Northern Territory Fiscal Crisis

HANSARD EXTRACT

 

MOTION

NORTHERN TERRITORY FISCAL CRISIS

(Wednesday, 13 February 2019)



This extract is taken from the Draft Daily Hansard of the Legislative Assembly of the Northern Territory, and will be subject to further edits by the Hansard Unit before incorporation into the Parliamentary Record.

 

 

 

MOTION

Northern Territory Fiscal Crisis

 

Mr HIGGINS (Opposition Leader) (by leave): Madam Speaker, I move that the Legislative Assembly recognise that the Northern Territory is in fiscal crisis based on the government’s plan for budget repair dated 14 December 2018, that this party transcends the party divide, and takes responsibility as a whole to address the dire state of Northern Territory Finances.

 

The opposition is deeply concerned about the disarray and disorder that has enveloped the Territory Labor government. This is an exceedingly dark time for Territory politics. This is not a time for squabbling. Dysfunction of this magnitude is bad for Territorians and the Territory, and does nothing to address our financial and crime crises.

 

Politicians talking about themselves is not what Territorians want to hear. Territorians want to hear what this government is doing to fix the economic crisis that Labor has caused, and what the government is doing to address crime and restore community safety.

 

Punishing the only Labor minister who had the courage to speak the truth is not only unfair, it is immature and shows a lack of leadership. To add further insult to Territorians, the Chief Minister has replaced the former Minister for Primary Industry and Resources, the Member for Johnston, with a left-wing unionist who is on the public record opposing fracking.

 

The former Minister, the Member for Johnston, has confirmed that government spending and waste is out of control. He has exposed that it has no plan, and Labor cannibalised him. At least the Member for Johnston had the guts to stand up for his convictions and acknowledge that Labor has lead the Territory into dangerous and uncharted waters.

 

On last Friday evening the Member for Fong Lim resigned and indicated that the Labor government is in denial about the economic crisis. The Chief Minister’s priorities are questionable. He remained on leave after dropping an economic bombshell on 14 December last year, yet cut short his overseas trip to shore up his numbers in the caucus. The Chief Minister has a lot to explain.

 

Financial mismanagement—in 2018 Labor delivered the worst ever set of finances in the Northern Territory. Their own figures show an unwieldy debt burden, an analysis that says that the Territory will not be able to meet interest payments let alone pay back the debt. The Treasurer is begging for a bailout from the Commonwealth. Even though they have been managing the coffers for two and a half years, they blame everyone and everything except themselves.

 

When the CLP government left office in 2016 the non-financial public sector debt, or net debt, was $1.8bn. That was a $1.7bn improvement on the $3.5bn net debt inherited when the CLP came to power in 2012. Then, like now, the recklessness of entrenching recurrent expenditure emblematic of Labor’s incompetence has put the Territory on a path to insolvency.

 

Territory Labor’s tenure at the helm thus far has been unending consultation and outsourcing of responsibility and blame, constantly levelled at the federal government or the previous CLP government. The Chief Minister has shown no leadership in this time of crisis. This is highlighted by the release by his government of a paper titled ‘A Plan for Budget Repair’ that detailed how the Territory would pay $2bn in interest on borrowings by 2029–30 and hit a debt to revenue ratio of 320%.

 

These numbers and levels are self-evidently far beyond sustainable, yet Labor has no plan to ever deliver a surplus or get the Territory back on track. Moreover, the assumptions underpinning these dreadful numbers are kind, if not overly optimistic.

 

We in opposition are concerned about the compounding effects of a credit downgrade. Again, we call on the Territory Labor government to set a clear economic narrative and focus on wealth creation, not just social reform. The primary driver of economic growth must be the private sector. Impediments to investment must be removed. The Labor Party has made fraudulent claims about this budget and has deceived Territorians.

 

Territorians deserve the facts about GST. The Commonwealth Grants Commission determines GST allocations every year based on a formula agreed by each state and territory. For the Territory, the change between 2017 and 2018 was an additional $136m. The Member for Nelson went through this as well. Our relative share of the GST pie is declining because our population growth is not keeping up with the rest of the nation. In other words, we need more people in the Territory!

 

The federal Coalition topped up the Territory’s GST allocation last year by $259m. The federal Coalition is fixing the GST formula, ensuring that the Territory will not be worse off. That is the legislation.

 

Labor has misled Territorians over the $2bn and $3.4bn GST cut lie. Government is blame-shifting and basing its cut numbers on what it would like to get, as stated in the Pre-election Fiscal Outlook for 2016. The formula for calculating the GST return to each state and territory has been agreed upon for nearly two decades. That formula has not altered. The Territory’s economic fortunes have.  That is, people are leaving—0.03% to 0.7% population decline forecast in Budget 2017–18 and 2018–19 respectively. Why? Lack of jobs.

 

GST distribution is not political. Payments are distributed by the Commonwealth Grants Commission. Declines in GST receipts started under the CLP, but the CLP still managed to pay down debt and close the deficit gap—structural deficit or fiscal imbalance.

 

The CLP had a plan—we published it—to diversify the economy and create jobs. Labor is still thinking about it. This government needs to lead and stop lying to Territorians. A total of 71%, or $4.2bn, of the NT income for 2017–18 has come from the Commonwealth.

 

Let us look at government waste—there are a few sitting on the other side. The Labor government has spent more than $63 000 on promotional fence wraps and boarding around the underground car park project. Talk about waste! This spending is on self-promotion and it has to stop. This is another example of how Labor has continued to fritter away taxpayers’ money, but they will never acknowledge it. They will continue to blame everyone else for the Territory’s economic crisis. There are those words again.

 

It may seem like small figures compared to the millions in debt that Labor has landed us in, but this is how the waste adds up. Anyone with a credit card debt can tell you, small incremental spending is just as bad as big-dollar purchases.

 

We appreciate the safety aspect of the solid hoarding, but why the graphically designed promotional painting and very strange inclusion of artificial grass? Why not put it up in the first place instead of the initial fence wrap?

 

The figures also show that 14 projects across the NT have had fence wrap installed at a total cost of $68 770.79, excluding GST. The 14 projects, however, do not include the Nightcliff renal upgrades, which also feature government fence wrap.

 

Other government waste includes $500 000 on the MyFuel NT website, $150 000 on the driverless bus trial, $1.2m on the economic summit series talkfest, and the $800 000 plan for the now defunct Myilly Point museum. Then there is the $1m to date for the Alice Springs art gallery, which the Chief Minister now says the government will have to reconsider. That is a bit different to what the Tourism minister recently said. That is $1m and we do not even have a location, let alone an art gallery. At the same time, South Australia is forging ahead with its Indigenous art gallery.

 

What about that $40m rugby league stadium—$40m seems a bit over their estimates, but this is to benefit one club and not supported by the 80% of the other clubs.

 

What about the lack of business confidence? The NT Chamber of Commerce in its 2019 Business Outlook Survey received over 615 responses. A resounding response that confirms the concerns of Northern Territory businesses on a wide scale. The Chamber conservatively estimates that these 615 businesses employ 20 000 local Territorians.

 

In terms of their assessment of NT business in general 63% have a negative outlook, 23% are neutral and only 14% are positive. I wonder what happens if the votes turn out that way? The Chamber on behalf of its members has put forward a five point plan. That includes:

  • acknowledge that it is the local private sector that needs to lead economic growth and act accordingly, cut red and green tape and speed up government approval processes

 

  • continue to invest in strategic infrastructure and spend the allocated money in the year allocated

 

  • tackle crime, vandalism and itinerant issues that are killing local businesses

 

  • the Northern Territory Government to live within its means and to streamline the public service

 

  • grow our population by creating real jobs generated by the private sector and industry development.

 

It is a very loud and clear message to the Gunner Labor government and evidence that the business community are displeased with the government’s performance and that they want to be heard. In my statement to the House yesterday I outlined the growing and unfortunate number of businesses that have closed and I do not intend to go through that list again, suffice to say it has happened and it is further proof the Northern Territory is in an economic crisis.

 

Wealth creation—Labor has introduced the world’s worst hybrid royalty regime. A property levy on investors who are doing it tough, a halt to gas exploration, a moratorium on water licences, uncertainty for major retailers like Dan Murphy’s, uncertainty for the mining industry through legislative changes and dropped components of the pastoral land legislation which would have allowed for subleasing to be recorded on the title thus unlocking millions in much needed investment.

 

In short, Labor has hindered wealth creation in the Territory. It has not helped. The Opposition believe that at this time of economic crisis with the government spending $4m every day more than it has, then it should be government’s priority to make it easier not harder to invest in the Territory.

 

The environmental legislation proposed by Labor empowers the Environment minister in such a way as to give her an absolute veto on any project. At the very least this could be a Cabinet decision not the decision of a single minister.

 

The changes proposed by the government increase business uncertainty, are unprecedented, unwise and unnecessary, represent a scale of reform that is sweeping at a time when business investment confidence in the Territory is flagging.

 

It should be made clear that the opposition see hope and abundant opportunity in the Territory. Today there are 17 major mineral resource projects at final investment decision phase. Unhelpfully the Territory Labor government has sought to increase red and green tape, not reduce it as is required at this time of crisis.

 

Labor’s hybrid mining tax will put at risk at least $6bn of investment and 4000 jobs and that is according to the Association of Mining and Exploration Companies, AMEC.

 

Crime remains out of control in the Northern Territory. The most recent crime statistics released for the 12 months ending 30 November show a 15% increase in commercial break-ins and Territory wide with a near 10% increase in Alice Springs, a 42% increase in Palmerston and an incredible 167% increase in Katherine. This is a kick to the gut of business when they are already down for the count.

 

The resourcing of police force have been questionable indeed and we are told that they will need to reduce their spending by at least $30m. Police are a demand driven agency. If this government continues its social reform agenda where there is no consequences for crime being committed in our communities inevitably you will continue to see an expediential increase in crime and an increased demand for police resources. The government likes to wring its hands over law and order and it has done nothing to truly address the issue.

 

Let us have a look at portfolio management. There have been significant failures by ministers over a number of portfolios and an alarming level of bureaucratic capture. There are two words that describe the Treasurer, boundless debt. The Minister for Territory Families has lurched from disaster to disaster for children in care, their families and youth detainees. The Minister for Tourism and Culture keeps her job even though she has shown scant interest in her duties apart from media release announcements and she has failed time and time again. The current Minister for Infrastructure, Planning and Logistics tends to leave all the heavy lifting to the previous minister and is re-announcing government projects to look like she is doing something.

 

While the opposition welcomes the announcement of infrastructure projects last week it is disingenuous for Labor to imply they are some sort of boon to the economy. These are necessary infrastructure projects which have been on the books for some time. In the case of the Mandorah Jetty this is an overdue project, Labor promised it ages ago so they are just catching up. They are that far behind.

 

We are not saying do not do them but we are cynical about the government’s announcement. It amounts to no new money and once the projects are done the jobs will disappear. They are bringing forward projects that they failed to get out in the first place. Only the Litchfield spend will yield a financial return. I remind members of this House that Labor has priors in not getting work out the door and we will believe it when we see it.

 

The Housing minister conducts his business through media releases with no proof that what he says is being delivered is actually being delivered. Time and time again we have heard the minister boast about the provision of housing in remote communities. After an offer of $550m from the federal government in April 2018, this government has failed to even sign up for that money. Rattle a tin but never sign an agreement. How many times do we hear members opposite bleeding about the federal government and its inability to adequately provide for Territorians? I say to the minister, get on with your job, stop playing politics with the lives of vulnerable Aboriginal people and get the agreement finalised and signed. Shame on you minister, shame!

 

The Attorney-General and Minister for Justice and Minister for Health has overseen the bungling of alcohol reform from floor price debacle through to select measures for corner shops. The Territory government continues to strong-arm locally owned businesses which employ Territorians and contribute to the fabric of our community. Labor has failed to consult in a meaningful way and completely ignored businesses which are already struggling in a tough economic climate and have been plagued by crime. Crime that they cannot address. These are the same businesses that employ Territorians, sponsor and support local community groups, including sporting teams and drive foot traffic to local retail precincts.

 

Finally, we come to the Chief Minister. As I said earlier, the Chief Minister chose to go hiking when his Government released the damning plan for budget repair. He only decided to cut his holiday short when he was directed by his chief of staff to sack three colleagues for having the temerity to speak the truth. They spoke the truth and got cannibalised, crucified and everything else that happened to them.

 

The Chief Minister continues to preside over a 50 metre $2.7m shade structure that does not even provide any shade. And in the wake of an eight-hour riot at Don Dale Youth Detention Centre, the Territory Labor government reinforced its inept and tone-deaf approach in deciding to circulate a media release about the Territory’s population.

 

The Chief Minister needs to get real. Youth justice detainees rioted at Don Dale putting the safety of frontline responder youth justice workers and fellow detainees at risk. Rather than addressing that issue, Labor has forged ahead with its flopulation plan that intends to bribe people to move to the Northern Territory. Growing the Northern Territory’s population is vital, but without the jobs to keep people here and a safe community, any Labor bribe will not work.

 

The incompetence and arrogance of this government is really boundless. Let us not forget that the repair bill for the Don Dale riot was almost $1m. The Chief Minister has shown no leadership in this time of economic crisis. He has gone so far as to say there is no crisis. This is despite their own report detailing how the Territory would pay $2bn in interest on borrowings by 2029‑30 and hit a debt to revenue ratio of 320%.

 

Remember, they were given 27%. They put a zero on the end and added a bit, which seems Labor’s new way of blaming the CLP. They are nothing if not consistent with their blame game. The fact is the deficit handed to Labor was $78m, as recorded in the Treasurer’s Annual Financial Statement. The CLP also had a plan to bring the budget back into surplus, which can be seen in the forward estimates of Budget 2016‑17. Labor loved it! They stuck with it. They did not introduce a mini‑budget—they loved it.

 

Labor also knew that INPEX was winding down and our GST receipts would be down. Where was their plan to deliver economic diversification and tackle the downturn? Remember there was not even a mini‑budget. Maybe it was because they could not add up.

 

Our plan included onshore gas, diversification of the pastoral estate, growing and supporting our tourism industry, developing further links to tap into the growing international student market and major projects. We published a full policy and plan at the time of the 2016 election. All Labor has done is say it is just thinking about it—‘We are taking a breath’. They must be comatose. Between breaths you have years go past. They have to be comatose.

 

All Labor has said is, ‘We are thinking about it’—about tomorrow. But bet your bottom dollar tomorrow there will be a sunrise. That is the only thing we know will happen tomorrow. Yet we all know tomorrow never comes. An old saying Labor has adopted is Labor debt today is less than yesterday but it will be more tomorrow.

 

The Chief Minister needs to wake up and talk about real solutions, not sprout more rhetoric. Taking out expensive political ads in newspapers and TV and putting out a Facebook posts for ‘have your say’ websites is not leadership. This Labor government is trying to outsource responsibility and crowd source solutions. Labor lurches from crisis to crisis and desperately needs to apply itself if it is to steer the Northern Territory through the fiscal and social crisis we find ourselves in. Their hubris prevents them from admitting any wrongs and they are overly fond of blaming everyone else except themselves.

 

All ministers need to start performing in their portfolios. They should be holding agencies to account and should start insisting on approving any new executive position, as well as reviewing those currently in place. They need to listen more closely, improve their work with others, and use their time more effectively. Labor’s extremely poor performance and incompetence is a cause for serious concern.

 

Territorians cannot afford for them to continue to fail. They need to vastly improve their attitude, performance and work ethic, swallow their pride, stop the internal bickering and pick up their act overall. If they do not, the NT will be bankrupt, the economy weakened by the uncertainty and the Northern Territory will be taken over by the Commonwealth.

 

The NT opposition recognises that the Territory, like Australia, must be competitive regionally and globally. We further recognise that any government that lacks the big vision has a big problem. We have a vision for the Northern Territory as a safe, secure community with a strong, prosperous economy led by private sector investment.

 

NT Budgets 2017‑18 and 2018‑19 showed population set to decline 0.3% and 0.7% respectively, which is the first period of negative population growth in 14 years. Additionally, it is critically important that we recognise that the Territory is currently in recession. Given the anomalies of the Territory economy and the outsized effects of major exports, the best measure of how the economy is travelling is state final demand.

Under this metric, the Territory has been in deep recession for some time. The NT opposition believes that the current fiscal and economic challenges the Territory faces can be addressed through the following steps as a minimum.

 

Rein in the spending. Reduce general government operating expenditure from 6% to 3%—welcome but insufficient.

 

We need smaller government and to reduce the price of delivering core government services. Stop the waste—underground car parks, shade structures, consultancies, reviews do nothing to generate wealth in the Territory.

 

Support a diversified economy. This means proactively backing the mining, tourism, hospitality, international student education, agribusiness, Defence supply and service sectors. Free up business. Scrap the investment killing vacant and derelict land tax. Scrap the world first, world worst hybrid mining tax. Introduce new debt and bond products for national and international investors and provide strategic infrastructure investments that create sustainable employment.

 

The opposition wants to know where the Chief Minister is up to in regard to one-on-ones he is conducting with departmental heads, and how the so-called root and branch examination is going. I look forward to him responding to that.

 

I ask the Chief Minister what savings have been identified for this financial year and the outer years. What disciplines have been put in place in departments and agencies? How is the government reining in its spending? We need the detailed numbers. We have not seen one dollar in savings identified.

 

Territorians deserve some real answers and not more rhetoric. We must do more than crowd sourcing comments on a website. We cannot allow our children to inherit our debt of $35bn. We cannot stand by and continue to listen to empty slogans that ‘times are tough but the sun will shine again’.

 

We cannot continue to see businesses closing across the Territory day after day. We cannot ignore the calls of businesses that say, ‘Cut the bureaucracy red tape’. We cannot ignore the calls of the resource industry, which is calling for business certainty.

 

We must scale back the social reform that is sweeping across the Territory and causing so much fiscal and other harm to our communities the length and breadth of the Territory. I, as the Opposition Leader, am not saying we have all the answers. We do not have all the information at our disposal and neither do the members of this Assembly.

 

This crisis is one that all Territorians are facing and it transcends the party divide. Today I call on every member of this Assembly to take an active interest in the very serious and grave financial situation on behalf of their constituents. Further, and importantly, I call on this parliament to support this motion.

 

I also ask that members take an active role in the PAC’s examination of accounts and receipts of expenditure of the Northern Territory, which commenced yesterday. Sessional Order 16.2 allows each and every member of this House to participate in the PAC’s proceedings. A PAC inquiry will allow individuals and organisations to make submissions for public hearings to be held and for the committee to have public service agencies provide the information on scrutiny of government receipts and spending. This is desperately needed at this time.

 

We need the PAC and all members of this parliament to examine the calamitous state of the Territory’s finances. The solvency of the Territory is in doubt. These are serious issues and require serious people to take responsibility on behalf of their constituents.

 

Should members opposite not support this motion they will clearly demonstrate to their constituents that they, too, are in denial that we have a physical crisis and they are not serious about budget repair. There has been no time in the history of the Territory when it has been more necessary to scrutinise public accounts and, importantly, for each of us to band together to do so.

 

I urge honourable members to support this motion. Let us work together with the community to haul the Territory back from the brink and into the brighter future.