Territory Stories

Budget Paper No5 Northern Territory Economy 1998/99



Budget Paper No5 Northern Territory Economy 1998/99

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Tabled Paper 382


Tabled papers for 8th Assembly 1997 - 2001; Tabled papers; ParliamentNT




Tabled by Michael Reed


Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




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BUSINESS CONDITIONS Economic indicators such as office vacancy rates, new business registrations, commercial and lease finance commitments, and bankruptcies can be used to gauge current business conditions in the Territory. The number of new business registrations in the Territory rose 5.7% in the year to January 1998, compared to the previous year. Recorded bankruptcies increased substantially during 1997, some 70% of bankruptcies are individual while the balance are corporate. Office vacancy rates increased in the Territory during 1997 as the increase in gross lettable area outpaced the increase in demand for office space. Nationally the increased level of economic activity was evidenced by the strong growth in the value of commercial finance commitments, although the number of bankruptcies also increased considerably. BUSINESS FINANCE The level of business finance commitments reflects the prevailing and anticipated economic conditions and the confidence held by the business community. Commercial and lease finance includes the majority of finance commitments entered into by business to facilitate the acquisition of goods and capital items and to smooth cash flow fluctuations. Figure 7.1 shows growth in commercial finance (new fixed loans less refinancing plus new and increased credit) in the Territory and nationally. The Territory has recorded growth in commercial finance commitments every year during the 1990s. Commitments made during 1997 were 4.3% higher than in 1996. There has, however, been a considerable slowdown in the growth of commercial finance committed to businesses in the Territory over the past two years. National growth in commercial finance was virtually unchanged over the year and remains strong. Finance raised by major national and transnational companies with operations in the Territory is generally not reflected in the Territorys commercial f inance commitments data, as the amounts are more than likely to be borrowed outside the Territory. Furthermore, some borrowings by businesses and sole traders may not be classified as business finance. 33 Chapter 7 -20 -10 0 10 20 30 40 1991 1992 1993 1994 1995 1996 1997 % Northern Territory Australia Figure 7.1 COMMERCIAL FINANCE COMMITMENTS (Annual change) Source: ABS Cat. No. 5643.0

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