The Territory’s net debt hits $9bn with no payment plan in place

The Northern Territory budget remains a sea of red ink despite a marginally better financial outcome than forecast – with net debt increasing by almost $1bn in the 12 months to June 2023.

The Northern Territory budget remains a sea of red ink despite a marginally better financial outcome than forecast.

In the 12 months to June 2023, net debt increased by almost a billion dollars.

Eighteen months since the 2023-24 budget was delivered by then Treasurer Eva Lawler, the Territory economy ended the financial year a whopping $9.018bn in debt, with a $638m fiscal deficit.

Tabled in parliament on Wednesday, the Treasurer’s Annual Financial Report however contained marginally better financial outcomes than those forecast when the budget was delivered in May 2023.

The 2023-24 budget forecast debt of $9.231bn which was revised upwards in the mid-year report to $9.396bn. The figure actually came in at $9.018bn, $213m less than originally forecast and almost a billion dollars more than $8.291bn debt in 2022-23.

Chief Minister Lia Finocchiaro and Treasurer Bill Yan. Picture: Pema Tamang Pakhrin

The final $1.236bn deficit figure included in the TAFR was higher than the $1.134bn originally forecast but lower than the revised mid-year deficit figure of $1.559bn.

For the first time in the Territory’s history the debt to revenue ratio hit three figures, coming in at 108 per cent.

The previous government had twice forecast the ratio to be higher at 113 and 115 per cent.

No less disturbing was the almost half-a-billion dollars the government is paying to service the Territory’s debt.

In 2023-24 expenses on interest was $484m – $10m higher than originally forecast – and this year it is tipped to hit $586m before skyrocketing to $756m in 2027-28.

Interest is now the third highest category of expenditure in the Territory budget – after health and education and ahead of police and emergency services.

An economist told this masthead part of the reason interest repayments are estimated to rise by 29 per cent over the following three years is that debt will force ratings agencies and lenders to downgrade the NTG’s creditworthiness, meaning that interest rates will be higher, on top of increased borrowings.

NT Treasurer Bill Yan played down the slightly better figures than forecast, blaming the previous government for the debt scenario while declining to offer a pathway out of future hikes to debt.

“I don’t know that it’s a better outcome than expected,” he said.

“When you look at the net debt to revenue ratio for the first time in history the Northern Territory’s gone over 100 per cent.

“The debt they forecast was going to be higher was actually a little bit less, but it was still a billion dollars higher than it was in the previous year.

“While some of those numbers actually look okay when you look at them in the grand picture of the budget, it still paints a very dire picture of where the Territory’s financial position is.”

Mr Yan would not rule out a suggestion by shadow Attorney-General Chansey Paech that the cost of unfunded corrections reforms announced this week would add another $700m to debt over the next four years.

Originally published as The Territory’s net debt hits $9bn with no payment plan in place