Michael Gunner to face NT voters with smashed budget

The coronavirus pandemic and national economic slump will smash the Northern Territory budget.

Northern Territory Chief Minister Michael Gunner briefing the media on the government's fiscal outlook. Picture: Che Chorley

The coronavirus pandemic and corresponding national economic slump will smash the Northern Territory budget, doubling this financial year’s projected deficit to $2.3bn or about 40 per cent of revenue.

On his last day of official duties before the government goes into caretaker mode ahead of an Aug­ust poll, Chief Minister Michael Gunner unveiled an updated fiscal outlook adding $1.3bn to the NT’s net debt forecast.

The revised 2020-21 total of $8.2bn (equal to a nation-leading 134 per cent of revenue) means the Labor team will face voters with the government owing more than three times as much as it did when they took power.

Mr Gunner said it had been “an incredibly difficult” four years. “We saw the comedown off the Inpex (LNG project) high with 11,000 workers leaving the construction site,” he said.

“We’ve seen an argument … about the GST distribution.

“We feel we’re $500m worse off every year as a result of how it’s calculated.”

Treasurer Nicole Manison said slightly improved estimates for 2019-20 showed her government’s budget repair plan had been working and that an economic recovery had been under way when the pandemic hit.

“COVID-19 has changed everything,” she said.

The government has committed $383m to pandemic-related stimulus, which Treasury thinks will deliver an economic return of $701m and may have already helped save about 6700 jobs.

The Territory gets almost 80 per cent of its revenue from Canberra, mostly in the form of GST. Revised estimates show drops in local tax receipts of 5–10 per cent annually and totalling $142m in the two years to July 2021. Treasury thinks the equivalent GST hit will be $649m.

Mr Gunner, who has been campaigning on his success in managing the pandemic, said infection control was the key to economic success.

“It has never been more critical to get more jobs in more areas,” he said. “To fix the budget, you need to fix the economy; to fix the economy, you need to control the virus.”

Country Liberal Opposition Leader Lia Finocchiaro blamed Labor for the Territory’s woes.

“Here we are less than a month from the election, and the Gunner government has unveiled an economic horror show with no solutions to fix the situation,” she said.

“This government continues to fail to recognise that it is the cause of our financial burden and our economic decline, instead choosing to blame the federal government and GST losses.”

Territory Alliance leader Terry Mills called the budget numbers “appalling” and the government “deceitful”.

Treasury documents reveal national modelling near the start of the pandemic suggested the Territory could face 92,500 COVID-19 infections and 5400 hospitalisations, costing at least $200m to treat. In fact just 32 corona­virus cases have been recorded so far.

The fiscal update put the cost of “COVID-19 response measures” at $119m in 2019-20 and $216m in 2020-21.

The operating balance is expected to be minus $1.5bn this year, with the government’s interest bill more than $1m a day.

The NT has the worst credit rating of any Australian­ ­jurisd­iction, according to Moody’s. A spokesman said the latest outlook did not change its analysis.