NT budget mid-year report forecasts $500m debt blowout

Scrapping the public service wage freeze is one of the reasons the NT’s forecast debt is nearing $10bn. Read why the budget is heading further into the red.

Scrapping the public service wage freeze has delivered a significant financial hit to the Northern Territory Budget.

Tabled in parliament on Thursday, the Treasurer’s Mid-Year Report forecasts a half-billion dollar blowout in debt over the forward estimates ending 2025-26.

The report shows Territory net debt is forecast to increase by up to $600m in coming years, with net debt to revenue also exceeding May budget expectations.

Originally forecast to hit $9.37bn in 2025-26, the Mid-Year Report revised debt upwards by $540m to $9.91bn in 2025-26.

The net debt to revenue ratio, which contrasts government spending with income, is set to increase from 121 per cent to 127 per cent.

Chapter Two of the Mid Year Report said variations in net operating balances since the May Budget reflect “the effect of government operational policy decisions, largely due to a change in the Northern Territory Public Sector Wages Police that will replace the non-cumulative lump sum payment policy with an annual 2 per cent compounding pay increase”.

Treasurer Eva Lawler has tabled the mid-year budger report in parliament. Picture: (A)manda Parkinson

The report added: “Factors affecting net debt are the combined result of policy and non‑policy changes (which) include government’s operational and capital commitments. Non‑policy changes include increased GST, the effect of renewed and extended leases of office accommodation and timing of payments.”

Former chief minister Michael Gunner late last year secured support from the general public service for a four-year pay freeze, but this was scrapped in favour of a 2 per cent pay rise when Natasha Fyles replaced him as chief minister.

The Report puts the four year cost of scrapping the wages freeze at $245m.

Other budget costs were $9.8m in 2022-23 to meet additional Covid-19 “expenditure pressures” relating to St John Ambulance, pathology and hospital services and $7.1m to Charles Darwin University to relocate NT Library to the new uni campus.

The report said $3m would be spent this year building interim accommodation for displaced Wadeye residents.

In addition $3m has been allocated to tackle anti-social behaviour including security patrols and $3m to support a temporary blitz in courts and correctional services to reduce remand pressures.

Former Chief Minister Michael Gunner late last year secured support from the general public service for a four-year pay freeze, but this was scrapped in favour of a 2 per cent pay rise when Natasha Fyles replaced him as chief minister. Picture: Glenn Campbell

Delays securing a timely roll-out of the long-awaited Darwin shiplift blew-out the project from about $400m to $515m.

The budget has been boosted by an additional $69m in GST revenue “as a balancing adjustment relating to 2021-22 national GST pool collections”.

Reserve Bank interest rate increases are hitting government as well as householders.

Interest payments this year will be $1m a day totalling $366m, tipped to grow to $429m by 2025-26.

Treasurer Eva Lawler, who inherited the Budget delivered by then-treasurer Michael Gunner in May, played down the blowouts.

“Two key factors have impacted the figures in this report: the change to the NT Public Sector wages policy and the Darwin Ship Lift project,” Ms Lawler said.

“The change to the NT Public Sector wages policy is expected to cost $245m over four years.

“This money will help public servants through cost of living pressures, and it is money that will stay in the Territory.

“The ship lift budget increased by $112m to a total of $515m to allow the project to proceed with the full scope of works.

“This is a major investment in a project that will generate millions per year into the NT economy for many years to come.”