Coronavirus: Michael Gunner floats federal bailout idea for Northern Territory

Michael Gunner says a collapse in the GST pool, which reflects national economic conditions, would cause his NT government significant problems.

Northern Territory Chief Minister Michael Gunner in Darwin on Thursday. Picture Katrina Bridgeford

The Northern Territory will need a bailout from Canberra if the nationa­l economy remains weak in the wake of COVID-19 and the GST pool collapses, forcing taxpayers in the larger states to cover even more of the Top End government’s costs.

Chief Minister Michael Gunner said with more than 70 per cent of revenue coming from GST and other federal funding arrangements, a collapse in the GST pool, which reflects national economic conditions, would cause his govern­ment significant problems.

“If that money is not coming in from the Australian government through the means that they would normally give it to us, then there is a case for that money to be provided through a different form,” he said.

He likened the situation to a one-off GST top-up payment handed to Western Australia. Then, the Territory was receiving more than $5 or about 15 times WA’s roughly 30-cent return for every dollar paid into the GST pool. The Territory typically receive­s more than $4 back for every dollar contributed.

Successive governments have said the NT needed to diversify its economy away from public-sector spending but, in practice, have tended to pander to Nimby-ish local concerns and a mollycoddled public service.

Mr Gunner promised on Thursday to reopen the Territory’s borders on July 17. Business groups and opposition parties had been campaigning for an earlier date on the grounds that the Labor govern­ment’s safety-conscious approach was killing the economy.

The Chief Minister acknow­ledged that waiting another four weeks was too long for some. The NT formally eradicated corona­virus on Thursday, having gone 28 days without a new infection.

“I would rather you hate me right now, and you are alive to hate me, than have the regret of going too soon and stuffing it up,” he said.

At the start of the crisis, worst-case predictions had the Territory facing 2200 deaths and a critical shortage of intensive care beds. Mr Gunner said his strict border restrictio­ns had helped avoid that “nightmare scenario”.

In April last year, the Gunner government released a fiscal review warning the Territory could be broke within a decade if governments did not reform spending.

The May budget promised to cap expenditure growth at levels achieved only four times since the turn of the century. Since then, the economy has crashed, and the NT government added $500m to this year’s projected outlays.

Mr Gunner denied that the Territory was on an even faster path to fiscal ruin, even though his government is yet to implement some of the most critical reforms recommended by its review.

“I don’t believe in taxing businesses out of existence,” he said.