Budget 2013/14 Northern Territory Economy
Tabled paper 295
Tabled papers for 12th Assembly 2012 - 2016; Tabled papers; ParliamentNT
Tabled by David Tollner
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.
Department of the Treasury and Finance
External Economic Environment 31 Northern Territory Economy factors, in addition to the high Australian dollar, have led to an increase in the proportion of consumption of GSTfree items such as education and health, and ongoing growth in online shopping activities. As such, there have been lower levels of GST revenue growth experienced in recent years. Royalties The performance of the global economy has a direct impact on commodity prices and in turn private investment activity in the mining sector, a primary driver of growth for both the Australian and Territory economies. Changing commodity prices and the high Australian dollar also impact on the Territorys ownsource revenue, as the Territorys mining royalty regime is generally calculated on a profit basis instead of by volume or value of minerals extracted. The Australian economy continued to outperform most advanced economies in 2012, growing by 3.6percent in the year. This is the highest growth rate since 2008 and the 21st consecutive year of economic expansion. Growth was mainly due to large increases in private investment activity in the mining sector, a recovery in exports and a return to trend growth in household consumption expenditure. Growth was partly offset by ongoing fiscal consolidation by state and Commonwealth governments and declining dwellings investment. The weakness in dwellings investment was concentrated in the first half of 2012 with a substantial rebound in the second half as interest rate cuts by the Reserve Bank of Australia (see Chapter6: Prices) stimulated demand. Despite increasing Commonwealth and state government debt levels in 2012, public finances in Australia remained within manageable levels compared with other advanced economies. This was recognised by both Moodys Investor Services and Standard&Poors credit rating agencies, which continued to rate Australian Government debt as Aaa/AAA. This, in conjunction with a strong economy and high interest rate spreads, underpinned a strong Australian dollar over the year (see Chapter6: Prices). While the strength of the Australian dollar has helped offset inflationary pressures in the economy by making imports cheaper, it has also negatively impacted on a number of industries, particularly tourism, retail and manufacturing, and with mining investment forecast to fall, it is expected to pose the highest risk to future economic growth in Australia. The IMF is forecasting economic growth in Australia to slow to 3.0percent in 2013, before strengthening to 3.3percent in 2014 and moderating to 3.1percent through to 2016. Investment in the mining sector, which has been the main driver of the Australian economy over the past few years, is expected to peak in 2013 with declining levels subtracting from economic growth from 2014 onwards. This is expected to be more than offset by strong growth in exports, as mining production and exports increase substantially as major projects are completed. While exports growth over the next few years is expected to underpin economic growth, the less employmentintensive nature of this part of the economy means it will not be a major driver of employment growth. This, coupled with forecasts for the Australian dollar to continue to outperform its major trading partners, is expected to partly offset economic growth out to 2016. National Economy
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