Federal Government revenue top-up uncertain for NT, as economist says budget repair will need to take a back seat amid COVID-19

THE NT’s soaring debt burden needs long-term management, but an economist says budget repair may need to take a back seat amid the pandemic. It comes as the federal government will not say if it will step in and help the NT again.

THE federal government has not said if it will repeat its generosity of the past and pump funds into the Territory to prop up its declining revenue pool.

It comes as an economist from the Grattan Institute says the NT’s soaring debt burden needs long-term management, but budget repair may need to take a back seat amid the pandemic.

The NT government’s coronavirus fiscal update, released on Wednesday, revealed the Territory would be saddled with $8.2bn of net debt by July next year while revenue fell to $6.1bn.

That puts the NT’s net debt to revenue ratio at 134 per cent by 2020/21, levels the government did not expect to hit for another four years.

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The federal government pumped $252m in “general revenue assistance” to the NT in 2019/20, and $249m the year before that, as top-ups for the cash-strapped jurisdiction.

Federal Treasurer Josh Frydenberg did not indicate if the NT could expect another top-up beyond reiterating that the commonwealth would “do what it takes” to cushion the blow “for those who have been most impacted by this crisis”.

Economic markers like unemployment and retail show the NT is doing much better than other jurisdictions.

Meanwhile, Grattan Institute budget policy fellow Kate Griffiths said the NT’s $8.2bn debt burden needed to be managed in the long-term, but at the moment the government “shouldn’t hold back on economic recovery”.

“The ability to pay back debt is much easier when the economy is growing,” Ms Griffiths said.

“The cost of debt is particularly low right now … and the expectation is interest rates will be low for a long time.”

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Ms Griffiths said the biggest risk to the NT’s economic and fiscal outlook was a second wave of coronavirus beyond Victoria, with even local lockdowns expected to whack employment. “It’s much more likely that the situation gets worse than the situation gets better,” she said.