Territory Stories

Debates Day 2 - Wednesday 1 May 1991



Debates Day 2 - Wednesday 1 May 1991

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Parliamentary Record 3


Debates for 6th Assembly 1990 - 1994; ParliamentNT; Parliamentary Record; 6th Assembly 1990 - 1994




Made available by the Legislative Assembly of the Northern Territory





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Legislative Assembly of the Northern Territory

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Attribution International 4.0 (CC BY 4.0)

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Legislative Assembly of the Northern Territory



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DEBATES - Wednesday 1 May 1991 growth in the productive capacity, growth and income of the Territory economy. If we were not to borrow, we would deny the capacity of the Northern Territory economy to grow and take advantage of the infrastructure put in place. It is appropriate, as a general rule, for assets with long service lives to be financed in large part by borrowings. This is particularly the case where assets generate an income flow which can be used to service that debt. In addition, it is appropriate for those who benefit from the future services provided by the assets to contribute to debt servicing through general budget revenue. That is known as the Sydney Harbour Bridge philosophy which I will come back to later. The present generation of taxpayers should not be required to fund entirely assets which will provide services to future generations. This is not to deny that excessive levels of public sector indebtedness should be avoided. Whether the level of public sector debt is appropriate or acceptable depends on whether growth of the public debt in the current generation prejudices the ability of succeeding generations to continue to develop the productive capacity and income of the Territory economy. It is certainly the case that the main way in which one generation can impose an unwarranted burden on succeeding generations is by abrogating responsibility to add to or replace the Territory's capital assets. Anything which adds to the asset structure of the Territory benefits the next generation. It benefits that next generation by increasing the productive capacity and potential income of the economy. Clearly, the economic development, growth and the interests of the next generation are generally furthered by policies which increase public and private capital formation even if this does involve increases in the level of public debt. An essential element of any public sector debt strategy is to ensure that any such decisions to incur further public sector debt are undertaken within the framework of the twin criteria of both the capacity to service the debt and the need to develop the productive capacity of the Northern Territory. It is acceptable and sound financial management practice to fund, once again to an appropriate extent, the accumulation of capital assets and the infrastructure by borrowings. The Northern Territory government is required to provide a range of infrastructure to enable the development of the Territory to proceed. That infrastructure provides the essential foundation on which the private sector can develop, diversify and expand the economy of the Northern Territory. Not to provide the necessary productive capacity essential for further economic development and an increase in the living standards of all Territorians would certainly unreasonably inhibit the ability of succeeding generations to continue to develop the vast potential of the Territory economy. It is also essential to ensure that the level of debt incurred by the current generation does not overly commit future budgetary resources to debt servicing, thereby restricting the future budgetary flexibility which will be required to meet emergent objectives and the changing policy initiatives of government. The Northern Territory does indeed have a higher level of debt than the states or other places in Australia. However, there are good reasons for that. It is more expensive to develop the Northern Territory than it is to develop other parts of Australia. As a percentage of state populations resident in rural areas, the 6-state average is 16.8%. In the Northern Territory, the rural population is 27.8%. The percentage of state 850

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