2010-11 Budget Papers

No. 1 Speech The Treasurer’s speech to the Legislative Assembly describes the Northern Territory Government’s Budget strategy and key features of the 2010-11 Budget, together with the Bill presented to Parliament outlining appropriations for 2010-11.

No. 2 Fiscal and Economic Outlook Meets the requirements of the Fiscal Integrity and Transparency Act. Includes a discussion of the Government's fiscal strategy, the fiscal and economic outlook for 2010-11 and the forward estimates period, and an overview of expenditure and revenue initiatives in the Budget. It also discusses current and topical issues in intergovernmental relations from the Territory’s perspective and outlines financial arrangements with the Commonwealth for Specific Purpose Payments and National Partnership Agreements. The financial data provided meets the Territory’s obligations under the Uniform Presentation Framework as agreed between governments.

No. 3 The Budget Detailed information about agency budgets, grouped by Ministerial portfolio. Includes agency budget highlights, appropriation amounts, output statements and accrual financial statements (Operating Statement, Balance Sheet and Cash Flow Statement) for all agencies within the Northern Territory budget sector. A detailed summary of revenue information is also provided.

No. 4 The Infrastructure Program Presents a summary of the Government’s Infrastructure Program for all budget sector agencies, as well as descriptions of 2010-11 capital projects for each agency. Expected committal dates for major projects in 2010-11 are also provided.

Related Papers Budget Overview

Key features of the 2010-11 Budget.

Northern Territory Economy A detailed assessment of the Territory economy, including recent performance and growth prospects, employment, population, trade, and Australian and international conditions. Includes chapters on the performance and outlook for major Territory industries. An overview is also provided as a separate, self-contained document.

Regional Highlights Government’s initiatives, programs and expenditures in the 2010-11 Budget detailed by region.

Any of the above papers can be obtained from: Northern Territory Government Printing Office, Retail Sales, Railway Street, Parap NT 0820 or GPO Box 1046, Darwin NT 0801 Telephone (08) 8999 4031, Facsimile (08) 8999 4001, or Northern Territory Budget website at www.budget.nt.gov.au

The cover photographs are reproduced with the kind permission of Department of Health and Families; Department of Construction and Infrastructure; Department of Natural Resources, Environment, The Arts and Sport; and Steve Strike.

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2010-11 Budget

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ContentsStructure of the Economy 2

Economic Growth 3

External Economic Environment 4

Population 5

Labour Market 6

Prices and Wages 7

Retail and Wholesale Trade 8

International Trade 9

Residential Property Markets 10

Mining 11

Manufacturing 12

Construction 13

Agriculture, Forestry and Fisheries 14

Tourism 15

Transport and Communications 16

The Public Sector 17

Defence 18

Northern Territory Economy OverviewThis overview is a summarised assessment of the Territory economy,

including a brief description of recent performance and growth prospects,

employment, population, trade, and Australian and international conditions.

There is also some discussion on the performance and outlook for major

Territory industries. The Economy Overview is summarised from the more

detailed document, Northern Territory Economy. (For more information, visit

www.budget.nt.gov.au)

2 Economy Overview

2010-11 Budget

Structure of the EconomyThe drivers of economic activity in the Northern Territory are markedly

different to those for other Australian jurisdictions. The Territory has an

abundance of natural resources, a large public sector and a significant

defence presence, but relatively smaller professional, financial and

insurance services.

The Territory economy is highly influenced by global economic conditions

due to its relatively small size and commodity-focused base. As a result,

economic growth tends to be volatile from year to year.

Mining is a significant driver of economic growth and the largest industry

contributor to Territory gross state product (GSP). The Territory economy

has potential for high growth in line with mineral and energy developments.

The second largest contribution to Territory GSP, accounting for

8.5 per cent in 2008-09, is public administration and safety, which

incorporates government administration and defence services. Compared

to most other jurisdictions, the Territory Government faces relatively higher

per unit costs of providing government services to a small population that

is widely dispersed. The defence presence in the Territory is also relatively

large compared to other jurisdictions.

The Territory’s manufacturing base has increased significantly since 2006

following the completion of the Darwin LNG Pty Ltd liquefied natural gas

(LNG) plant at Wickham Point, the new BOC helium plant in Darwin and the

expansion of the Rio Tinto Alcan alumina refinery at Gove.

International exports of goods and services from the Territory are an

important source of economic activity. In 2008-09, international exports

accounted for 39 per cent of Territory GSP compared to 20 per cent

nationally.

Source: ABS Cat. No. 5220.0

Chart 1: Industry Proportion of GSP and Gross Domestic

Product (GDP), 2008-09

3

Economic GrowthFollowing the global financial crisis (GFC), economic growth moderated

to 2.6 per cent in real terms in 2008-09, compared to an average annual

growth rate of 5.1 per cent over the previous five years.

In real terms, economic growth in the Territory is estimated to have

moderated to 0.4 per cent in 2009-10, due to lower construction activity

as several major projects such as the Eni Blacktip project and the GEMCO

manganese refinery expansion are completed. Growth was supported by

Commonwealth stimulus measures, a record Territory Government capital

works program and a widening trade surplus.

Growth in consumption expenditure is estimated to have moderated to

1.3 per cent in 2009-10 as increased public sector consumption offsets

declining household consumption. Household consumption expenditure

is estimated to have declined by 0.3 per cent as higher interest rates

and residential rental prices reduced disposable household income,

dampening demand for recreational, leisure and luxury goods. Public

sector consumption expenditure is estimated to have increased by

3.5 per cent, driven by Commonwealth stimulus measures, increased

national partnership funding and increased nurse, teacher and police

numbers.

In real terms, Territory economic growth is forecast to strengthen to

3.6 per cent in 2010-11, driven by higher mineral and energy exports as

the world economy continues to strengthen and production capacity in

the Territory continues to increase. Further weakness in private sector

investment is forecast to partly offset growth.

Consumption expenditure is forecast to increase by 1.9 per cent in

2010-11 mainly due a moderate recovery in household consumption

expenditure. Although dampened by a rising interest rate environment

and growth in residential rental prices, household consumption is forecast

to increase by 1.8 per cent, supported by strengthening residential

construction activity and population, wages and employment growth.

Public consumption expenditure is forecast to moderate from 3.5 per cent

in 2009-10 to 2.0 per cent in 2010-11 mainly due to lower public sector

employment growth and unwinding of Commonwealth stimulus measures.

e: estimate; f: forecast Source: Northern Territory Treasury, ABS Cat. Nos 5206.0, 5220.0, base year 2007-08

Chart 2: Territory State Final Demand (SFD) and GSP

(year-on-year percentage change)

4 Economy Overview

2010-11 Budget

External Economic Environment

The external economic environment is an important influence on the

Territory economy due to the significance of international and interstate

trade.

The Australian economy proved to be remarkably resilient to the downturn

in the global economy in 2009 with economic activity supported by

substantial fiscal and monetary policy stimulus measures.

The Australian economy is expected to strengthen over 2010 mainly due

to a recovery in private sector demand, especially in business investment

and housing construction.

After contracting in 2009, the global economy is expected to slowly

strengthen over 2010 led by Asian economies, particularly China, before

growing at trend levels in 2011.

The International Monetary Fund is forecasting the global economy to grow

by 3.9 per cent in 2010 and by 4.3 per cent in 2011.

A number of risks remain to a sustained global recovery in 2010, including

the premature withdrawal of fiscal and monetary stimulus measures and

private sector demand not recovering sufficiently.

Source: Reserve Bank of Australia, International Monetary Fund

Chart 3: Actual and Forecast GDP (year-on-year percentage change)

5

PopulationThe Northern Territory has the smallest population of the jurisdictions and

accounts for about 1 per cent of the Australian population.

A far higher proportion of the Territory’s population is Indigenous

(30 per cent) than in other jurisdictions.

Despite a vast land area, much of the Territory’s population is highly

urbanised, with more than half the population living in the Darwin region

and a further quarter living in the five main regional centres (Alice Springs,

Katherine, Tennant Creek, Jabiru and Nhulunbuy).

The Territory has the youngest population of any jurisdiction in Australia

with a median age of 31.1 years compared to the national median age of

36.9 years.

Despite having a young population the Territory is ageing rapidly with the

proportion of the population aged over 65 years projected to more than

double by 2036.

Over the past five years, the Territory has experienced average yearly

population growth of over 2 per cent, the third highest growth rate of all

the jurisdictions behind Western Australia and Queensland.

Annual population growth of 2.2 per cent is estimated for December 2009,

moderating to 2.1 per cent in 2010 and 2.0 per cent in 2011.

Accurate population estimates are of critical importance to the Territory

as they are a key determinant of the proportion of goods and services tax

revenue the Territory receives, which accounts for more than half of total

Territory Government revenue.

f: forecast Source: Northern Territory Treasury, ABS Cat. No. 3101.0

Chart 4: Population (annual percentage change)

6 Economy Overview

2010-11 Budget

Labour MarketThe largest employment sectors in the Northern Territory are retail trade,

government administration, health, education, tourism and property and

business-related services.

Despite weaker headline growth in 2009-10, the Territory economy

remained strong, with resident employment growth estimated at

3.3 per cent and the average unemployment rate estimated to have fallen

to 3.5 per cent in the year. This outcome reflects the moderation in the

Territory’s economic growth due to a slowdown in major projects, many of

which are offshore or utilise fly-in, fly-out (FIFO) workers and as a result

have less bearing on the Territory’s core economic performance.

Despite further falls in private investment in 2010-11, resident employment

is forecast to increase by 2.5 per cent supported by a record Territory

Government capital works program and strengthening residential

construction activity.

Australian Bureau of Statistics (ABS) reported employment data does

not include defence personnel or FIFO workers and as such it should be

considered only generally indicative of the actual level of employment in

the Territory. Even more importantly, ABS employment data for the Territory

is subject to very high levels of volatility due to small sample sizes and

large relative standard errors, and must be interpreted and considered in

conjunction with a range of other economic indicators.

e: estimate; f: forecast Source: Northern Territory Treasury, ABS Cat. No. 6202.0

Chart 5: Resident Employment (year-on-year

percentage change)

7

Prices and WagesGrowth in Darwin’s annual inflation rate, as measured by the

Consumer Price Index (CPI), moderated to 3.0 per cent in the

December quarter 2009 from 3.7 per cent in the December quarter 2008.

Moderating growth was due to large falls in transportation and freight

costs, as a result of lower crude oil prices.

The housing category was the largest contributor to growth in Darwin’s

annual inflation rate in the December quarter 2009, contributing

1.72 percentage points (or 57 per cent of total growth). The contribution

of the housing category to Darwin’s annual inflation rate has been steadily

increasing over the past three years, reflecting strong growth in property

and rental prices.

Year-on-year terms provides a more stable measure of annual growth.

Year-on-year growth in Darwin’s CPI moderated to 2.8 per cent in 2009.

Growth is forecast to strengthen to 3.1 per cent in 2010 and to 3.4 per cent

in 2011, as the result of increased commodity prices, in particular crude

oil, flowing through to higher automotive fuel, transportation and freight

costs.

Growth in the Territory’s Wage Price Index (WPI) moderated from

4.3 per cent in 2008 to 4.0 per cent in 2009, driven by a slowdown in

private sector wages growth.

Growth in the Territory’s WPI is forecast to strengthen to 4.2 per cent in

2010 before moderating to 3.8 per cent in 2011. Growth in private sector

wages is expected to be offset by moderating growth in public sector

wages. Private sector wages growth will be driven by lower unemployment

levels, tighter labour market conditions and an improved outlook in the

mining and construction sectors.

f: forecast Source: Northern Territory Treasury, ABS Cat. No. 6401.0

Chart 6: Consumer Price Index (year-on-year

and quarterly percentage change)

8 Economy Overview

2010-11 Budget

Retail and Wholesale Trade Retail and wholesale trade accounted for 4.9 per cent of Territory GSP in

2008-09 and about 13.2 per cent of total employment (15 300 people).

In 2008-09, growth in real retail trade turnover in the Territory strengthened

to 9.1 per cent from 8.4 per cent in 2007-08. Growth was driven by

strong employment, wages and population growth and supported by

Commonwealth Government stimulus payments to households as well as a

40-year low in interest rates.

Growth in retail trade turnover is expected to moderate to 3.5 per cent in

2009-10 reflecting the unwinding of Commonwealth stimulus payments

to households, increasing interest rates and a slowing Territory economy.

Nevertheless, activity is expected to be underpinned by solid employment

and population growth as well as strong growth in private sector house

construction.

Retail trade turnover in the Territory is forecast to moderate to 3.0 per cent

in 2010-11 mainly due to higher interest rates, lower disposable household

income, lower population growth and an absence of major private sector

projects in the major urban centres of Darwin and Alice Springs.

e: estimate; f: forecast Source: Northern Territory Treasury, ABS Cat. No. 8501.0, base year 2007-08

Chart 7: Retail Trade Turnover (year-on-year

percentage change)

9

International TradeInternational trade is a fundamental component of the Territory economy,

with international demand accounting for 35.0 per cent of Territory final

demand and creating employment across a range of industries including

mining, manufacturing, rural industries and fisheries.

Mineral and energy commodities are the dominant exports. Energy

resources, including feedstock gas for the Darwin LNG Pty Ltd liquefied

natural gas plant at Wickham Point, and machinery and transport

equipment, are the Territory’s major imports.

The chart below reports the Territory’s merchandise trade balance over

time and shows that in 2009-10 the Territory’s trade surplus is estimated to

have moderated by 13.8 per cent to $1.7 billion primarily due to commodity

price declines.

In 2010-11, the Territory’s trade surplus is projected to increase by

59.8 per cent to $2.7 billion as increased mineral and energy export

volume growth and an improvement in commodity and energy prices are

forecast to more than offset import growth associated with increased

feedstock gas from the Joint Petroleum Development Area (JPDA).

After contracting by 15.8 per cent in 2009-10, merchandise goods exports

are forecast to increase by 23.8 per cent to $6.6 billion in 2010-11, mainly

due to a recovery in prices and increased volume of both commodity and

energy exports, in particular, LNG, manganese and alumina.

After contracting by 16.2 per cent in 2009-10, merchandise goods imports

are forecast to increase by 5.4 per cent to $4.2 billion in 2010-11, mainly

due to an increase in feedstock gas imports from the JPDA which is

projected to more than offset declines in petroleum, pearl and aircraft

imports.

e: estimate; f: forecast Source: Northern Territory Treasury, ABS Cat. No. 5368.0

Chart 8: Territory International Merchandise Trade

(moving annual total, current prices)

10 Economy Overview

2010-11 Budget

Residential Property MarketsDemand for housing has increased substantially in the Territory since

2003-04, fuelled by strong population and economic growth rates and

rising disposable household incomes.

Growth in house and unit prices strengthened across the Territory in 2009

driven by low interest rates, temporary government housing initiatives and

historically low rental vacancy rates.

As at the December quarter 2009, the median price for a three-bedroom

house in Darwin was $540 000, the third highest of the eight capital cities.

The median price for a two-bedroom unit was $412 000, the second

highest of the eight capital cities.

Alice Springs experienced the strongest growth in median house prices

in the Territory in 2009. The strength of the local economy, especially

compared to nationally, led to less population churn in Alice Springs over

2009 and increasing numbers of people moving to the town in search of

employment. Increasing demand for housing continued to be exacerbated

by a shortage of vacant residential land in the region.

In 2009, 404 land sales were recorded in the Territory, 4.9 per cent less

than in 2008, mainly due to a declining stock of vacant residential land

in the Darwin region, higher prices for the remaining land, and financial

institutions becoming more risk averse during the year.

The accelerated release of land, rising interest rates and the end of

government housing initiatives are expected to lead to moderating growth

in housing prices across the Territory in 2010.

Source: Real Estate Institute of the Northern Territory

Chart 9: Territory Median House Prices

11

MiningMining is the largest industry in the Territory, accounting for 26.5 per cent

of GSP in 2008-09, the highest proportion of all Australian jurisdictions.

Nationally, mining accounted for 6.8 per cent of GDP.

Mining output is volatile as production is dominated by a small number of

large operations. Global supply and demand conditions, and the impact

of exchange rate movements, are key factors affecting production levels

and price.

In the five years to 2009-10, the real value of Territory mining production

is estimated to have grown by 40.3 per cent, driven by strong international

demand for Territory commodities, particularly from China and Japan.

In real terms, the value of mining production in the Territory is estimated

to have increased by 12.9 per cent to $4.9 billion in 2009-10. The rise was

mainly attributed to an increase in manganese, gold, iron ore and offshore

oil production in the year.

In real terms, the value of mining production in the Territory is expected to

increase by 10.5 per cent to $5.4 billion in 2010-11. The increase largely

reflects higher gold and manganese production, as Crocodile Gold

continues to increase gold production and the GEMCO and OMH

manganese operations expand capacity. Higher energy production,

largely attributed to an increase in gas and liquids production from

the Bayu-Undan field after planned maintenance shutdowns reduced

production in 2009-10, is also expected to contribute to growth in 2010-11.

e: estimate; f: forecast Source: Northern Territory Treasury; Department of Resources, base year 2007-08

Chart 10: Value of Mineral and Energy Production and

Processing (moving annual total)

12 Economy Overview

2010-11 Budget

Manufacturing The manufacturing industry in the Territory is smaller than in other

jurisdictions, accounting for 7.7 per cent of GSP in 2008-09, compared to

8.6 per cent nationally. However, the difference has narrowed since LNG

and alumina production increased in recent years.

In 2008-09, about 4500 people were employed in manufacturing,

accounting for 3.9 per cent of total employment in the Territory.

Manufacturing activity in the Territory is dominated by the production of

alumina and LNG.

The processing of bauxite into alumina at the Rio Tinto Alcan alumina

refinery on the Gove peninsula accounts for the majority of metal product

manufacturing. Data from the Department of Resources reports that in

2006-07 alumina production was 1.7 million tonnes valued at $483 million,

increasing to 2.2 million tonnes in 2007-08 valued at $517 million, and

2.4 million tonnes in 2008-09 valued at $596 million.

Production of LNG at the Darwin LNG Pty Ltd plant began in

February 2006, with an estimated 1.7 million tonnes of LNG exported

to Japan in 2006-07. The plant produced 3.5 million tonnes of LNG in

2008-09, up from 3.0 million tonnes in 2007-08. Production was lower

in 2009-10 due to a six-week plant shutdown to carry out scheduled

maintenance work.

Future manufacturing growth prospects include the potential expansion

of the Darwin LNG plant at Wickham Point and construction of a new LNG

plant at nearby Blaydin Point.

Source: ABS Cat. No. 8221.0

Chart 11.1: Territory Manufacturing Industry

Value Added and Employment, 2006-07

13

ConstructionIn real terms, residential, non-residential and engineering construction

activity accounted for 5.1 per cent of Territory GSP in 2008-09 and

employed about 9.8 per cent of the labour force.

In real terms, construction activity has increased significantly since the

beginning of the decade, with an average of about $2.5 billion a year

spent between 2000-01 and 2008-09.

In 2008-09, construction activity in the Territory reached record levels

mainly due to a number of major projects in the mining and energy

sectors such as the Eni Blacktip gas project and associated Bonaparte

gas pipeline, the GEMCO refinery expansion at Groote Eylandt and

development activity associated with the Montara oil field in the Timor Sea.

In 2009-10, Territory construction expenditure is estimated to have

decreased by 46.5 per cent to $1.8 billion, driven by the completion of a

number of the major projects listed above.

Construction activity is forecast to increase by 10.1 per cent to $2 billion

in 2010-11 mainly due to a record Territory Government capital works

program, higher levels of private and public residential construction

activity and the redevelopment of the Montara oil field.

Public sector residential construction activity has been supported by the

Strategic Indigenous Housing and Infrastructure Program (SIHIP), a joint

$672 million Territory Government and Commonwealth Indigenous housing

construction project that aims to deliver 750 new houses, 230 rebuilds

and 2500 refurbishments in 73 remote Territory Indigenous communities

by 2013.

Improving global economic conditions and increased energy demand are

expected to support increased construction expenditure in the medium

term, particularly from developments of natural gas reserves in the

Timor Sea.

e: estimate; f: forecast Source: Northern Territory Treasury, ABS Cat. Nos 8752.0, 8762.0, 8782.0, base year 2007-08

Chart 12: Territory Value of Construction Work Done

(moving annual total)

14 Economy Overview

2010-11 Budget

Agriculture, Forestry and FisheriesAgriculture, forestry and fisheries accounted for 1.5 per cent of Territory

GSP in 2008-09 and 2.5 per cent of resident employment.

The cattle industry is the largest contributor to agriculture, forestry and

fisheries in the Territory, comprising approximately 50.7 per cent of the

total value of production in 2009-10.

The value of agriculture, forestry and fisheries production is estimated to

have increased by 5.5 per cent to $548 million in 2009-10. Solid growth in

live cattle exports overseas and interstate, as well as increased harvest

from mangoes and melons, were the major contributors to growth in

2009-10.

Cattle production in the Territory increased by 5 per cent in 2009-10

with around 536 000 cattle turned off Territory pastoral properties. This

is a result of herd numbers recovering after destocking due to drought

conditions in recent years.

Mango production is the most valuable horticulture industry in the Territory.

In 2009, mango production increased by 18.0 per cent to $46.1 million,

with a near record 18 000 tonnes of fruit produced. This was a result of

new plantings reaching maturity, as well as little disease on the fruit for the

season as a whole.

Melon production increased by 33.0 per cent to $24.4 million in 2009. This

was a result of large plantings in the Darwin, Katherine and Tennant Creek

regions.

Fisheries include the harvest of wild catch, the Commonwealth-managed

Northern Prawn Fishery and aquaculture. Fisheries production decreased

by 1.1 per cent to $122.1 million in 2009-10. This was due to the

production of mud crabs returning to long-term trend levels in 2009-10

after increasing by 57.1 per cent in 2008-09. The strong growth in 2008-09

reflected a particularly good wet season, providing optimal growing

conditions for mud crabs.

e: estimate; f: forecast Source: Department of Resources

Chart 13: Agriculture, Forestry and Fisheries, Value of

Production (moving annual total, current prices)

15

Tourism Tourism plays a significant role in the Northern Territory economy, creating

demand and generating employment in a range of different industries,

including hospitality, retail trade and transport.

In 2008-09, Northern Territory Treasury estimates that tourism directly

contributed $1.03 billion to the Territory economy.

In 2008-09, overnight visitors to the Territory increased by 0.6 per cent to

1.4 million. Of this, 46 per cent were from interstate, 31 per cent intrastate

and 24 per cent international.

Overnight visitor numbers to the Territory are estimated to have declined

in 2009-10. This reflects consumers becoming more conservative in

their spending following the downturn in the global economy over 2009.

However, the medium to long-term outlook for tourist numbers and

expenditure is positive.

Cruise ship visitors to the Territory have continued to increase. The newly

completed Darwin Convention Centre is also attracting visitors to Darwin

and will be an important driver of medium to long-term tourism growth.

e: estimate Source: Sustainable Tourism Cooperative Research Centre 2009, Northern Territory Treasury

Chart 14: Tourism Value Added (current prices)

16 Economy Overview

2010-11 Budget

Transport and CommunicationsTransport and communications play a vital role in the economic

development of the Northern Territory, particularly given the Territory’s

small population, dispersed over a large geographical area.

Road infrastructure spending in 2010-11 will provide flood immunity and

fatigue management improvements on major highways, and strengthen

and widen major roads.

The Port of Darwin is the Northern Territory’s major port and Australia’s

closest port to the markets of South East Asia. Total trade volume through

the Port of Darwin in 2008-09 increased by 38 per cent to 3.8 million

tonnes, mainly due to increasing exports of dry bulk materials (manganese

and iron ore) and imports of petroleum products.

Despite significant investment, the gap between the Territory and other

jurisdictions in access to and delivery of information and communication

technology-based services remains large, particularly in remote areas.

The completion of a fibre optic backbone linking Darwin, Katherine and

Tennant Creek to all major Australian cities by the end of 2011, combined

with the rollout of the National Broadband Network over the next eight

years, is expected to allow for substantial gains in reducing the gap in

communication services and prices between the Territory and metropolitan

areas in other Australian jurisdictions.

1 Total includes intrastate trade volumes Source: Darwin Port Corporation Annual Reports, 2000 to 2009

Chart 15: Trade through the Port of Darwin

17

The Public SectorThe public sector consists of Commonwealth, Territory and local

government activity including defence. However, due to the large

Australian Defence Force presence in the Territory, defence is considered

separately. The public sector is a major contributor to the Territory

economy, providing a wide range of economic and social services.

The public sector is the largest employer in the Territory. In 2008-09, there

were 31 000 people employed by the Commonwealth, Territory and local

governments, an increase of 7.6 per cent from 2007-08.

Public sector expenditure in the Territory increased by 5.5 per cent to

$4.6 billion in 2008-09, accounting for 25.4 per cent of SFD. Nationally,

the public sector accounted for 20.2 per cent of domestic final demand in

2008-09.

Compared to most other jurisdictions, the Territory Government faces

relatively high per unit costs of providing government services given the

small and widely dispersed population. Public sector expenditure in the

Territory in 2008-09 was $20 587 per person, the second highest of all

jurisdictions (behind the Australian Capital Territory).

Source: ABS Cat. No. 5206.0

Chart 16: Public Sector Spending as a Percentage of State Final

Demand by Jurisdiction, 2008-09

18 Economy Overview

2010-11 Budget

DefenceThe defence presence in the Territory has more than doubled since the

early 1990s, with the number of defence personnel and their families

increasing from 6223 in June 1992 to an estimated 13 975 in June 2009.

Of all the Australian permanent defence force personnel, 10 per cent are

based in the Territory.

Defence expenditure is an important contributor to the Territory economy

and includes both consumption and investment. In 2008-09, the ABS

estimates that defence sector total expenditure in the Territory was about

$1.26 billion, equivalent to 7.9 per cent of the Territory’s SFD, up from

$1.18 billion in 2007-08.

Defence consumption, including both defence salaries and operational

expenditure, contributed an estimated $1.16 billion to the Territory

economy in 2008-09. Defence salaries accounted for $559 million of

defence consumption in 2008-09, representing about 42 per cent of total

defence expenditure.

The development of a Defence Support Hub near Robertson Barracks by

the Northern Territory’s Land Development Corporation will provide the

opportunity to establish repair and maintenance facilities for major defence

equipment and contribute to the Territory economy through job creation.

The Territory’s economy will continue to benefit from new and ongoing

defence supply and support contracts.

Source: Department of Defence, ABS unpublished data

Chart 17: Defence Expenditure in the Territory

(moving annual total current prices)