report found, because entities like Power and Water Corporation still required significant ongoing subsidy to stay afloat.

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But the NT’s economic prospects “remain sound, despite current conditions”, particularly because it managed to dodge the worst of the coronavirus-induced economic blow.

This is because the NT is geographically isolated, has a small population, and implemented border controls early to stop COVID-19 according to Moody’s.