By ERWIN CHLANDA
The current Budget Mid Year Report raises the question: How can the NT have a debt of more than nine billion dollars and still boast a balanced Budget?
No worries. You just send 12% of the Budget to banks, wherever in the world they may be, to service loans. Best guess it is more than $400m.
And that’s just paying interest, not repaying principal.
Also, these figures are six months old, before the sharp interest rises which will whack the 2024/25 Budget.
“A balanced Budget means revenue equals expenditure. It’s got nothing to do with the debt. The debt is past expenditure,” says Rolf Gerritsen, the Charles Darwin University’s Professorial Research Fellow in Alice Springs. (He is due to retire in two weeks’ time.)
On the balance sheet, interest payments are just another expenditure, such as hospitals, roads, schools, public housing and so on.
You’d get a lot of these for $400m, but so long as receipts match spending, Treasurer Eva Lawler (pictured) can make statements such as this: “In 2019 our government released a plan for budget repair, and the Mid-Year Report confirms the strategies implemented to achieve those outcomes are working.
“We have set a target of growing our economy to $40 billion by 2030.
“We are determined to achieve this target as we want to see the NT reach its full potential.”
Prof Gerritsen takes a wry view about Budget electoral cycles.
“A party wins office because they made all these promises. First year in office they implement promises.
“Second year in office they claw back the money they had unwisely spent, usually by demolishing what their predecessors built.
“The third year, just before the election, the pork barrels are rolled out and away they go.”
Prof Gerritsen says the current one is a classical Mid Year Report.
“What they are saying, the fisc is in good shape. So when the Budget comes ‘round next May they can announce all sorts of new spending measures, obviously with the intent of being re-elected.
“The Budget is in good shape, we can afford this,” is the motto.
“So we’ve got a bogus deficit estimate in the Budget papers too.”
Borrowings this year will amount to $9,140,773,000 – that’s just over nine billion dollars.
The NT Government doesn’t disclose where the loans are coming from.
“I’m not privy to the Treasury’s loan negotiations,” says Prof Gerritsen. But the Commonwealth Government Public Debt Interest Calculator sets the default long-term nominal interest rate for the 10-year bond currently at 4.8%.
At that rate our annual loan interest bill would be $432m – money the people of the Territory will of course never see again.
The NT’s 2022/23 revenue was $7.6 billion, including $5.3 billion in grants, mostly from Canberra.
IMAGE at top: Professor Gerritsen and illustration from Treasurer Lawler’s Facebook site.
I vaguely remember Frank Sinatra singing “Who wants to be a millionaire”.
In my opinion a rather crappy bit of music, but never mind.
These days being a millionaire is no big deal, except for the many who have nothing.
By stealth billions replaced millions in a relatively short time.
Professor Gerritsen must wonder how many zeroes will be added after he retires.
This is a snapshot of the NT’s poverty mindset of debt, crippling interest payments and a dearth of political will. What we are missing out on is revenue flowing to government.
NT has moved into the top 10 in the world in terms of attractiveness for exploration but it is over in WA that 29.5% of government revenue or $12.7 billion from mining, drives a multibillion surplus.
The NT has the potential to become one of the world’s leading jurisdictions for critical minerals as the globe transitions to net zero emissions in the next two decades, but little progress is being made.
Simplifying the royalties regime, streamlining regulatory processes, minerals titles, land access, improving engagement with communities, downstream promotion (including precincts and shared infrastructure) and improving our roads and cutting inflated infrastructure costs are all needed.
The WA Government fosters and works with exploration companies and miners. For example: a tiny start up company called CG Resources found some deep copper/gold geophysical signatures near Kiwirrkurra community just across the border from Kintore NT.
Potentially there is a $B resource but the cost of drilling was about $1m that the company could not afford.
The WA government stopped in and paid half the cost.
Nearby a company found a major rare earths deposit so the WA Government spent $10m upgrading the road to the west to help get the mine into production.
You drive from Newman out along the Telewana Track and it’s now a two-lane highway with WA Govt graders working full time to ensure the miners along the Track can get their resources out regardless of the weather.
None of this would happen in the NT and we wonder why WA is always the jurisdiction of choice even if the NT has a superior resource.
There is a lot the NT could do or at least run the ruler over.
For example, the Tennant Creek area is shaping up to be a major gold producing centre again with numerous small companies finding high grade gold.
But none of them can afford to build a mill for their gold ore. An $80m government expenditure for a mill to off take the gold ore could pay for itself in a few years and transform numerous explorers into free cash flow miners.
Jack Labor owes $20,000 on his $20,000 limit visa credit account. The bank calls in the debt, Jack Labor doesn’t have the money so he borrows $20,000 from Johnny Ling. Jack Labor pays down his $20,000 dept to the bank, problem solved for Mr. Labor but Johnny Ling, whose real name is Mr. Territory Citizens, is left with the $20,000 dept plus interest.
Beware citizens of the Northern Territory of Australia. Jack Labor earned his name because he doesn’t give Jack Shit about you.