NORTHERN TERRITORY...Onpril 16 A 2019, the Territory Government released the Fiscal Strategy Panel’s final report: A plan for budget repair, and announced the government’s response

NORTHERN TERRITORY

NORTHERN TERRITORY ECONOMY

May 2019

Industry Outlook

ii

Industry Outlook

ContentsIndustry outlook 1

Government and community services 3

Service industries 5

Mining and manufacturing 7

Construction 16

Defence 22

Retail and wholesale trade 27

Tourism 31

Agriculture,forestryandfishing 36

AbbreviationsandAcronyms 43

Glossary 44

Industry outlook 1

Industry Outlook

Industry outlookTheTerritory’seconomicoutputispredominantlyconcentratedinconstruction,governmentandcommunity services, and the mining industry. These industries account for over half of the Territory’s totaleconomicoutput.Incontrast,themaincontributorstototalemploymentareconstruction,government and community services, and retail and wholesale trade. This industry outlook provides a descriptiveviewoftheTerritory’skeyindustries,thecurrenttrendofeachsectorintermsofshareofgrossstateproduct(GSP)andresidentemploymentintheTerritory,aswellasopportunitiesforand risks to growth in these industries.

Table1:TerritoryindustrycontributiontoandgrowthinGSPandemployment,2017-181

GSP Employment4

Value $M2

Change %3

Share %4

10-yearaverage Number

Change %3

Share %

10-yearaverage

Government and community services 6 117 2.4 23.0 5 505 52 043 0.4 37.9 46 709

Publicadministrationandsafety 3156 0.7 12.0 3036 18614 -15.9 13.6 19936

Health care and social assistance 1749 5.9 6.6 1 355 20926 24.1 15.2 15282

Educationandtraining 1 212 1.8 4.4 1114 12504 -2.7 9.1 11491

Service industries 5 060 1.5 19.4 4 329 46 349 - 0.4 33.7 42 605

Accommodationandfoodservices 663 2.5 2.5 585 9524 -7.3 6.9 8329

Transport, postal and warehousing 862 -2.3 3.3 695 6722 1.4 4.9 6418

Informationandmediatelecommunications 116 -1.7 0.4 110 1501 19.5 1.1 1621

Financial and insurance services 628 4.0 2.5 575 1847 7.6 1.3 1750

Rental, hiring and real estate services 378 0.8 1.4 325 2358 -7.0 1.7 2247

Professional,scientificandtechnicalservices 792 2.3 3.1 628 7059 -5.2 5.1 6583

Administrativeandsupportservices 440 6.3 1.7 414 4272 -5.0 3.1 4118

Electricity, gas, water and waste services 437 1.2 1.7 375 2382 -14.3 1.7 2 212

Artsandrecreationalservices 299 -2.6 1.1 240 4111 20.7 3.0 3429

Other services6 445 3.5 1.7 384 6574 9.8 4.8 5898

Mining and manufacturing 4 131 - 0.2 16.4 4 022 9 211 - 3.5 6.7 9 077

Mining 3166 0.8 12.9 2942 5027 -13.4 3.7 4946

Manufacturing 965 -3.1 3.5 1080 4184 11.9 3.0 4131

Construction 2 945 1.4 11.0 2 357 14 487 2.4 10.5 13 525

Defence7 2 130 4.2 8.2 1 919 5 336 - 4.5 5.2 6 258

Retail and wholesale trade 1 265 2.2 4.9 1 113 13 514 - 4.5 9.8 13 808

Retail trade 709 0.4 2.8 652 11 222 -2.6 8.2 11016

Wholesale trade 556 4.5 2.1 461 2292 -12.6 1.7 2792

Tourism7, 8 1 203 3.9 4.6 989 9 040 - 1.5 6.5 9 055

Agriculture, forestry and fishing 735 -0.9 2.9 764 1 743 - 8.9 1.3 2 516

GSP: gross state product1 Excludesnon-industrycomponentsofGSPsuchasownershipofdwellings,taxeslesssubsidiesandstatisticaldiscrepancy.2 Inflationadjusted.3 Comparedto2016-17.4 Currentprices.5 Annual average.6 OtherservicescomponentsofGSPincludepersonalservicesandgeneralrepairandmaintenanceactivities,howeverexcludes

units engaged in providing buildings or dwelling repair and maintenance services.7 TourismanddefencearenotseparateindustriesforthepurposeofreportingbytheABSinthenationalaccounts,ratherindustrycontributionsarecapturedacrossmultipleindustries.

8 Directcontribution,2016-17.Source:ABS,Australian National Accounts: State Accounts,Cat.No.5220.0,Labour Force, Australia,Cat.No.6291.0.55.003,ABS

unpublished defence data; Department of Defence, 2016 ‑17 Annual Report; Tourism Research Australia, State Tourism Satellite Accounts, 2016‑17

2 Industry outlook

Industry Outlook

Overtheforwardestimates,theTerritorywillcontinuetoundergoastructuralshiftinthecontributionbytheconstructionsectortoGSPandemploymentandtowardsarangeofsmallerserviceindustries.CurrentlythereisnomajorprojectintheforwardestimatesperiodthatcomparesinscaletotherecentlycompletedIchthysliquefiednaturalgas(LNG)project.Theconstructionphaseofthissingleprojectincludedupto10000workers,historicallyhighlevelsofnon-dwellingconstructionactivityandotherformsofbusinessinvestment.

TheTerritoryGovernment’sEconomicDevelopmentFramework(EDF)hasidentifiedindustrieswithsignificantglobalgrowthanddemandwheretheTerritoryhasacomparativeadvantagetostrengthenanddiversifytheTerritoryeconomy.Thesectorsidentifiedforfuturegrowthincludeenergyandminerals,tourism,agribusiness,andinternationaleducationandtraining.InternationalstudentsandtheirgreaterdispersaltoregionaluniversitiesacrossAustralia,alongwithscholarshipsandvisastiedtoregionalresidency,havebeenannouncedintherecentlyreleasedCommonwealthPlanning for Australia’s Future Population.

TherearealsoseveralotherdevelopingindustriespresentingsignificantgrowthanddevelopmentopportunitiesthatwillcontributetodiversifyingtheeconomyandcreatingjobsacrosstheTerritoryasidentifiedintheEDF.Thesesectorstendtobesmallerthanthemaingrowthindustries,howeverpresentanupsidetotheeconomicgrowthoutlook,andincludecreativeindustries,tropicalhealth,environmentalservicesandrenewableenergy.ThefirstprogressreportforOctober2018ontheEDFhasbeenreleased,presentingasummaryofprogressandkeyachievements.

The outlook for many industries remains subdued including: retail and wholesale trade; construction;agriculture,forestryandfishing;andserviceindustries.However,theminingandenergyindustrywillexperiencestronggrowthsupportedbyLNG,liquefiedpetroleumgas(LPG)andcondensatefromtherecentlycompletedIchthysLNGprojectandtraditionalmetals.Overthemedium term, growth in government and community services will be constrained as the Territory Governmentimplementsarangeofbudgetrepairmeasures,howevercontributionsfromtheCommonwealth and local governments are expected to be stable.

Historically,defenceisanimportantcontributortotheTerritoryeconomyandwillcontinuetoprovideopportunitiesinthefuturewithnationalinvestmentsindefenceandanincreasedpresencefromtheUnitedStates(US)intheTerritory.ThereareanumberofdefenceinfrastructureprojectsinprogressorexpectedtobeexecutedintheneartermandproposedprojectsseekingapprovalfromtheCommonwealthParliamentaryWorksCommittee.

TourismanddefencearenotseparateindustriesforthepurposeofreportingbytheAustralianBureauofStatistics(ABS)innationalaccounts.Rather,thecontributionsmadebythesesectorsareincluded across other industries. Tourism and defence are, however, included individually in this sectionduetotheirrelativeimportanceintheTerritory.

Government and community services 3

Northern Territory Economy

Government and community services

Recent activityThe government and community services industry includes Commonwealth, Territory and local government activity and accounted for 23.0 per cent of GSP and 37.9 per cent of total resident employment in 2017‑18, remaining a significant industry and employer for the Territory.

OutlookOver the medium term, growth is expected to be constrained due to the Territory

Government implementing budget repair measures, in conjunction with a stable contribution from Commonwealth and local governments and non‑government providers.

Thegovernmentandcommunityservicesindustryconsistsofpublicadministrationandsafety,educationandtraining,andhealthcareandsocialassistance.Theseservicesaremainlyfundedbythe public sector, including the Commonwealth, Territory and local governments. This also involves outputfromnon-governmentprovidersofeducation,health,agedcareandothercommunityservices as well as defence.

In2017-18,thegovernmentandcommunityservicesindustrycontributed$6.1billionwhichaccountedfor23.0percentoftheTerritory’sGSP,comparedtothenationalaverageof16.7percent.Thegovernmentandcommunitysectoremployedover52000Territoriansaccountingfor37.9percentofemployment.Ofthese,18614,or35.8percentwereemployedinpublicadministrationandsafety,20926,or40.2percentwereemployedinhealthcareandsocialassistance,and12504,or24.0percentwereemployedineducationandtraining.

For the latest data on government and community services refer to the Territory Economy website.

OutlookOverthelastthreeyears,theTerritoryhasfacedchallengingeconomicconditionswithcontractingpopulationandemploymentgrowthalongwithdeclininglevelsofprivateinvestmentandconstruction.Theseconditionsarelikelytobemostacutein2018-19and2019-20.TheTerritoryGovernmenthasimplementedcounter-cyclicaleconomicsupportsuchasstimulusmeasures,recordinfrastructureprograms,jobcreationinitiativesandapopulationgrowthstrategytohelpoffsetthesedeterioratingconditions.However,theTerritoryGovernment’sabilitytocontinueincreasingitseffortstooffsettheseimpactsisbeingconstrainedbyrevenuecapacityandescalatingdemandfor frontline service delivery.

On16April2019,theTerritoryGovernmentreleasedtheFiscalStrategyPanel’sfinalreport:A plan for budget repair, and announced the government’s response to the report, including its plan to returnthebudgettobalance/surplusoverthemediumtermandtheimplementationoftherootandbranch (program) review.

Asaresultofthesebudgetrepairinitiatives,growthinthegovernmentandcommunityservicesindustry is forecast to remain constrained in the medium term. However, the Territory Government remainscommittedtoinvestinginhealth,education,publicadministrationandsafetyaswellasthebroaderpublicsector,alongwithstablecontributionsfromCommonwealthandlocalgovernments.

Forthe2019-20Budget,theTerritoryGovernmentisdeliveringseveralinfrastructureprojectsincludingcontinuationoftheTerritoryGovernment’s$1.1billionRemoteHousingInvestmentPackageover10yearsfrom2016-17andafurtherCommonwealthcommitmentof$550millionoverfiveyearsfrom2018-19.Othersignificantprojectsincludestage2ofZuccoliPrimary

https://nteconomy.nt.gov.au/

4 Government and community services

2019-20 Budget

School,thenewPalmerstonfireandemergencyservicescomplex,theJohnStokespublichousingredevelopment, new marine facility at Mandorah,theKatherineLogisticsandAgribusinesshub,upgradesatLitchfieldNationalParkandstage2oftheKilgariffdevelopmentinAliceSprings.

TheTerritoryGovernmentiscontinuingtherolloutoftheBuildingBetterSchoolsprogramwhichwillprovideaone-offgrantof$300000toeverypublicandprivateschoolintheTerritorytoimplementnewandupgradedfacilities.

TheTerritoryGovernmentisestablishingan$89millionLocalJobsFundtoacceleratemajorandsignificantprojectsintheTerritorywhichseekstohelplocalbusinessesincreaseexportsofgoodsandservicesbothinterstateandinternationally,creatingnewjobopportunitiesandcontributingto GSP.

Inaddition,theCommonwealthGovernmenthasalsomadeco-contributionsinsomelongertermprojectstohelpimprovefacilitiesintheTerritoryaspartofitsplantoensuretheTerritoryhasthefacilitiesandinfrastructureitrequirestosupporteconomicgrowth.Someoftheseinfrastructureprojectsinclude:

• TheDarwinCityDeal,whichisacombinedinvestmentof$200million($100millionfromCommonwealthand$100millionfromtheTerritoryGovernment),whichseekstobuildanewCharles Darwin University campus, a redeveloped State Square, a new art gallery, new shade structuresandlandscapetolowertemperaturesinthecentralbusinessdistrict(CBD),developaLarrakiaCulturalCentreandredevelopmentofDarwinharbourandwaterfront.

• TheAliceSpringsCityDeal,whichisa$20millionprojecttorevitalisetheAliceSpringsCBDthroughupgradestomeetingplaces,awaterplayareaandshading.

• TheBarklyRegionalDealinvolvinga10yearcommitmentof$78.4million($45.4millionfromtheCommonwealth,$30millionover5yearsfromtheTerritoryGovernmentand$3millionfromtheBarklyRegionalCounciltoaddresslocalprioritiesthatreflectAboriginalculturalvaluestoimproveeducational,employmentandsocialoutcomes.

• TheTerritoryGovernmentisalsoinvestinginthefutureofJabiruandKakaduNationalParkprovidinganadditional$131.5millionfrom2019-20to2022-23withtheCommonwealthcontributing$216.2millionover10yearsfrom2018-19.

Australia and US has agreed to $2 billion of infrastructure investment and defence related spending betweenthetwocountries.Inaccordancewiththe2016DefenceWhitePaperabout$20billionindefenceconstructionprojectswillbeinvestedintheTerritoryover20yearsaswellasfurtherprojectscommittedoverthemediumterm,pendingapprovalfromtheParliamentaryWorksCommittee.TheIntegratedInvestmentProgram,includescapitalandrelatedinvestmentwhichwillbringnewandupgradeddefenceinfrastructuretotheTerritoryintheshort-term.

Service industries 5


Service industries

Recent activityThe value of service industries increased by 1.5 per cent in 2017‑18, driven by growth in administrative and support services, financial and insurance services, professional, scientific and technical services, and other services. However, employment in service industries decreased by 0.4 per cent in 2017‑18.

OutlookWith the Ichthys LNG project now operational, there will be declines across some of the

professional and technical services industries; however these will be partly offset by growth in tourism‑related industries over the medium term.

The service industries category covers a broad range of discrete industries and makes up a large proportionofTerritory’sGSPandemployment.Serviceindustriesinclude:accommodationandfoodservices;transport,postalandwarehousing;information,mediaandtelecommunications;financialandinsuranceservices;rental,hiringandrealestateservices;professional,scientificandtechnicalservices;administrativeandsupportservices;electricity,gas,waterandwasteservices;artsandrecreationservices;andotherservices.Theoutlookfortheserviceindustriescategoryismixed,reflectingthediversenatureoftheindustrieswithinthiscategory.

For the latest data on Territory service industries, refer to the Territory Economy website.

OutlookSeveralindustriesinthiscategoryareforecasttoimproveastourism-relatedinitiativesandprojectsare rolled out over the forecast period including:

• theTerritoryGovernment’sTurbochargingTourismmarketingandinfrastructurestimulusprogramrolledoutover2018-19and2019-20

• a$69.1millioncommitmentfortheTurbo2extensionoftheTurbochargingTourismprogramdirectedtowardstourismmarketing,festivalsandevents,across2019-20and2020-21

• the$200millionluxuryhotelinDarwin(theWestinDarwinHotel),whichcommencedconstructionin2019

• theplantotransitionJabirufromaminingtownintoatourismhubandupgradestoKakaduNationalParkhavebeenapproved,comprisingtheTerritoryGovernmentcommitmentof$131.5millionfrom2019-20to2022-23aswellastheCommonwealth’splannedcommitmentof$216.2millionover2018-19to2027-28.

Theseinitiativesandprojectsareexpectedtosupporttheaccommodationandfoodservices,artsandrecreationservices,andotherservicessectors.

WiththeIchthysLNGprojectnowoperational,thedemandforlabourandgoodsfromsomeserviceindustries is expected to reduce, such as transport, postal and warehousing, and professional, scientificandtechnicalservices.Thiswilloffsetsomeofthegrowthexpectedinotherareasoftheservice industries category.

Anincreaseinthenumberoffirsthomebuyers,supportedbymoreaffordablepricesandgovernmentincentives,couldhelpconditionsinrealestaterelatedindustries,whichremainsoftduetomoderatepopulationgrowth.


6 Service industries

2019-20 Budget

In2017-18,serviceindustriesaccountedfor19.4percentoftheTerritory’sGSPand33.7percentof the Territory’s employment. A notable discrepancy exists between the share of GSP and share of employmentintheTerritory,whichisindicativeofhighemploymentinlabour-intensiveindustries,suchasaccommodationandfoodservices.Whiletherearedisparateoutlooksacrossthedifferentsectorsoftheserviceindustries,theoutlookremainspositiveoverthemediumterm,withanexpected increase in share of GSP and employment.

AspartoftheEDF,theTerritoryGovernmentiscommittedtogrowingemergingindustriesintheservicessectorsuchastropicalhealthandresearch,creativeindustries,renewableenergy,environmental services and human services. Development of service industries will diversify the Territory economy and promote stable, sustainable economic growth. These will complement the traditionalcommodityindustriesthatarelessreliantonlabourandheavilyinfluencedbyexternalfactors such as exchange rates, market prices and foreign investment.



Mining and manufacturing

Recent activityThe value of the mining and manufacturing industries decreased slightly by 0.2 per cent in 2017‑18, driven by decreased production of construction materials, partly offset by increased production of manganese, zinc‑lead concentrate and gas.

OutlookThe mining and manufacturing industries are expected to grow rapidly over the coming

years, largely driven by growth in LNG production and positive price and market conditions for many of the Territory’s other resources.

The Territory’s mining and energy industry is reported with the manufacturing industry for the purposesofthispublication.Althoughmanufacturingencompassesawiderangeofproductsforbothdomesticandoverseasconsumptionsuchasconcrete,woodandfoodproducts,themajorityofmanufacturedgoodsintheTerritoryareby-productsoftheminingindustry,suchasheliumfromgasproduction.Non-miningcomponentsofmanufacturingarediscussedintheirrespectivesections.MiningandenergyactivitiesintheTerritoryincludeminingofmetalores,oilandgasproduction,quarryingandminingofnon-metallicminerals.TheTerritory’sminingindustrydataalsoincludesoffshoreoilandgasproductioninTerritorywaters.

Analysisofthecomponentsofthisindustryisinformedbyanumberofdifferentsources,includinginformationpublishedincompanyreportsanddataprovidedbytheDepartmentofPrimaryIndustryandResources.Therefore,somesectionsarereportedonafinancial-yearbasisandothersonacalendar-yearbasis.

MiningandenergycontributestotheTerritoryeconomythroughinternationaltrade,privateinvestmentandemployment.MiningandenergyindustriesalsohaveasignificantimpactontheTerritory’sconstructionindustryasminingandenergydevelopmentprojectsgenerallyrequiresignificantlevelsofconstructionactivity.

For the latest data on the Territory mining and energy sector, refer to the Territory Economy website.

OutlookTheoutlookfortheminingandenergyindustryisexpectedtobedominatedbyproductionattheINPEXLNGplant,whichcommencedinlate2018andwillcontinuetorampuptofullproductionthrough2019-20.Thiswilldramaticallyincreasethevalueoftheresourcesindustryoverthecomingyears.Stronggrowthisexpectedforthenon-LNGcomponentsofminingandenergy,withanumberofminesexpectedtoreopenin2019andseveralminesapproachingfinalinvestmentdecision.TheliftingofthemoratoriumonunconventionalgasextractionhasthepotentialtoprovidesubstantialupsidestominingandenergyintheTerritory,althoughthesedevelopmentspredominantlyliebeyondtheforwardestimates.

ThevalueoftheTerritory’sminingandmanufacturingindustriesdecreasedslightlyby0.2percentin2017-18,to$4.1billionininflation-adjustedterms.Thedeclinereflectsdecreasedproductionofnon-metallicconstructionmaterials(gravel,sandandsoil)andconstruction-relatedmanufacturedgoods,partlyoffsetbyincreasedmanganese,lead-zincconcentrateandnaturalgasproduction.

Theminingandmanufacturingindustries’shareoftotalGSPcontractedover2010-11to2016-17,largelyduetotherapidexpansionoftheconstructionindustry.Despitethistrend,growthintheconstructionindustrywaslargelydrivenbyresource-relatedprojectswhichareexpectedto


8 Mining and manufacturing

2019-20 Budget

contributetotheminingandenergyindustryovertheoutlookperiod,particularlytheIchthysLNGproject.

In2017-18,theminingandmanufacturingindustriescontributed16.4percentoftotalGSPintheTerritory,comparedtoahighof33.5percentofGSPin2008-09.Comparedto2016-17,thecontributionfromtheminingsectorincreasedby0.7percentagepointsto12.9percent,overtakingpublicadministrationandsafety(12.0percent)asthelargestsingleindustrycontributortotheTerritory economy.

MineralsproductionThemajorityofmineralcommoditiesproducedintheTerritoryaremetallic,includinggolddore(amixtureofgoldandsilver),manganese,zinc-leadconcentrate(includingindividualconcentrates),bauxiteanduranium.TheTerritoryalsoproducesarangeofnon-metallicmineralresources,suchascrushed rock, sand and gravel.

TheTerritory’smineralproducerssold$4.5billionworthofcommoditiesin2017-18,a23.8percentincreasefromthepreviousyearincurrentprices.Thisincreasewaslargelydrivenbya33.0percentincreaseinthevalueofmanganeseproductionanda73.0percentincreaseinthevalueoflead-zincconcentrateproduction.Thisisduetoanincreaseinglobalmanganese,leadandzincprices (Chart 1).

Chart1:ValueofselectedTerritorymineralproduction

Source: Department of Primary Industry and Resources

ThevalueoftheTerritory’smineralproductionisexpectedtoincreaseby9.3percentin2018-19asthevalueofgoldanduraniumrises,whilepricesforbauxite,manganese,leadandzincstabilise.

0

0.5

1.0

1.5

2.0

14 15 16 17 18Year ended June

Bauxite Gold Manganese Zinc/lead concentrates

$B



Map1:CurrentandpendingmineralandonshorepetroleumoperationsintheTerritory1

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currencyorcompletenessoftheinformation.Tobeusedasaguideonly.

Source: Department of Primary Industry and Resources; Department of Treasury and Finance

Potential mineral developmentCeased/suspended production

Producing mineral minesProducing oil/gas field

BARKLY HIGHWAY

STUART HIGHWAY

KilimirakaMineral Sands Project Heavy minerals Gove Mine

Bauxite

Blacktip Gas field

Ranger MineUranium

McArthur River MineZinc, lead, silver

Northern Cement MineLime

Bootu Creek MineManganese

Jervois ProjectCopper, silver, gold

Molyhil ProjectTungsten, molybdenum

Mereenie Gas and oilfield

Palm ValleyGas field

Harts Range MineGarnet sands

DingoGas field

Surprise Oilfield

Mount Peake ProjectIron, vanadium, titanium

Central Tanami ProjectGold Rover Project

Gold

Old Pirate MineGold

Nolans ProjectRare earths

Chandler ProjectSalt

GEMCO MineManganese

Huandot Project Magnesite

Mount Todd Project Gold

Union Reefs Mine Gold

Maud Creek Project Gold

Gulkula Mine Bauxite

Wonarah ProjectPhosphate

Ammaroo ProjectPhosphate

Charley CreekRare earths

Sill80 MineIlmenite

KaringaPotash

Edna BerylGold

NORTHERN GAS PIPELINE

AMADEUS GAS PIPELINE

MCARTHUR RIVER GAS PIPELINE

BONAPARTE GAS PIPELINE

PINE CREEK

MATARANKA

BORROLOOLA

TI TREE

TIMBER CREEK

JABIRU

YULARA

NHULUNBUYDARWIN

ALICE SPRINGS

HERMANNSBURG

GUNBALANYA

KATHERINE

TENNANT CREEK

MELVILLE ISLAND

BATHURST ISLAND

WADEYE

GROOTE EYLANDT

Tom’s Gully ProjectGold

Hayes Creek Project Zinc, gold, silver

Gas pipeline

Merlin MineDiamond

Cosmo MineGold

ALYANGULA

Finniss Project Lithium

Yarram Project Iron

Winchester Project Magnesite

Mount Porter Project Gold

Roper Valley Project Iron

TANAMI GAS PIPELINE

Granites/Callie MineGold


2019-20 Budget

ManganeseManganeseisoneoftherawingredientsusedinthemanufacturingofsteelandproductionislargely driven by global steel demand. It is produced at the Groote Eylandt Mining Company (GEMCO)mineandattheBootuCreekminenearTennantCreek.

Followinga33.0percentincreaseinthevalueofmanganesein2017-18duetothereopeningoftheBootuCreekmine,thevalueofproductionisexpectedtostabilisein2018-19aftertwoyearsofpricerises.Globalsteelsupplyisexpectedtofallduring2019,reflectingdecliningdemandforsteel,resultingindecreaseddemandformanganese.

GoldGoldiscurrentlyproducedintheTanamiregion(theGranitesgoldmine)andintheBarklyregion(EdnaBerylmine).GoldhasalsohistoricallybeenproducedaroundthePineCreekregionintheTop End (Map 1).

Thevalueofgoldproductionincreasedby7.9percentin2017-18,whichcanbeattributedtoamineexpansioncompletedinMay2017attheGranitesgoldmine.Thepriceofgoldisexpectedtoincreasegraduallyover2018-19,withproductionremainingatcurrentlevels.KirklandLakeGoldisexpectedtoreopenboththeCosmoandUnionReefsminesinlate2019,located160kmsouthand170kmsoutheastofthecityofDarwinrespectively,whichwillincreasegoldproductionin2019-20.TherecentlyconstructedTanamigaspipeline,runningofftheAmadeusgaspipelinetoGranitesgoldmine,isexpectedtobringefficiencygainsduetoincreasedreliabilityofpowergeneration.

ZincandleadZincandleadareproducedattheMcArthurRivermine,located65kilometressouthwestofBorroloola,intheformofacombinedzinc-leadandsilverconcentrateaswellasindividualleadandzincconcentrates.

Thevalueofzincandleadconcentrateincreasedby28.8percentin2016-17and43.5percentin2017-18,reflectingincreasedglobalprices.Leadandzincpricesareexpectedtostabilisein2018-19,withMcArthurRiverminemaintainingcurrentlevelsofproductionsubjecttochangesin global demand. Glencore, the operator of the McArthur River mine, proposed the Overburden ManagementProjectin2014.Iftheproposalisimplemented,itwillextendthemine’slifebyoneyearto2037plus10yearstoreprocesstailings.Thisisexpectedtoincreaseoreproductionfrom2018by2milliontonnesto92milliontonnesby2037.TheprojectreceivedapprovalfromtheNorthernTerritoryEnvironmentalProtectionAuthorityinAugust2018.

BauxiteSincelate2017therehavebeentwobauxiteminesoperatingintheTerritory.TheGulkulamineprojectagreementwassignedbyRioTintoAlcanandGumatjCorporationinAugust2017,becomingthefirstAboriginal-ownedminingcompanyoperatingontraditionalland.Bauxitefromthis small scale mine is sold to the Rio Tinto Gove mine where it is processed and exported to Asianmarkets,predominantlyforuseintheproductionofaluminium.AsproductionfromtheGulkulamineincreases,productionattheRioTintoGoveminewillreducebyasimilaramount.

ThevalueofbauxiteproductionintheTerritoryincreasedby16.2percentto$524.9millionin2017-18,reflectinganincreaseinproductiontomeetstrongglobaldemand,partlyoffsetbyafallinprices.Thepriceofbauxiteisexpectedtostabiliseintheshortterm,withincreasedproductiondependentoncontinuedglobaldemand.



UraniumUraniumisproducedattheRangermine,locatedinKakaduNationalPark,withthesiteleasedfromtraditionalowners.ThecurrentleaseisduetoexpireinJanuary2021andtraditionalownershavenotapprovedextendingtheleasebeyondthisdate.Open-cutminingatthesitewascurtailedin2012andsincethenallproductionfromtheminehasbeenattributedtorunningdownexistingstockpiles.

Rangermineisexpectedtoprocess2000tonnesperannumin2018-19and2019-20,and1000tonnesin2020-21beforeitsscheduledclosureinDecember2020.Globaluraniumpricesareexpectedtoincreaseoverthenextfewyears.Japanhasbegunreactivatingitsdormantnuclearreactors,sevenyearsaftertheFukushimadisastercurtaileddemandfornuclearpower.Chinaisalsoconstructingmorenuclearreactors,withRussiaandIndiaplanningtoexpandnuclearpowerproduction.

EnergyResourcesofAustralia,theoperatorofRangermine,iscontinuingtoworkwithtraditionalowners and other stakeholders, including the Territory and Commonwealth governments, to support thetransitionofJabirufromaminingtowntoatourismhubfortheKakaduNationalPark.

Other mineralsNon-metallicmineralproductiondecreasedby5.5percentin2017-18,withdeclinesinproductionofsand,gravel,crushedrock,quicklimeandsoil.Thiswaspartlyoffsetbyanincreaseingarnetsandproduction,andthefirstsaleofdiamondsfromMerlindiamondminesincerecommencingminingoperationsin2017-18.Productionofnon-metallicmineralsisexpectedtoremainsubduedoverthenextfewyearsduetoalackofmajorconstructionprojectsovertheoutlookperiod.ThesematerialsareproducedpredominantlyforTerritoryconsumptionandareresponsivetochangesinconstructionactivity.

DespitetheslowdownintheconstructionindustryintheTerritory,thereareseveraldevelopmentsthatcontributetotheoutlookforotherminerals.In2017-18,productionofothermineralswasboostedbythereopeningoftheSill80ilmenitemine.Upto$6.0millionofmineralsandwasgeneratedbytheminein2017-18andthisisexpectedtoincreasein2018-19.TheMerlindiamondmineisreportedlyscalingupminingactivities,havingorderednewcapitalequipmenttodoubleitsdiamondprocessingcapacity.HartsRangegarnetsandsmineclosedinlate2017,howeverwasreopenedinlate2018aftersecuringdomesticinvestors.Demandforgarnetsandsisaffectedbyconstructionactivityasitismainlyusedasanabrasive.

Therearealsoanumberofotherprojectsinthepipelinethat,ifrealised,couldprovideaboosttomineralproductionintheTerritory.TheseprojectsincludethenewMountPeakevanadium,titaniumandiron-oremineincentralAustralia,theNolansrareearthsmine,ChandlersaltmineandJervoiscopperminenearAliceSprings,andtheAmmaroophosphateminenearTennantCreek.The Mount Peake, Nolans and Ammaroo mines have received environmental approval and are approachingfinalinvestmentdecision.InMarch2019,aforeigntakeoverbidwasannouncedforVerdantMinerals,ownersoftheAmmaroophosphateproject,whichhasthepotentialtoincreasecapitalforthenewproject.

Demand for rare earths and other materials used in manufacturing technology products such asmobilephonesandelectriccarsisexpectedtocontinuetoincreaseinthefuture,whichmayincreasethepotentialviabilityofmanyoftheseprojects.InJanuary2019,amineralleasewasgrantedtotheFinnisslithiumprojectlocatedsouthofDarwin.Lithiumisacorecomponentoflithium-ionbatterytechnologyusedinelectriccarsandenergystorage.

InApril2019,theTerritoryGovernmentannouncedtheTerritoryCriticalMineralsPlantohelppositiontheTerritoryasaproviderofcriticalmineralsimportanttotheadvancedtechnology,


2019-20 Budget

batteryanddefencesectors.TheplanisexpectedtosupportanumberoftheaforementionedminingprojectscurrentlyprogressingintheTerritory.

OilandgasproductionTheTerritory’sonshoreconventionalgasisproducedfromtheAmadeusbasin,attheDingo,PalmValleyandMereeniegasfields,locatedintheCentralAustralianregion.TheTerritory’sonshoregasproductionincreasedby23.5percentin2018.

ProductionisexpectedtoincreaseovertheoutlookperiodduetoseveraldevelopmentsintheMereenieandPalmValleygasfieldsasaresultoftheNorthernGasPipeline.TheMereeniefacility,inpartnershipwithMacquarieMereenie,wasupgradedinlate2018toincreaseitsgascapacityto44TJ/d,comparedtoitsaverageof14.7TJ/dovertheDecember2018quarter.PalmValleygasfieldresumedoperationinlate2018andisexpectedtoincreaseproductionwithanadditionalwellto be brought online.

ThemajorityoftheonshoreoilproducedattheMereenieoilfieldintheTerritoryistransportedtoSouthAustraliaforstoragepriortoexportbytanker.In2018,totalonshoreoilproductionvolumesdecreasedby10.2percentcomparedtothepreviousyear.

TheTerritoryhasanumberofoffshoregasreservesinTerritorywatersandintheJointPetroleumDevelopmentArea(JPDA)(Map2).CurrentoffshoreTerritorygasproductionislocatedattheBayu-UndangasfieldintheJPDA,theBlacktipgasfieldneartheTerritoryandWesternAustraliaborderand,asoflate2018,theIchthysgasfield,220kmoffthecoastofWesternAustralia.AlthoughtheIchthysoffshorefacilityisnotinTerritorywaters,itispipedonshore,viaa890kmsubsea pipeline, for processing in Darwin.

Map2:OffshorepetroleumactivityneartheTerritory1

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency or completenessoftheinformation.Tobeusedasaguideonly.

Source: Department of Treasury and Finance

TIMOR SEA

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OffshoreoilproductionattributedtotheTerritoryin2017-18wasattheMontaraandLaminaria-Corallinaoilfields.Oilproducedoffshoreisexporteddirectlyfromthefieldsforoverseastrade.ThevalueoftheTerritory’soffshorepetroleumoilexportsdecreasedby17.9percentto$175.4millionin2017-18.

TheTerritory’soilandgasproductionisexpectedtoincreasesignificantlyintheshortterm,drivenpredominantlybyLNGproductionbutalsoLPGandcondensatefromtheIchthysLNGplant.Thefacilitycommencedexportsinlate2018andisexpectedtoreachfullproductioncapacitybyearly2020,afterwhichgrowthintheproductionofoffshoreoilandgasisexpectedtostabiliseovertherestoftheoutlookperiod.However,thepossibilityexistsforadditionaloffshoregasandoilfieldstobedeveloped,increasingproductioninthelongterm.

TheBayu-Undangasfield,whichsuppliesgastotheConocoPhillipsLNGplant,isexpectedtobeexhaustedby2023.Theoperatoriscurrentlyexploringoptionstoprovidebackfillgastoextendthelifeoftheplant.TheleadingcandidateistheBarossaproject,whichproposesapermanentlymooredfloatingproductionstorageandoffloadingfacilityintheBarossagasfieldstosendgastoConocoPhillipsLNGplantviaasubseapipeline.Constructionisscheduledfor2020-21,withproductiontobeginin2023.TheBarossaprojectiscurrentlyinthefront-endengineeringdesignphase,andisyettoachievefinalinvestmentdecision.

ExplorationactivityThoughminingexplorationdoesnotalwaysleadtothedevelopmentofnewmines,levelsofexplorationactivityprovidealeadingindicatorofpotentialfutureminingdevelopments.

Chart2:ValueofmineralexplorationexpenditureintheTerritory

Source:ABS,Mineral and Petroleum Exploration, Australia,Cat.No.8412.0

TotalmineralexplorationexpenditureintheTerritoryincreasedby35.1percentin2018to$123.2million,significantlyhigherthanthe10-yearaverageannualexpendituregrowthof0.7percent.Thisincreasewaslargelydrivenbya45.3percentincreaseinthevalueofgoldexplorationto$60.9million,reflectingtheexplorationactivityattheCosmoandUnionReefsgoldmines(Chart2).TotalpetroleumexplorationexpenditureintheTerritoryincreasedby71.1percentto$149.5millionin2018,largelyduetoonshoregasdevelopmentsbyCentralPetroleum.

Nationally,mineralexplorationincreasedby23.9percentin2018,whilepetroleumexplorationdecreasedby4.5percentoverthesameperiod.MineralandpetroleumexplorationintheTerritoryisexpectedtocontinuetobesupportedoverthecomingyearsbytheTerritoryGovernment’sResourcingtheTerritoryprogram,with$26millioncommittedoverfouryearsfrom2018-19tohelpstimulateresourceexplorationandattractinvestment.

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InMarch2019,GeoscienceAustraliareleasedtheresultsofitsairborneelectromagneticsurveyofalarge region of northern Australia as part of its Exploring for the Future program, in partnership with NorthernTerritoryandQueenslandGeologicalSurveys.Thesurveyindicatedpotentialnewmineraldepositsincludinggold,copper,nickel,lead,zinc,manganese,cobalt,platinumgroupelements,andrare earth elements.

Hydraulic fracturing in the TerritoryFollowing an inquiry into the environmental, social and economic risks and impacts of hydraulic fracturingandassociatedactivities,theTerritoryGovernmentliftedthemoratoriumonhydraulicfracturingofonshoreunconventionalgasreservoirsinApril2018.TheTerritoryGovernmentacceptedall135recommendationsfromthefinalreport,andiscurrentlydeliveringtherecommendationsthroughtheHydraulicFracturingImplementationPlanannouncedinJuly2018.

TheeconomicimplicationsofthisdecisionaredependentontheresultsofonshoreexplorationintheBeetaloosub-basin,wheresignificantreservesofgashavebeenidentified.Approximately$160millionofexplorationexpenditureisexpectedfortheBeetaloosub-basinin2019-20.Thediscoveryofhigher-valuehydrocarbonswouldimprovethecommercialfeasibilityofunconventionalgasextraction,althoughthepresenceofsuchpetroleumproductsisyettobedetermined.AnotherimportantconsiderationiscompetitionwithUSimports,whichhavelowoverheadcostsduetothescaleoftheiroperations,partlyoffsetbyshippingcosts.InMarch2019,theCommonwealthGovernmentannounced$8.4milliontosupportfeasibilitystudiesfortheexplorationanddevelopmentoftheBeetaloosub-basin.

DuetotheuncertaintysurroundingthedevelopmentoftheBeetaloosub-basin,thefutureeconomicimplicationsofthisdecision(otherthanexplorationactivityintheforwardestimates)have not been factored into forecasts.

ThedevelopmentofonshoregassourcespresentssignificantdownstreamopportunitiesfortheTerritory.Thesizeofthepotentialonshoregasreservesisestimatedtobesufficienttoaccommodatenewgas-basedprocessingandmanufacturingindustriesintheTerritorywhilemeetingdemandintheeasterngasmarkets.Theseindustrieswouldbewellplacedtobenefitfromampleindustrialland,accesstoimportantinfrastructuresuchasatranscontinentalrailnetworkandaninternationalairport,andagrowingserviceandsupplyindustry.

ManufacturingTheTerritory’smanufacturedgoodsproductioncontributed$965milliontoGSPin2017-18,a3.1percentdecreaseinrealtermscomparedtothepreviousyear.Theoutlookformining-relatedmanufacturing in the Territory is subdued over the outlook period, driven by lessening demand for construction-relatedmanufacturedgoods.HydraulicfracturingintheBeetaloosub-basinhasthepotentialtoestablishasignificantdownstreamgas-basedprocessingandmanufacturingindustriesbeyondtheoutlookperiod,howeveritiscontingentontheresultsoffuturegasexplorationandfeasibility studies.

PipelinesNorthern Gas PipelineTheNorthernGasPipelinewascompletedinlate2018andisexpectedtoencourageonshoregasproductionbyprovidinggreateraccesstogasmarketsineasternAustraliaforTerritorygasproducers.ThepipelinecommencedinterstateexportsofgasinJanuary2019.Upto80percentofthepipeline’scapacityhasbeenfilledforitsfirstyear,althoughitscapacitymaybeexpandedinthelongterm.CentralPetroleum,whichoperatestheMereenieandPalmValleygasfields,inpartnershipwithMacquarieMereenie,expandeditsgasproductioncapacityin2018,withsomeofthegassuppliedintothepipeline.TheNorthernGasPipelinealsohassignificantimplicationsfor



potentialunconventionalgasextractionintheBeetaloosub-basin,positioningtheTerritoryasamajorgassupplierfortheeastcoast.

Tanami Gas PipelineTheTanamiGasPipeline,includingtheinstallationoftwopowerstationsandaninterconnectedpowerline,wascompletedinearly2019aspartoftheTanamiPowerProject.TheprojectwascommissionedbyNewmontMiningtoprovideagas-fuelledpowersourcefortheoperationofitsgoldminesincentralAustralia.ThepipelinerunsofftheAmadeusgaspipelinetotheGranitesandDeadBullocksoakgoldminesintheTanamiDesert,providingasafeandreliableenergysourcewhilereducingcarbonemissions.Priortoitscompletion,dieselwasoriginallydeliveredovertheTanami Road, which can be impaired by poor weather. The pipeline is expected to reduce power costsbyremovingtheneedtousevehicles,andestablishesthegroundworktopotentiallyextendthe life of the mine.

Renewable energyTheTerritoryGovernmenthascommittedtoa50percentrenewableenergytargetby2030,supportedbytheRoadmaptoRenewablesreportreleasedinNovember2017.Anumberofrenewableenergyprojectsarenowplannedovertheoutlookperiod.

The$43millionsolarprojectsatBatchelorandMantonDamarescheduledtobecompletedinlate2019.Inconjunctionwiththe$40millionKatherineSolarFarmannouncedinlate2018,thisisexpectedtoprogresstheshareofrenewableenergygenerationintheTerritoryfrom3percentto10percentfrom2019-20.Otherinitiativesinclude:

• $2millionEnergyEfficiencyandSustainabilityGrantfor2018-19toassistlocalgovernmentcouncils to reduce energy use and greenhouse emission costs.

• $8.3millionAliceSpringsBatteryStorageSystem

• TerritoryGovernment’sandAustralianRenewableEnergyAgency’s$59millionSolarEnergyTransformationProgramtorolloutsolarpowerstationsacross25remotecommunities

• TerritoryGovernment’s$5millionRooftopSolarSchoolsfrom2018-19to2020-21.

Inlate2018,theNorthernAustralianInfrastructureFund(NAIF)approvedaloanupto$150milliontofund$300millionworthofairportexpansionsacrosstheTerritory.Oftheplannedexpansions,theconstructionofsolarenergyfarmsatDarwin,AliceSpringsandTennantCreekairportsareincluded.

16 Construction

2019-20 Budget

Construction

Recent activityMajor projects continue to have an impact on the construction industry, which was reported to be the third largest contributor to the Territory’s GSP, and remained the Territory’s third largest employer in 2017‑18. Since then, construction activity has declined significantly, largely impacted by the completion of private investment and works associated with major resource projects.

OutlookConstruction activity is expected to significantly detract from economic growth in 2018‑19

through to 2019‑20, largely a result of weak private sector engineering investment and activity. A pipeline of projects, if realised, will provide stimulus to the industry and overall

economy, helping to partially offset the significant construction downturn.

AnalysisonconstructionactivityandworkdoneisbasedonmonthlyandquarterlydatareportedbytheABSthroughanumberofsurveysincludingengineeringconstructionactivity,buildingactivity,buildingapprovalsandconstructionworkdonepreliminaryestimates.ConstructionindustrygrossvalueaddedandcontributiontoGSParemeasuredannuallythroughtheABSnationalstateaccountsdata.IndustrycontributionstoemploymentarebasedonquarterlyABSlabourforceindustry-relatedstatistics.

Forthelatestdataontheconstructionsector,includingup-to-dateactivityonmainconstructionand building indicators, refer to the Territory Economy website.

OutlookOverthepastsevenyears,theTerritory’sconstructionindustryhasbeenheavilyinfluencedbyworksfortheIchthysLNGproject,aswellasotherresource-relateddevelopments.Duringthisperiodofstrongeconomicexpansion,theTerritoryalsorealisedasurgeinresidentialconstruction,whichpeakedathistoricallyhighlevelsin2013-14.FollowingcompletionoftheIchthysLNGproject,constructionactivitydeclinedsignificantlyandisexpectedtocontinuecontractingthroughto2019-20.Thesoftconstructionoutlookreflectscurrentweakactivityacrossarangeofconstruction-relatedindicatorssuchasbuildingactivityandapprovals(Chart1).


Construction 17


Chart1:ConstructionworkdoneintheTerritory1, 2

GEMCO:GrooteEylandtMiningCompanyOperation;LNG:liquefiednaturalgas;SIHIP:StrategicIndigenousHousingandInfrastructureProgram;e:estimate;f:forecast

1 Constructionworkdonepreliminarydataestimates.2 Inflationadjusted.Source:DepartmentofTreasuryandFinance;ABS, Construction Work Done, Australia,Cat.No.8755.0

In2017-18,theconstructionsectorwasthethirdlargestindustryintheTerritory,accountingfor11.0percentoftotalGSP,thehighestshareofGSPforthisindustryacrossalljurisdictions.EmploymentintheTerritory’sconstructionindustryincreasedby2.4percentto14490peoplein2017-18,remainingthethirdlargestemployerintheTerritory.However,morerecentdatareportsemploymentconditionshavedeclinedby14.9percenttoabout12360employedpersonsintheyeartoFebruary2019,reflectingthelimitedconstructionworkavailableandthesubstantialdemobilisationofconstructionworkersfromtheIchthysLNGproject.

Whilethevalueofprivatesectornon-residentialandresidentialconstructionactivityhasbeendecliningsince2013and2014,respectively,incontrastthepublicsector’scontributiontooverallconstructionactivityhascontinuedtogrow,reflectingthegovernment’sefforttosupporttheeconomy(Chart2).Despitethispositivecontribution,thepublicsectordoesnothavethescaleorfiscalcapacitytooffsettheeconomicdownturnattributedtothesharpdeclineinprivatesectorinvestment.Thisisduetothesheerdominanceofprivatesectorengineeringprojectsinconstructionactivityoverthepasttwodecades.

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SIHIPDarwin Correctional Centre

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INPEX workers'accommodation

village,multi-storey unitdevelopments

Northern Gas Pipeline,Ichthys LNG project Ichthys LNG

project, Montaraoilfield mineexpansions

Blacktip,Montara oilfield,

Kitan oilfield,GEMCO

expansion

Darwin LNG plant,Alice Springs to Darwin railway,Bayu-Undan

Alcan G3Refineryexpansion

18 Construction

2019-20 Budget

Chart2:BuildingactivityintheTerritory,bysector

Source:ABS, Building Activity, Australia,Cat.No.8752.0

Over2018-19and2019-20,theTerritory’sconstructionindustryisexpectedtocontractsignificantly,reflectingcontinueddownwardtrendsacrossallcomponentsincludingengineeringconstruction,andresidentialbuildingandnon-residentialbuildingactivity,largelydrivenbyweakprivatesectorinvestment.Followingalossofconstructionjobsduetothehousingdownturnandcompletionofmajorengineeringprojects,theconstructionindustry’scontributiontotheeconomyandworkforceismoderating.Thisoutcomewilllikelybemorepronouncedinthegreater Darwin region,asthereisnootherproject,currentorplanned,ofasimilarmagnitudetohelpsoftenoroffsetthenegativeeconomicimpactsfromthecompletionoftheconstructionphaseoftheIchthysLNGproject.

Inresponsetotheanticipatedongoingcontractinglevelsofprivatesectorconstructionactivity,theTerritoryGovernmentiscontinuingtosupporttheconstructionsectorthrougheconomicstrategies,infrastructureprogramsandincentives.InFebruary2019,theTerritoryGovernmentannounceditsplantofasttrackseveralnewconstructionprojectsexpectedtohelpsupporteconomicandemploymentgrowthinthisindustry.Thishasresultedinapipelineof$125.6millionininfrastructureprojectstocommenceinthenearterm.TheseconstructiondevelopmentsincludethenewMandorahmarinefacilitiesincludingajetty,thesecondstageoftheZuccoliPrimarySchool,stage2ofKilgariffinAliceSprings,upgradestoLitchfieldNationalPark,andanewPalmerstonfirestation.

TherolloutoftheTerritoryGovernment’sinfrastructureprogramof$1.45billionin2018-19and$1.45billionin2019-20isexpectedtocontributetothelocalconstructionindustryandstimulateeconomicactivityovertheoutlookperiodthroughavarietyofconstructionworksonTerritoryroads,hospitalandhealthfacilities,schoolandeducationfacilities,urbanandremotepublichousing,communitysafetyfacilities,communityinfrastructure,andtourismfacilitiesacrossallregions.Thecontinuedgovernmentassistanceinremotecommunitiesandforregionaldevelopmentwillsupporttheconstructionindustrythroughmoreemploymentopportunitiesintheremoteandvery remote regions of the Territory, providing new and upgraded infrastructure.

Engineering Thevalueofengineeringconstructionhasdeclinedfromthehighof$8.4billionin2014-15to$3.6billionin2018,andisnowatitslowestlevelsince2012.Thisislargelyduetodecreasesinactivityrelatedtoheavyindustryandelectricitygeneration,transmissionsandpipelinesfollowingthecompletionofseveralmajorprojectssuchastheIchthysLNGprojectandtheNorthernGasPipeline.Sincetheheavyindustrycomponentmakesupthemajorityofprivateengineering

Private non-residential buildings Public non-residential buildingsPrivate residential buildings Public residential buildings

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Construction 19


constructionworkdoneintheTerritory(about77percent),itsdeclinewillsignificantlyimpactthetotalvalueofactivity.Asaresult,theoutlookforengineeringconstructionactivityisexpectedtobelowerthanrecentyears,inlinewithprojecttimelinesandcompletions.From2019-20onwards,overallengineeringconstructionactivityisexpectedtoslowlyrecover,withsupportprovidedfromothercomponents,likelythroughsmallerprojectsidentifiedintheTerritory’spipeline.

Over the outlook period, the Commonwealth’s NAIF is expected to provide support to the sector throughfacilitatingandsupportingnewprivatesectorinfrastructureinvestment.In2018-19,threeprojectproposalswereapprovedforaloanintheTerritory,withatotalNAIFinvestmentofupto$184.7million.ThiswillprovidefundingfornewactivityandupgradestoinfrastructureforHumptyDooBarramundi,VoyagesIndigenousTourismandNorthernTerritoryAirports.TheNorthernTerritoryAirportsprojectwillfundinfrastructureworksacrossairportsitesinDarwin,TennantCreekandAliceSprings.Thisincludestheconstructionofafreightandcoldstoragefacility,andanexporthubinDarwinInternationalAirport,solarenergyfarmsatDarwin,TennantCreekandAliceSpringswithanoff-sitemulti-userbattery,andtheresurfacingofAliceSpringsairport’srunway,taxiways,aswellasinstallationofnewrunwaylighting.

Subjecttofront-endengineering,designandapprovalprocesses,theConocoPhillips’BarossaprojectisexpectedtocommenceconstructiontoprovideabackfillgassourcetoreplacetheexistingBayu-Undanoffshoregassupplyfrom2023.Ifrealised,thisexpansionprojectwillgenerateconstructionactivity,contributingtoTerritoryeconomicandemploymentgrowth.ThepotentialconstructionoftheMountIsatoTennantCreekrailwayprojectcanfurthersupportregionaleconomicdevelopment,creatingrailconnectivitybetweenthePortofTownsvilleandthePort of Darwin.

Followingtheliftingofthemoratoriumonunconventionalgasextraction,explorationoftheBeetaloosub-basinisexpectedtoprogress,subjecttotheregulatoryframeworkbeingputinplace,andwillsupportengineeringactivityforessentialinfrastructureworks.Otherresource-basedprojectsalsohavethepotentialtoprovideasignificantboosttotheTerritory’sconstructionandresource-relatedindustriesovertheforwardestimates.Therearealsoseveralplannedandpotentialprojectsinthepipeline,withthreelargeminesbasedinthecentralAustralianregionachievingenvironmental approvals and likely to proceed in the near term, including the Mount Peake vanadiumproject,NolansrareearthsprojectandtheAmmaroophosphateproject.

Thedefenceindustrywillplayasignificantroleintermsofinvestmentandconstruction-relatedactivityintheTerritorywith$20billionininfrastructureinvestmentplannedover20years,supportingtheconstructionsectorandlocalbusinesseswithvariousdefencecontracts.Majordefenceprojectssuch as the newaircombatcapabilityfacilitiesprojectattheRoyalAustralianAirForce(RAAF)BaseTindalaswellasmajorupgradestofacilitiesatRAAFbasesandHMASCoonawarraareexpectedtostimulatethesector,whichcouldpotentiallyextendbeyondtheoutlookperiod.RefertotheDefencesectionformoreinformation.

MajorinfrastructureinvestmentbytheCommonwealthandTerritorygovernmentsforroadupgradesandtransportdevelopments,suchasthe$59.5millionGarramillaBoulevardprojectinDarwinCBDandthe$35.5millionjointlyfundedVictoriaHighwayupgrades,willcontinuetosupportengineeringconstructionactivityandindustryemployment.AspartoftheNorthernAustraliaBeefRoadsProgram,theredevelopmentofTablelandsHighwayandtheBarklyStockRoutewillfurthersupportconstructionactivitythroughtolate2019.InMarch2019,theCommonwealthcommittedtoanew$500millioninvestmenttoupgradepriorityTerritoryfreightroutesaspartofanationalinitiative.

Furthermore,EquatorialLaunchAustraliaisprogressingthedevelopmentofAustralia’sfirstcommercialspacelaunchfacilityinArnhemLand,nearNhulunbuy.TheTerritoryGovernmentis

20 Construction

2019-20 Budget

committedtosupportinggrowthanddevelopmentofthisinnovativesector,withlocalpotentialinthelogisticsandconstructionindustriestodeliveressentialinfrastructureworks.Onceinoperation,ongoingcareeropportunitiesareexpectedtosupportjobsintheprofessional,scientific,technicalandeducationalsectors,generatingflow-oneffectstotheTerritoryeconomy.

Non-residentialIn2018,thevalueofnon-residentialbuildingworkdoneintheTerritorydeclinedby3.8percentto$598million,drivenbyacontractioninprivatesectoractivity,whichfellby13.5percentto$241million,wellbelowthe10-yearaverageof$459million.The10-yearaverageincludessignificantlevelsofactivityrelatedtothecompletedconstructionofsiteofficesandbuildingsfortheIchthysLNGproject,newofficebuildingsacrossDarwinandPalmerston,aswellascompletionofcommercialandretailbuildings,suchastheBoulevardPlaza,Gateway,CoolalingaCentral,andstageoneoftheDarwinCorporatePark.Publicsectornon-residentialconstructionincreasedby4.1percentto$358millionin2018,abovethe10-yearaverageof$255million.Thisreflectscompletedconstructionactivityonhealthfacilitiesandotherpublicfacilitiesincludingupgradesto the Royal Darwin Hospital, the new Palmerston Regional Hospital and the Alice Springs Supreme Court.

Buildingapprovalscanbeusedasaleadingindicatortodeterminethetrendofconstruction-relatedactivity.Since2015,thevalueofapprovalsfornon-residentialbuildingshasbeentrendingdownwards(Chart3).Basedonthecurrentstatusofmajorprojectsandotherprivatesectordevelopmentsinthepipeline,theoutlookfornon-residentialconstructionisexpectedtobesubdued.

Chart3:Valueofresidentialandnon-residentialbuildingapprovalsintheTerritory 1

1 Moving annual total.Source:ABS, Building Approvals, Australia,Cat.No.8731.0

Anadditional$200millionaspartoftheco-fundedTerritoryandCommonwealthgovernments’CityDealsprojecttorevitalisetheDarwinCBD,aswellasa$20millionfundingcommitmenttowardsrevitalisationworksintheAliceSpringsCBD,hasthepotentialtosupportconstructionactivitythroughnewandupgradedinfrastructureandfacilities.ThisfundingdealwillincludeanewDarwinCBDCharlesDarwinUniversitycampusandcivicprecinct,andanartgalleryinState Square precinct.

TheBarklyRegionalDeal,whichinvolvesa10-yearcommitmentof$78.4millionbytheCommonwealth,TerritoryGovernmentandBarklyRegionalCouncil,isexpectedtobenefitthelocalconstructionindustrythroughinvestmentinlocalinfrastructureprojectsandinitiatives.Itisalsoa

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Construction 21


government priority to develop a new resource services hub and supply centre in Tennant Creek, to supporttheopeningoftheEdnaBerylgoldmineandtheNorthernGasPipeline’soperations.

TheCommonwealthandTerritorygovernments’masterplantoredevelopJabiruandKakaduNationalParkthroughnewtourismfacilitiesandinfrastructureprojectsisfurtherexpectedtosupporttheconstructionindustrybycreatingnewregionalgrowthandemployment.TheTerritoryGovernment’scommitmentof$131.5millionfrom2019-20to2022-23,inadditiontotheCommonwealth’splannedinvestmentof$216.2millionover2018-19to2027-28,willincludetheconstructionofanAboriginal-ledWorldHeritageKakaduCentreinJabiru,significantroadupgrades,newtourisminfrastructure,andtheremediationofJabiru.TheTerritoryGovernmentisworkingtodeveloptheKatherineLogisticsandAgribusinessHubtodriveeconomicdevelopment,createjobsandincreaseprosperityintheregion.Significantfundingof$30millionhasbeencommittedforthemediumterm,whichisexpectedtosupportgrowthintheconstruction,resource,agriculture,defence, transport and tourism sectors.

Otherconfirmedandproposedprojects,suchasthefast-trackedPalmerstonfirestationandsecondstageofZuccoliPrimarySchool,newpolicestationandpublichousinginNightcliff,WestinDarwinHotel,CasuarinaShoppingcentrerenovations,upgradestocurrentsportinginfrastructureandeducationalfacilitiesacrosstheTerritoryregions,havethepotentialtoprovidestimulustothelocalindustry.

ResidentialKeyleadingindicators,suchasbuildingapprovals,housingfinanceapprovalsandbuildingactivity,suggesttheoutlookforresidentialconstructionactivitywillremainweak.Anumberofresidentialdevelopmentsareexpectedtocontinueovertheforwardyears,althoughcurrentdataindicatesactivityatmoresubduedlevelsrelativetopreviousyears.In2018therewasanimprovementinthevalueofresidentialbuildingworkdoneintheTerritory,upby2.2percentto$422million,drivenbyactivityforunits,townhouses,andalterationsandadditions.Despitethisdevelopment,thelevelofinvestmentremainswellbelowthe10-yearaverageof$637million.

Publichousingmakesupaconsiderableportionofthedwellingsinmanyremotecommunities.In2018,therehasbeenastrongincreaseinthevalueofpublicsectorresidentialconstructionworkdone(upby17.1percent),reflectingongoingworktoimprovethequalityandvolumeofpublichousingstockintheTerritoryregions.Theongoingpublichousingstimulusprogramsof$1.1billionisexpectedtosupporttheconstructionindustrythroughupgrades,repairsandmaintenanceworksto public housing across the Territory’s remote and very remote regions, providing employment opportunitiestotheregionalconstructionsector.Furthermore,theCommonwealthhascommittedanadditional$550milliontosupportremotehousingintheTerritoryovertheforwardestimates,which will deliver new buildings, extensions and refurbishments. The Territory Government has also fast-trackedtherevitalisationofJohnStokesSquareinNightcliff,whichwillseetheconstructionactivityofthreenewpublichousingtowersfromOctober2019.

TherevisedTerritoryGovernmenthomeownerincentiveschemeswillalsohelpstimulateconstructionactivityfollowinganexpectedincreaseindemandfornewdwellingsoverthemedium-termoutlook,supportingprivatesectorresidentialactivity.Thenew$12millionBuildBonusincentive,providing600constructiongrantsvaluedat$20000forpeopletobuildanew home in the Territory, including those who currently own a home, is expected to provide a timelystimulusduring2019-20fortheconstructionsector.Inaddition,continuedlandreleasesacrossNorthcrest,Zuccoli,KatherineEastandKilgariffarealsoexpectedtohelpsustainjobsinanumberoflocalconstructionandrelatedindustriesovertheoutlookperiod.RefertotheResidentialPropertyMarketchapterinthe2019-20NorthernTerritoryEconomypublicationformoreinformation.

https://budget.nt.gov.au/__data/assets/pdf_file/0008/689525/2019-20-Economy-book.pdf

22 Defence

2019-20 Budget

Defence

Recent activityDefence continues to be a contributor to the Territory economy through major joint operations and exercises, and capital works projects, however personnel numbers have been declining in recent years.

OutlookA continued long‑term commitment by the Department of Defence

in major infrastructure investment will strengthen the Territory’s strategic position in the region and support the defence industry.

TheABSreportingstandardsdonotclassifydefenceasaseparateindustryinnationalaccounts,rather it is reported against a number of industries and is predominantly included in public administrationandsafety.DefenceemploymentnumbersarealsonotincludedinABSlabourforcereporting,whichisrestrictedtothecivilianpopulation.ReferencestodefencerefertoboththeDepartment of Defence and the Australian Defence Force. Data for defence personnel and housing is sourced from the Department of Defence and Defence Housing Authority (DHA) annual reports.

For the latest data on the Territory defence sector, refer to the Territory Economy website.

OutlookTheTerritoryisastrategiclocationfordefencethatleadstolong-termdefenceinvestmentintheregionmakingasubstantialcontributiontotheTerritoryeconomythroughdirectandindirectemployment,anddemandforlocalgoodsandservices.DefencealsogenerateseconomicactivitythroughmajoroperationsandexercisesheldintheTerritory,suchasPitchBlackandKAKADU,aswellascapitalworksprojectsthatengagelocalbusinessesandsupporttheconstructionindustry.

DefenceexpenditureasashareoftheTerritory’sGSPwas8.2percentin2017-18,or$2.1billion.Defenceexpenditureincreasedby4.2percentcomparedtothepreviousyear.Thisresultwasabovethe10-yearaveragedefenceexpenditureof$1.9billionperannum,largelydrivenbyanincreaseinoperationalexpenditure,andweaponsandotherinvestments(Chart1).DefenceexpenditureintheTerritoryasaproportionoftotalnationaldefenceexpenditurewas5.3percentin2017-18.Thedefenceindustryisexpectedtoincreaseitseconomiccontributionconsiderablyoverthemediumtermthroughcommittedinfrastructureinvestment,providingstimulustolocalbusinessesandcreatingadditionalemploymentopportunitiesintheTerritory.


Defence 23


Chart 1: Defence expenditure in the Territory1

1 Inflationadjusted.Source:DepartmentofTreasuryandFinance;ABSunpublisheddata

AcontinuedneedforAustraliatohaveastrongdefencepresenceintheTerritorywasreinforcedbythe2016DefenceWhitePaper,whichoutlinedtheCommonwealth’slong-termplansforstrengthened capability in northern Australia through increased personnel, investment, training, exerciseswithinternationaldefenceforcesandthejointUnitedStatesForcePostureInitiatives(USFPI).TheUSFPIfurtherdemonstratestheimportanceoftheTerritoryasastrategiclocationforregionalsecurity.ThisincludestheUSmarinerotationsacrosstheTerritory,highlightingthesignificanceofAustralia’sstrongalliancewiththeUS.

Theannualrotationhasgrownfrom200USmarinesin2012to1590in2018.The2018rotationincludedagroundcombatelementsupportedbyanartillerybatteryofsixM777Howitzersandacombatlogisticsdetachment.Theaircombatelementincludedeighttilt-rotorOspreys,F/A-18DHornetfighters,AH-1ZViperandUH-1YVenomhelicoptersandKC-130JHerculesaircraft,whichconstitutedthelargestdeploymentofUSaircraftinDarwinaspartoftheUSFPI.The2019rotation,whichcommencedinMarch2019,isexpectedtobethelargestonrecord,includingmorethan1600USmarinesandanevenlargeraircraftelement.Overtheoutlookperiod,thenumberofUSmarinesonrotationintheTerritoryisexpectedtoincreaseto2500aspartofthe USFPI.

About $2 billion of infrastructure investment will be shared by Australia and the US for the USFPI. As part of this infrastructure investment, US Defence has announced a release of the procurement forabulkfuelstorageconstructionprojectattheRAAFBaseDarwin,whichwillconsistoftwo7950cubicmetrecutandcoverbulkfuelstoragetanks,twopumphouses,fuelfilterbuilding,petroleumoperationsbuilding,aswellasfuelfillinganduploadingstands.Inaddition,theUSwillcontributetotheongoingoperationalcostsoftheUSFPIoverthefull25-yearlifeoftheagreement.

TheIntegratedInvestmentProgram,introducedatthesametimeastheWhitePaper,includesallcapitalandrelatedinvestments.Overtheforwardestimates,theTerritorywillbecomehometosignificantnewdefenceinfrastructure.Someofthemajorcommitteddefenceprojectsinprogressor expected to be executed in the near term include:

• $39millionontheUS-ledairfieldworksatRAAFBaseDarwin,from2018to2020

• $161milliononupgradestoRAAFBaseDarwintosupportthenewPoseidonP-8maritimepatrolaircraft,from2018to2020

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2019-20 Budget

• $177 million for the redevelopment works at the Delamere Range south of Katherine to include constructionofnewfacilities,communicationandguidancesystemstosupportpersonneltrainingontheEA-18GGrowleraircraft,dueforcompletionin2019

• $14milliononupgradestohealthfacilitiesatRobertsonBarracksanddevelopmentofanewhealthfacilityatLarrakeyahBarracks,during2019-20

• $15milliononupgradestoRAAFBaseDarwin’sexplosivesstoragefacilitiesaspartoftheExplosiveOrdnanceLogisticsReformProgram,dueforcompletionin2020

• $93millionforthereplacementoftheexistingAustralianDefenceairtrafficsystemsatRAAFBaseTindalandRAAFBaseDarwin,dueforcompletionin2021

• $472millionontheredevelopmentofLarrakeyahBarracksandHMASCoonawarratoimproveinfrastructureservicesandprovidenewmaritimefacilities,includinga250metrewharffacility

• $433millionforthenewaircombatcapabilityfacilitiesprojectatRAAFBaseTindalandRAAFBaseDarwin,tosupporttheF-35ALightningJointStrikefightersarrivingatRAAFBaseTindalin2021,dueforcompletionin2020.

Otherworksincludeupgradestoexistingfacilitiestosupportanumberofnewdefencecapabilitiesandplatforms.Ifrealised,itisexpectedthisdefenceconstructionactivitywillgeneratenumerousemploymentopportunitiestosupportconstructionworkers,followingthecompletionoftheconstructionphaseontheIchthysLNGproject.Someoftheseproposedprojectsareexpectedtocommenceinthenextdecade,subjecttoapprovalfromtheParliamentaryWorksCommittee,andinclude:

• $770milliononredevelopmentworksatRAAFBaseTindalandairfieldworkstosupporttheKC30Amulti-roletankerairtransport

• $500milliontowardsupgradestovariousdefencetrainingareas,includingtheBradshawfieldtraining area

• $210milliononupgradesatHMASCoonawarratosupportthenewoffshorepatrolvessels

• $160millionforthepavementupgradeworksatRAAFBaseTindalandRAAFBaseDarwin,aspartoftheNationalAircraftPavementMaintenanceProgram

• $40milliononupgradesattheJindaleeOperationalRadarNetworkintheAliceSpringsregion.

Defence 25


Map3:MajordefencesitesintheTerritory1

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency, or completeness of theinformation.Tobeusedasaguideonly.

2 TheJindaleeOperationalRadarNetworkhastwooperatingfacilitieswithintheAliceSpringsregion,atHartsRangeandMountEverard.Source:DepartmentofTreasuryandFinance;DepartmentofTrade,BusinessandInnovation;DefenceNT;DepartmentofDefence

Inset showing Darwin and Palmerston

STUART HIGHWAY

BARKLY HIGHWAY

North AustraliaExercise Area

Kangaroo FlatsTraining Area

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HMASCoonawarra

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Robertson Barracks

Delamere AirWeapons Range

Jindalee Operational Radar Network2

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RAAF Base Darwin

Defence Establishment Berrimah

26 Defence

2019-20 Budget

Apieceoftransportandmaintenanceinfrastructurethatcouldpotentiallysupportdefenceactivity,ifrealised,istheproposedDarwinshipliftfacility.Suchaprojectcouldhavethecapacitytoservicedefence,theAustralianBorderForceandothercommercialusers,andreducetheneedfordefencevessels to use other Australian or overseas ports for maintenance and repairs.

ThereleaseoftheTerritoryGovernment’sDefenceandNationalSecurityStrategy2018reinforcestheTerritoryasakeydefenceandnationalsecurityhubandtheprimarycentreformaintenanceandsustainmentoffacilitiesandassetsdeployedtotheregion.ThestrategyoutlineskeyfocusareastosupportastrongdefenceandnationalsecuritypresenceintheTerritoryandenhanceopportunitiesin the industry, as part of developing northern Australia.

Agrowingnumberofdefenceandnationalsecurityplatforms(includingaircraft,shipsandland-basedequipment)eitherbasedinoroperatingfromtheTerritorywillbereplacedaspartofthemajornationalacquisitionprogramcurrentlyunderway.CurrentplatformsintheTerritory,suchastheF-18HornetandtheArmidaleClasspatrolboat,willbereplacedwithnewplatforms,suchastheF-35AJointStrikefighter,aswellassixofthe12newoffshorepatrolvessels,proposedtobelocatedatHMASCoonawarra(Map3).Also,inthestrategy,theTerritoryhasbeenidentifiedasapotentialoperatingbaseforthefutureMQ-4CTritonunmannedaircraft.

DHA is progressing new developments and refurbishments of defence housing stock both on bases andintownships,includingDarwinandKatherine,reaffirmingthelong-termdefencepresenceandincreaseddefenceinvestmentintheTerritory.In2018,morethan400DHApropertiesweredamagedbyCycloneMarcus.DHAprojectsintheTerritorycurrentlyunderwayorexpectedtocommence in the coming years include:

• ongoingexpansionofthesuburbofMuirheadforcompletionin2019,whichisexpectedtoresultin1184dwellinglots,witharound305dwellingstobebuiltbyDHAandoccupiedbydefencemembers and their families

• developmentoftheformerLeePointRadarStationsitelocatednearLeePointandMuirheadNorth,whichisexpectedtoresultinabout800residentiallots,ofwhich30percentwill be allocated for defence members.



Retail and wholesale trade

Recent activityRetail and wholesale trade expenditure grew by 2.2 per cent in 2017‑18, however employment in the industry decreased by 4.5 per cent over the same period.

OutlookRetail trade growth is expected to be subdued over the outlook period due to

below‑average growth expectations for population, employment, housing and wages.

This chapter outlines both the Northern Territory and Australia’s retail and wholesale trade industry conditions.Furthermore,anoutlookisprovidedovertheshorttomediumterm,highlightingpotentialretailandwholesaleprojectsintheTerritory.

For the latest data on the retail and wholesale trade industry, refer to the Territory Economy website.

OutlookIn2017-18,theTerritoryretailandwholesaletradeindustrycontributed$1.3billioninrealtermstotheTerritory’seconomy.AsapercentageofGSP,theindustrycontributed4.9percentin2017-18,onlyslightlybelowthe10-yearaverageof5.0percent.

Despite this, the outlook for the industry is expected to be subdued. This follows the Territory’s moderatetonegativepopulation,employmentandhousingmarketexpectations,whichwilllikelyexertnegativeinfluenceonhouseholdexpenditureandconsumerspendinghabits.Thisisfurtherexacerbatedbybelow-averagewagegrowthandhigherunemployment,leadingtolessdisposableincomeamongadecreasingnumberofhouseholds.Subduedconditionsareexpectedtopersistovertherestoftheoutlookperiod,complementedbymoderatelyrisinginflationandlowwagegrowth.Populationandemploymentgrowthareexpectedtoimproveovertheouteryearsoftheforecastperiod,howeverwillremainbelowlong-termhistorictrends.

Chart1:Year-on-yearchangeintheretailandwholesaletradeturnover1

1 Inflationadjusted.Source:ABS,Australian National Accounts: State Accounts,Cat.No.5220.0

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28 Retail and wholesale trade

2019-20 Budget

RetailandwholesaletradeexpenditureintheTerritorygrewbyanaverageof4.2percentperannumfrom2008-09.However,inthefouryearsto2016-17,theannualgrowthrategraduallydeclinedfromahighof10.5percenttobeingflat,ending15yearsofconsecutivegrowthintheTerritory.Retailandwholesaletradeturnoverreboundedby2.2percentin2017-18,mainlyduetostronggrowthinthewholesalesector,butremainedbelowthe10-yearaverage(Chart1).

AccordingtothelatestmonthlydatafromtheABS,retailtradeturnovermoderatedintheyeartoFebruary2019,drivenbydecliningexpenditureon:householdgoods;cafés,restaurantsandtakeawayfood;pharmaceutical,cosmeticandtoiletryproducts;andotherrecreationalgoodssuchasentertainmentmedia.Whilethismonthlymeasuredoesnotaccountforinflation,itdoesreflectthe general trend of components of retail and wholesale trade expenditure.

AcrosstheotherAustralianjurisdictions,theretailandwholesaletradeindustryshareofGSPandemploymentisbroadlyconsistent,withtheshareofgrossdomesticproduct(GDP)averaging8.6percentandtheshareofemploymentaveraging14percentacrossAustraliaoverthelastdecade.Nationally,retailandwholesaletradeasashareofemploymenthasbeentrendingdownwardssince2012-13withashareof13.3percentin2017-18,belowthe10-yearaverage.

Chart2:RetailandwholesaletradeshareofGSP,GDPandemployment,2017-18

GSP:grossstateproduct;GDP:grossdomesticproduct1 Inflationadjusted.2 Annual average.Source:ABS,Australian National Accounts: State Accounts,Cat.No.5220.0,Labour Force, Australia,Cat.No.6291.0.55.003

IntheTerritory,thecontributionmadebythisindustrytoemploymentandGSPissmallerthanthenationalaverage,reflectingthedominanceofthegovernmentandcommunityservicesindustry,miningandconstructionindustries,andtherelativelysmallsizeoftheTerritory’swholesaletradesector(Chart2).Althoughtheretailandwholesaletradeindustrycontributesjustunder5.0percentoftotalTerritoryGSP,itisoneofthelargestemployersintheTerritorywith9.8percentofemployedpeopleworkinginthisindustryin2017-18which,althoughsignificant,remainsbelowthe10-yearaverageof10.8percent.

RetailRetailtradeactivityisexpectedtobesubduedoverthemediumterm.Oneofthemaincontributorstoslowretailactivityislowwagesgrowth,whichaffectsconsumerspending behaviour and confidence.Weakerwagesgrowthovertheoutlookperiodisexpectedtoconstrainretailturnover,discretionaryspendingandhouseholdconsumption.Adecliningpopulationandcontinuedsofteningin the Territory housing market are expected to further limit the growth of retail trade.

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DuetothesmallsizeoftheTerritoryeconomy,newretailandentertainmentdevelopmentscanhaveapronouncedimpactontheretailindustry.AfterthecompletionoftheGatewayandCoolalinga shopping centres in recent years, current retail developments either underway or plannedareofamuchsmallerscale.Thefollowingprojectsareexpectedtosupportsmallandmedium-sizedbusinessesacrossavarietyofsectorsinthemediumtolongterm.Theseprojectsinclude:

• TheTerritoryandCommonwealthgovernmentshavecommitted$200milliontotheDarwinCityDealprojecttorevitalisetheCBD.Theprojectisexpectedtocreateamoreattractiveandliveablecity for residents and visitors as well as for retailers to conduct business.

• TheTerritoryGovernmenthasalsocommitted$20millioninAliceSprings,whichwillincluderevitalisationtocreateamorevibrantCBDforresidents,visitorsandlocalbusinesses.Therevitalisationwillfocusonfourmajorinitiatives:heatmitigation,crimepreventionthroughenvironmentaldesign,theKwatja(Water)PlaySpace,andthecarparkingmasterplan.

• TheTerritoryGovernment’s$103millionTurbochargingTourismstimuluspackageisexpectedtodevelop the Territory’s tourism industry and encourage retail spending as a result of more visitors. ThisisfurthersupportedbytheTerritoryGovernment’scommitmentof$69.1millionforTurbo2,anextensionoftheTurbochargingTourismpackage,over2019-20and2020-21.

• The$10millionSwitchingonDarwinplan,withfundingcommittedfromtheTerritoryandCommonwealthgovernmentsandCityofDarwin,willprovideDarwincitywithadditionalCCTV,smartlights,wi-fi,amicro-climatemonitoringsystemandparkingsensorsinmaintouristandshoppingareas.TheplancommencedinFebruary2018andisscheduledtobecompletedbytheendofMay2019.

• Thedevelopmentofthe$200millionWestinDarwinHotel,aluxuryhotelthatwilltargethigh-endbusinesspeopleandtourists.Constructionisexpectedtobecompletedin2022.

• The$8.5millionupgradetoCasuarinaSquareisexpectedtoimprovecustomerservices,withconstructionbeginninginFebruary2019,expectedtobecompletedbyAugust2019.

• TheTerritoryGovernment’scommitmentof$131.5millionfrom2019-20to2022-23,withanadditionalcontributionof$216.2millionover10yearsfromtheCommonwealthtoredevelopJabiruintoatourismhubisexpectedtoincreaseretailspendingfrommorevisitors.

Theseprojectswillhelpfacilitateretailtradeandgenerateshort-terminterestuponcompletion,howevertheyarenotindicativeoffutureretailactivity.Forinstance,despitethecompletionofstage1ofthe$300millionGatewayShoppingCentrein2017-18,thetotalnumberofretailbusinessesinPalmerstononlyincreasedbytwooverthesameperiod.Thecompletionoftheseprojectshascoincidedwiththeweaknessindemandcausedbysubduedpopulation,employmentandwagegrowthconditions.

Nationally,retailtradeactivityisexpectedtoincreasein2019-20and2020-21aftermoderategrowthinlate2018.Themaincontributortothisincreaseiscontinuedgrowthinemploymentandwages, supported by low interest rates and Commonwealth income tax relief measures. This is partlyoffsetbyuncertaintyinthehousingmarketoutlook,whichmayconstrainhouseholdspendingamid high levels of household debt.

30 Retail and wholesale trade

2019-20 Budget

WholesaleTheoutlookforwholesaletraderemainsrelativelysubduedduetoalackofmajorprojectsovertheforecastperiod.Wholesaletradeisthesaleofneworusedgoodstobusinessesandinstitutionalusers,butexcludesgovernmentusers.ActivityintheTerritory’swholesaletradeindustryismainlyinindustrialstorageandequipment,transport,andfoodwholesaling,andhasbeeninfluencedinrecentyearsbymajorprojects.

Chart 3: Retail and wholesale trade expenditure

Source:ABS,Australian National Accounts: State Accounts,Cat.No.5220.0

In2017-18,wholesaletradeexpenditurewasatitshighestlevelonrecord,increasingby4.5percentto$556million.Despitethis,wholesaletradeintheTerritorycontinuestocontributeasmallerproportion(43.6percent)totheretailandwholesaletradeindustrythannationally(47.2percent)(Chart3).Thisdiscrepancyisexpectedtopersistovertheoutlookperiod.

Inearly2019,theDarwin$52millionTruckCentralredevelopmentwasofficiallyopened,providingsupport to the Territory’s road freight transport industry. This development is expected to provide supplychainefficienciesintheregion,whichhassignificantlinkageswithwholesaletrade.Furtherdevelopmentsareunderwayatthelocation,withaheavyvehicleinspectionfacilityscheduledtobecompletedbylate2019.

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Tourism 31


Tourism

Recent activityIn 2018, international visitation to the Territory increased as a result of growth in visitors from Japan and China. Domestic visitation was relatively steady, reflecting some growth in holiday and business travellers to the Territory offset by declines in visitors for other purposes. Attracting domestic visitors to the Territory continues to be affected by competition and cheaper destinations available both domestically and internationally.

OutlookOver the medium term, holiday and business visitation numbers and associated

expenditure are expected to increase and remain key contributors to the Territory’s tourism industry, following support from the Territory Government’s

Turbocharging Tourism stimulus program and other activities.

Tourismdiffersfromotherindustriesasitisdefinedbytheconsumer’sbehaviourratherthantheprocessofproducinggoodsandservices.Accordingly,standardABSmeasuresofproductioninthenationalaccountsarenotavailablefortourism.Rather,tourism’scontributiontotheTerritoryeconomyiscapturedinarangeofindustries,includingaccommodationandfoodservices,retailtrade,cultureandrecreation,andtransport.Tourismissensitivetoanumberoffactorssuchasglobalandlocaleconomicperformance,exchangerates,tourismmarketingactivity,aviationaccess,changingconsumerbehaviour,visaregulationsandanincreasingnumberofcompetitivedestinations.

The Territory economy relies more heavily on the tourism industry than other states and territories inAustraliaintermsoftourism’sdirectandindirectcontributiontoGSP.AccordingtoTourismResearchAustralia(TRA),in2016-17tourism’sdirectcontributiontototalGSPintheTerritorywas4.6percent.Inaddition,tourismremainedamajoremployer,employing16270people(9040directlyand7230indirectly).The2016-17TourismSatelliteAccountdatawasthemostrecentavailableatthetimeofpublishing.

For the latest data on tourism, refer to the Territory Economy website.

Outlook Visitors, visitor nights and expenditure

TheTerritoryeconomycontinuestobenefitfromdomesticandoverseasvisitors,theirlengthofstayandspendinghabits,aswellasprofitsretainedintheTerritorybytourismoperatorsandretailers.In2018,theTerritoryhad1.9millionvisitorsofwhom49.5percentcamefrominterstate,while34.7percentwereintrastatetravellers,and15.9percentcamefromoverseas.Duringthistime,domesticvisitorsspentanaverageof$1218pertripandinternationalvisitorsspentanaverageof$1585pertrip,resultingintotalexpenditureof$2.4billionin2018(Chart1).


32 Tourism

2019-20 Budget

Chart 1: Visitor expenditure in the Territory1

1 Internationalexpenditureincludespackageexpenditure.Domesticexpenditureincludesairfaresandlongdistancetravelcosts.Formoreinformation,refertotheNationalVisitorSurveyMethodologyonTourismResearchAustralia’swebsitetra.gov.au.

Source: Tourism Research Australia, International Visitors in Australia, Travel by Australians

From2018-19,TRAforecastsgrowthinvisitationtotheTerritoryoverthenextfiveyearsatanaverageannualrateof2.9percentfordomesticovernightvisitornightsand5.0percentforinternationalvisitornights.Despitethisanticipatedgrowthininternationalvisitation,attractinginternationalvisitorstotheTerritoryremainsachallenge,andgrowthinvisitationcontinuestotrendbelownationallevels,resultinginadecliningvisitormarketshare(downto3.5percentin2018,from3.4percentinthepreviousyear).Thisreflectsanongoingincreasingtendencyofinboundtravellers to Australia to visit the east coast, making fewer stopovers and not dispersing to more regionaldestinationssuchastheTerritory.

WhilevisitorsfromtheTerritory’straditionalwesternmarketsincludingtheUnitedKingdom,theUSandFrancedecreasedover2018,visitationfromJapan,ItalyandgreaterChina(whichincludesmainlandChina,TaiwanandHongKong)increased.Inparticular,visitorsfromgreaterChinaincreasedby55.0percentin2018,partlyasaresultofthedirectflightbetweenShenzhenandDarwin.Growthfromthissourcemarketislikelytocontinueovertheoutlookperiodfollowingongoinginterestandcommitmenttodirectflightservices.VisitorsfromJapanalsoincreasedby56.0percentin2018,likelydrivenbyincreasedinterestinvisitationtoUlurubeforetheclosureoftheclimbannouncedforOctober2019.

AttractingdomesticvisitationtotheTerritoryalsoremainsachallengeduetostrongcompetitionandcheaperdestinationsavailablebothdomesticallyandinternationally.InterstatetraveltotheTerritoryincreasedby2.2percentto929000visitorsin2018.Overthesameperiod,intrastatevisitorsdeclinedby1.3percentto651000travellers(Chart2).BusinesstravelintheTopEndhasbeenamaincontributortooverallgrowthindomesticvisitationinrecentyears,mainlyduetotheworkrelatedtotheIchthysLNGproject.

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Tourism 33


Chart 2: Visitors to the Territory

Note:DuetoachangeinNationalVisitorSurveymethodologyfromQ12014,interstateandintrastate(domesticvisitation)estimatesfrom2014onwardsarenotdirectlycomparabletopreviousyears.Cautionisadvisedwhenanalysingtrends.For

moreinformation,refertoNationalVisitorSurveyMethodologyonTourismResearchAustralia’swebsitetra.gov.au.Source: Tourism Research Australia, International Visitors in Australia, Travel by Australians

AstheIchthysLNGprojecttransitionsfromconstructiontotheoperationalphasethrough2019,visitationto,andexpenditurelevelsin,theTerritorywillbenegativelyimpacted.TheTerritoryGovernmenthascommittedtobridgethisgapthroughitssignificantTurbochargingTourismstimulusprograms,designedtoaccelerategrowthintheholidayandleisurevisitormarketstohelpmitigatethenegativeeconomicimpactsresultingfromtheendofamajorproject.Theinitial$103millionTurbochargingTourismstimulusprogramanditsassociatedeconomicactivityisexpectedtocontinuetoflowthrough2018-19into2019-20,reflectingtimingbetweenmarketingandinfrastructureactivities,andsubsequenttravel.

ThecontinuationofarelativelyweakAustraliandollarislargelypositiveforthetourismindustryasitstimulatesvisitationlevelsbyencouragingAustralianstotraveldomesticallyandattractsagreaternumber of overseas visitors for leisure purposes, which remains the Territory’s largest and key contributortotheindustry.Internationalholidayvisitornightsareexpectedtoaverage4.8percentperannumoverthefiveyearsfrom2018-19,whiledomesticvisitornightsareexpectedtoaverage1.7 per cent per annum.

TourisminitiativesIn2018,theTerritoryGovernmentlaunchedanewBusinessEventsSupportFundtosupportbusiness-relatedtravelandincreasethenumberofbusinesseventsheldintheTerritory.Thefundprovidesfinancialassistancetoeventorganisersof$100perdelegate,uptoamaximumof$50000perevent,foreventswherethemajorityofeventparticipantstraveltotheTerritoryfrominterstateandoverseas,thusprovidingflow-onbenefitstotheeconomy.BytheendofJanuary2019,theTerritoryGovernmenthadinvested$1.34millionandattracted34confirmedbusiness events. The Department of Tourism, Sport and Culture expects these events to deliver 10600delegatesandaround$25.5millionindelegateexpendituretotheTerritoryeconomyoverthemedium-termoutlook.

The Territory Government’s extension to the Turbocharging Tourism program, Turbo2, valued at$69.1millionisexpectedtoprovideadditionalincentivestothelocaltourismindustryover2019-20and2020-21,withgrowthopportunitiesexpandingacrossothersectorsincludinghospitality, retail, arts and culture, and transport. The program is planned to deliver more investment intodomesticandinternationalvisitormarketing,andwillcontinuetosupporteventsandfestivalsintheTerritory.TheCommonwealthandTerritorygovernments'masterplantoredevelopJabiru

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34 Tourism

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into a tourism hub provides opportunity for new tourism and infrastructure investment and works. ThisplanhasthepotentialtotransformJabiruintoanationallyandinternationallyrecognisedtourismdestination,andincreasevisitationlevelsandassociatedexpenditure.TheTerritoryGovernment'scommitmentof$131.5millionfrom2019-20to2022-23,inadditiontotheCommonwealth'splannedinvestmentof$216.2millionover2018-19to2027-28,willincludetheconstructionofanAboriginal-ledWorldHeritageKakaduCentreinJabiru,significantroadupgrades,newtourisminfrastructure,andtheremediationofJabiru.TheplanalsoproposestheremovalofcrocodilesfromLakeJabirutoofferyear-roundswimmingtofurthersupporttourismatKakaduNationalParkanditsmajorattractionslikeJimJimFalls,UbirrRockandGunlomFalls.Inadditiontothesubstantialcontributionitwillmaketothetourismsector,therewillbeflow-onbenefitstotheoveralleconomy,supportinggrowthinemploymentandoutputacrossseveralotherindustries.

Investmentinkeyfestivalsandeventsareexpectedtosupportimprovedliveability,visitationlevelsandlocaljobs.ThisincludesanewBruceMunro‘TropicalLight’exhibition,torunfromOctober2019toApril2020,featuringeightlightinstallationsthroughDarwinCBDandtheWaterfrontprecinctaimedatattractingvisitorstotheTopEndregionoverthewetseason.BruceMunro’s‘FieldofLight’installationatUluru,whichcommencedinApril2016,hascontributedtoover250000visitorsreceivedintheregion.ThisadditionaldemandhasresultedinJetstarAustraliabenefitingfroma15percentincreaseindemandforflightstotheexhibition.Inresponse,theairlinehasincreasedcapacityfromMelbourneandSydneyto50000airlineseats.DuringApril2019andApril2020,AliceSpringswillfeatureanotherlightfestival‘Parrtjima’,whichisexpectedtostimulatetouristactivityintheregion.

From26Aprilto4May,theTerritoryGovernmenthostedthe2019ArafuraGamesinDarwin,whichfeaturedlocal,nationalandinternationalathletes.Theeventprovidedstimulustothelocaleconomythroughthecontributionsmadebyathletesandvisitorstowardsaccommodation,foodandrestaurants,andtoursandattractionswhileintheregion.Inaddition,the$220millioninvestmentinrevitalisingtheCBDsofbothDarwinandAliceSpringsarealsopartoftheCommonwealthandTerritorygovernment’seffortstohelpcreateandimprovetouristexperiencesintheTerritory.TheTerritoryGovernmenthasalsoinvested$100milliontoshowcaseartandculturalobjectsproducedintheTerritoryaspartoftheArtsTrail.Thisinvestmentincludesgrantsfor remote and regional museum and gallery infrastructure upgrades and extensions in Katherine, ArnhemLandandTennantCreek,topromoteandmaximisevisitationintheregions.

InAugust2016,theTerritoryGovernmentandLandbridgeInfrastructureGroupAustraliasignedanagreementforthedevelopmentofaluxuryhotelinDarwinattheDarwinWaterfront.ConstructionofthenewWestinDarwinHotelcommencedinearly2019withplanstocommenceoperationsbyearly2022.Thisnewprivatedevelopmentwillcreateopportunitiesandsupportthelocaleconomy,deliveringmorethan500constructionjobsandabout150ongoingpositions.Theluxuryhotel,witharound200roomsplanned,willbroadentherangeofaccommodationavailableintheTopEndregionandhelpattractmoretouristsanduniquebusinesseventsinDarwin.Asaresult,theTerritory’stourismindustryisexpectedtobenefitfromincreasedinterestfromChineseandotherAsianholidayand business visitors.

AccommodationThequantityandqualityofthesupplyofaccommodationcontinuestoinfluencethedevelopmentofthetourismsector.During2018,therewere101short-termaccommodationsuppliers(includeshotel,motel,servicedapartmentsandresortswithover10rooms)acrosstheTerritory,with9422roomsavailable(upfrom9208thepreviousyear).IntheDarwinregion,therewere47establishmentswith5578roomsavailable(upfrom5345thepreviousyear).Asaresultofthewind-downofconstructionontheIchthysLNGproject,someaccommodationprovidershavereallocatedroomspreviouslyusedforlong-stayaccommodationtotheshort-termaccommodation

Tourism 35


market.In2018,fourestablishments,DarwinCityHotel,KalidonisVillage,One30EsplanadeandH20Apartments,addedroomstotheshort-termaccommodationmarket,withtheintentiontoattractmoretourists.Thisincreaseinroomsupply,combinedwithlowerdemandandincreasedentriesofotherprivateshort-termlettingproperties(suchasAirbnbandStayz)hasresultedinloweroccupancyratesinDarwin(69percentin2018).WithexceptionoftheWestinDarwinHotel,theTerritory’saccommodationpipelineisexpectedtobeconstrainedreflectingthecurrentoversupply, combined with lower consumer demand and yields.

Cruise shipsThecruiseshipsectorisakeypartofthetourismindustryintheTopEnd,with74cruiseshipvisits(shipswith100ormorepassengers)scheduledin2019-20.IncloseproximitytoAsia,DarwiniswellpositionedasAustralia’snortherngatewayportandisexpectedtoattractanincreasingnumberofcruiseshipsovertheforecastperiod,particularlywithproposedupgradestofacilitiesbytheLandbridgeGroup.Cruiseshipvisitscanprovideaninfluxoftouristsintotheregionduringtheoff-peakseasons,withpassengersandcrewundertakingtours,visitinglocalattractions,shoppingatlocalretailoutlets,andspendingatcafésandrestaurants.Thetotalexpenditure(includingpassenger,crewandcruiselineexpenditure)bythecruisesectorintheTerritorywasestimatedat$171.9millionin2017-18,beingthemostrecentdataavailableatthetimeofpublishing.TheLandbridgeGroupalsointendstogrowDarwinportandtradeopportunitiesbetweenAustraliaandAsianeconomiesandenhancecruiseshipfacilitiesatFortHillWharf.

AviationAviationaccessisimportanttobringtouriststotheTerritory.TheTerritoryGovernmentcontinuestocollaboratewithmajordomesticcarriersaswellasattractingandmaintaininginternationalcarriers.DonghaiAirlinescommencednon-stopdirectservicesbetweenDarwinandShenzhenon30May2018andcarried3085inboundpassengersuptoJanuary2019.DiscussionsarecontinuingwithotherChinesecarriersinterestedinestablishingservicestoDarwinasthepopulationcentresin China are considered large enough to support more than one carrier to the Territory.

Furthermore,VirginAustraliaisoperatingseasonalflightsfromDarwintoDenpasarthreetimesaweek,between10Apriland20October2019.JetstarAsiaisoperatingdailyflightsbetweenDarwinandSingaporebetween11ApriltotheendofJuly2019.SilkAirhasalsoproposedtoincreaseflightfrequenciesbetweenDarwinandSingapore,offeringdailyflightsfrom6July2019.SilkAir’sDarwinservicewilltransitionontotheSingaporeAirlinesbrandduring2020.

Onthedomesticfront,AirnorthhascommencedseasonalflightsfromDarwinviaTownsvilletotheGoldCoast,operatingtwiceweeklybetween3Aprilto20October2019.TheQantasGroupismakingaseriesofadjustmentstoitsTerritorynetworkin2019,whichinclude:

• two new routes to Uluru (Ayers Rock Connellan Airport) from both Darwin and Adelaide, operatingtwiceperweekonbothroutes,from3April2019

• anaircraftupgradebetweenAliceSpringsandDarwin,providingincreasedcapacityofupto1300seatsperweekontheroute

• anincreaseinJetstarAustraliaflightsbetweenCairnsandDarwin(fromfourperweektodailyduringpeakseason),whileQantaswillceaseflightsontheroute

• adailyflightbetweenPerthandDarwinyear-round(downfrom11perweekduringpeakseason)

• twoflightsperweekbetweenPerthandAliceSprings(downfromdailyflights)

• ceaseddirectflightsbetweenCairnsandAliceSpringswithconnectionsnowavailableviaUluru.

36 Agriculture, forestry and fishing

2019-20 Budget

Agriculture,forestryandfishing

Recent activityThe agriculture, forestry and fishing sector accounted for 2.9 per cent of GSP and 1.3 per cent of total resident employment in 2017‑18. It remains a significant employer and source of economic activity in the Territory’s regional and remote areas.

OutlookThe value of the Territory’s agricultural output is expected to increase

in 2018‑19, driven by increases in live cattle exports, along with a positive outlook for horticulture and aquaculture.

Althoughtheagriculture,forestryandfishingsectorrepresentsarelativelysmallproportionoftheTerritory’soutputandemployment,itisasignificantemployerandsourceofeconomicactivityinregionalandremoteareas(Map4),aswellashavingimportantlinkagestoothersectorsoftheeconomy, including retail and wholesale trade, manufacturing and transport. The industry’s output canvarysignificantlyfromyeartoyearduetochangesinproduction,seasonalconditionsandchangesandgovernmentregulationinglobalanddomesticdemandforTerritorycommodities.

Forthelatestdataontheagriculture,forestryandfishingindustry,refertotheTerritory Economy website.

OutlookIn2017-18,theagriculture,forestryandfishingindustryaccountedfor2.9percent($735million)oftheTerritory’sGSPand1.3percent(1743people)oftheTerritory’stotalemployment.Thevalue of the agricultural industry is expected to increase in the short term due to improvements inlivecattleexports,whichisthelargestcontributortotheindustry.Thevalueofhorticultureandaquacultureisanticipatedtoexpandinthemediumtermasthebananaandmelonindustriesrecover,andbarramundiandprawnfisheriescontinuetoperformwell.AdditionalupsideexistsifProjectSeaDragonreachesfinalinvestmentdecision,withstage1oftheprojectcontinuingtoprogress.

LivecattleTheTerritory’slivecattleexportsareexpectedtoincreaseintheshorttermduetogrowingdemandinSouthEastAsia,partlyoffsetbycompetitionwithfrozenIndianbuffalomeatinIndonesia.InterstatelivecattlemovementsareexpectedtoincreasetorestockcattlestationsfollowingtheseverefloodingandassociatedstocklossinnorthernQueensland,combinedwithdryconditionsintheTerritoryandsouthernQueensland.Themovementofstockhasthepotentialtonegativelyimpactoverseaslivecattleexports.

IndonesiaistheTerritory’slargestlivecattleexportmarket,accountingfor79.3percent(210821head)oftotalTerritorycattleexportsin2018.TheIndonesia-AustraliaComprehensiveEconomicPartnershipAgreementwassignedinMarch2019andisexpectedtodelivermoreopenmarketaccessforTerritorylivecattleexportsandfurthertariffreductionsforAustralianbeef.ThisoutlookispartlyoffsetbythenegativeimpactexpectedfromtheentryofIndianbuffalomeatintotheIndonesianmarket.IndiabecameAustralia’smajorcompetitorintheIndonesianbeefmarketsinceitslegalentryinAugust2016and,combinedwithhighAustraliancattlepricesandtheIndonesiangovernment’spoliciestoachieveself-sufficiencyformajorcommoditiesincludingbeef,itisconsideredtocontinuetohaveanimpactonAustralianlivecattleexports.Thecompetitive


Agriculture, forestry and fishing 37


landscapeisexpectedtoincreaseastheIndonesianGovernmentcontinuestoseektoreducebeefpricesanddiversifybeefsupplysources,withBrazilcurrentlybeingassessedformarketaccess.

Inearly2019,ongoingdroughtinsouthernQueenslandandtheBarklyregionoftheTerritoryresultedinalargenumberofcattlebeingofferedthemarket,whichdepresseddomesticcattlepricesinnorthernAustralia.ThisdecreasewaspartiallyoffsetbyhighexportactivityinJanuaryandFebruaryof2019,andincreasedrainfallfromCycloneTrevorinMarch2019whichalleviateddryconditionsforsomestationsintheBarklyregion.Thedomesticpriceofcattleisexpectedtoincreasein2019,mainlydrivenincreaseddemandforheifersfromnorthernQueenslandwhichexperiencedwidespreadfloodsinearly2019andCycloneTrevorthatresultedinsignificantlossofcattle.Assuch,flood-affectedfarmersareexpectedtorestocktheirherdswithheifers,whichis likely to increase interstate exports from the Territory as there are a limited number of supply options.TheinterstateexportofcattleduetotheseweathereventsmaydetractfromtheTerritory’sability to export overseas.

Inearly2018,thefirstshipmentofcattlefromnorthernAustraliawasexportedtoChinathroughTownsville.Priortothat,allcattleshipmentstoChinaweresourcedandshippedfromsouthernAustraliaduetobluetonguevirusbeingendemicinnorthernAustralia.Bluetonguevirusisnon-contagiousandhasnoclinicalsymptomsoncattle,howeveranyliveexportstoChinamustcomefrombluetonguevirus-freezones.FollowingtheshipmentfromTownsville,anothershipmentofcattlewassenttoChinafromPortAlmainQueenslandattheendof2018.ChinacouldpotentiallybecomeamajorexportdestinationforTerritorycattle,subjecttoextraquarantinemeasuresandcommercialfeasibility.The2018outbreakofAfricanswinefeverinChinashiftedconsumerpreferencesfromporktowardbeef,improvingtheprospectsforhigh-qualityAustralianbeef.

Indonesia’sshareoftotallivecattleexportsincreasedover2018,outpacinggrowthindemandfromothercountries(Chart1).LivecattleexportstoVietnam,whichaccountedfor13.6percent(25884head)ofalllivecattleexportsin2017,declinedto13.0percentin2018.However,thenumberofcattleexportedtoVietnamincreasedby36.5percentto35342headintheyearandisexpectedtocontinuetogrowintheshortterm.AlthoughIndonesiaremainstheTerritory’slargestmarketforlivecattleexports,otheroverseasexportmarketsmaygrowtoencompassagreatershare over the outlook period.

Chart1:AnnualnumberofliveTerritorycattleoverseasexports,bydestination

1 OthercomprisesBrunei,Cambodia,Egypt,EastTimorandThailand.Source: Department of Primary Industry and Resources

0

50

100

150

200

250

300

350

09 10 11 12 13 14 15 16 17 18

Number (000)

Calendar yearIndonesia Vietnam Philippines Malaysia Other1


2019-20 Budget

LivebuffaloThelivebuffaloindustryisasmallbutemergingindustryintheTerritory.ThehighpriceofbeefhasmadelivebuffaloamoreattractiveTerritoryexport,sellingforabout60percentofthepriceoflivecattle.

InFebruary2017,IndonesiarestartedthelivebuffalotradefromtheTerritoryafterseveralyearsoflittleactivity.IthassincegrowntobecomethelargestexportdestinationforTerritorybuffalo,accountingfor42.9percent(3724head)oftotalbuffaloexportsin2018.VietnamisthesecondlargestexportdestinationofTerritorybuffalo(35.4percent),followedbyMalaysia,whichaccountedfor16.9percentin2018.

Duetothechallengesofharvestingbuffalofromthewild,theTerritoryGovernmentinpartnershipwiththeindustryisfocusedondevelopingdepotsandgrow-outfacilities.Ifaconsistentsupplycanbefullyrealised,theTerritorywouldhavethecapacitytoexportanestimated30000headofbuffaloayear,comparedtocurrentlevelsofaround10000head.

Other livestockAustralianAgriculturalCompanymothballedtheLivingstonebeefprocessingfacilityduetolowprofitabilityinJuly2018.ItwasthelargestcapacityfacilityintheTerritoryand,consequently,boxedbeefproductionisexpectedtodecreasesharplyin2018-19.ThiswillbepartlyoffsetbythereopeningofthemeatprocessingfacilityatBatchelor,expectedinthefirsthalfof2019.

TheCrocodileFarmersAssociationoftheNorthernTerritory(CFANT)aimstoincreasethevalueoftheTerritory’scrocodilefarmingindustrytoalmost$50millionperyearby2021-22.Toachievethistarget, and with support from the Territory Government, CFANT put in place the Northern Territory CrocodileFarmingStrategicPlan2015-20,tooptimiseopportunitiesforsustainableindustrygrowthandcreateanenvironmentforinvestmentincrocodileproduction.

Australiaaccountsfor60percentoftheglobaltradeinsaltwatercrocodileskins,withabouttwothirds farmed and exported by the Territory. Of the remaining one third farmed interstate, the majorityofstockissourcedfromtheTerritory.Duetostrictergradingstandardsintroducedin2016-17andincreasedsupplyoflowgradeskinsfromAsianandAfricanfarms,thepriceoflowgradeskinsdeclinedtohistoriclowsin2017-18.Despitethis,thevalueofthecrocodileindustryincreasedslightlyfrom$23.0millionto$23.7millionthrough2017-18andtheoutlookfortheindustryremainspositive,drivenbyhighdemandforhighqualityskins.In2018-19,itisestimatedthecrocodileindustrywillgeneratetotalrevenueofabout$29.9million,asignificantincreasein2017-18.Inlate2018,theinternationalluxuryfashionhouseChanelannounceditwouldstopusingexoticanimalskinsinitsproducts,includingsaltwatercrocodiles.Itwasthefirstluxuryfashionhousetodosoandhassincebeenjoinedbyanumberoflargecompanies.Thisisexpectedtopartlymoderate demand for crocodile skins from the Territory.

DonkeyfarmingisapotentialindustryfortheTerritory,withrisingdemandinChinafordonkeyproducts.In2017,theTerritoryGovernmentpurchasedasmallherdofferaldonkeysforaresearchprogramattheKidmanSpringsResearchStationtoexploretheeconomicandenvironmentalsustainabilityoffarmingTerritorydonkeys.Researchplanningfordonkeyfarmingcontinuesandobservationalinformationiscurrentlybeingcollected.



Map4:Territoryagriculture,forestryandfishing

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency or completenessoftheinformation.Tobeusedasaguideonly.

Source: Department of Treasury and Finance; Department of Primary Industry and Resources

Prawn Trawling

Commercial And Recreational Fishing

Ord Irrigation Area

Forestry

AquaculturePotential

TIMOR SEA

PINE CREEK

MATARANKA

BORROLOOLA

ELLIOTT

TI TREE

NGUKURR

DAGURAGU/KALKARINDJI

TIMBER CREEK

MELVILLE ISLAND

BATHURST ISLAND

GROOTE EYLANDT

YUENDUMU

YULARA

NHULUNBUY

TENNANT CREEK

KATHERINE

DARWIN

ALICE SPRINGS

LAJAMANU

WURRUMIYANGA

GUNBALANYA

MANINGRIDA

MILINGIMBI

RAMINGINING

WADEYE

NUMBULWAR

YIRRKALAGAPUWIYAK

HERMANNSBURG

PAPUNYA

ALI CURUNG

GALIWIN’KU

UMBAKUMBAALYANGULA

ANGURUGU

Commercial Fishing

Horticulture

Rangeland Cattle and other Livestock

AquacultureHorticulture,Crocodile Farming Buffalo


AquaculturePotential

Beef Processing

GOULBURN ISLANDS

Aquaculture

Horticulture,Mixed Farming

Aquaculture

JABIRU

BARKLY HIGHWAY

STUART HIGHWAY



KatherineDaly Basin

Forestry



2019-20 Budget

Trade agreementsInMarch2018,theComprehensiveandProgressiveAgreementforTrans-PacificPartnership(CPTPP)wassignedbyAustraliaand10othermembercountries.TheCPTPPcameintoforceattheendof2018andisexpectedtobenefitarangeofagriculturalandhorticulturalexportsovertheoutlookperiod.PartoftheagreementinvolvestheeliminationofCanadianboxedbeeftariffsinfiveyears,theeliminationofMexicantariffsonbeefcutsin10yearsandthereductionofboxedbeeftariffsinJapanwithin15years.

InMarch2019,theIndonesia-AustraliaComprehensiveEconomicPartnershipAgreementwassignedbetweenthetwocountriesandisexpectedtohaveasignificantimpactonagricultureintheTerritory.InadditiontoitssupportoflivecattleexportstoIndonesia,theagreementisexpectedtoassistoverseasexportsfromthemeatprocessingfacilityatBatcheloronceitcommencesoperation.Theagreementwillreducetariffsonlivecattleandboxedbeef,andallowanunlimitedvolumeofboxedbeeftobeexportedtoIndonesia.TariffsonboxedbeeftoIndonesiawillthenbeeliminatedoveracourseoffiveyears.Livecattlepermitswillincreaseby4percenteachyearuptoacapof700000headbythesixthyearoftheagreement.

HorticultureMangoproduction,alargeproportionoftheTerritory’shorticulturesector(44.9percent),isstronglyinfluencedbyseasonalconditionsanddemandinsouthernmarkets.Mangoproductionin2017wasoneofthestrongestonrecord,increasingby33.7percentto39700tonnes.Despitethisincrease,thetotalproductioncapacityofmangoesisnotlikelytovaryovertheoutlookperiod.Morethan50000youngmangotreeshavebeenplantedintheDarwinandKatherineregionsin2018,andareexpectedtomaturein4to5years.Theincreasedproductionfromtheseplantingsisexpectedtobelargelyoffsetbyoldertreesnolongerinproduction.Beyondtheforecastperiod,thereisthepotentialfornew,moreproductivevarietiestoenterthemarket.TheDepartmentofPrimaryIndustryandResources(DPIR)begantestingtwonewvarietiesofmangoesinlate2018.Thenewvarietieshaveahigheryieldwiththesameinputs,andareexpectedtoextendtheproductionwindowcomparedwithexistingvarietiesifsuccessfullyadoptedonthemarket.

Melonproductiondecreasedfrom56400tonnesin2016to46000tonnesin2017.Despitethisdecline,theoutlookformelonsfrom2018onwardsispositive,subjecttoseasonalconditions.Thethree-yearresearchprojectintothecucumbergreenmottlemosaicvirus,whichwasdetectedintheTerritoryandnegativelyimpactedthemelonindustryin2014,hasproducedimprovedmanagementoptionstocontainfutureoutbreaks.

In2013,anoutbreakofbananafrecklediseaseledtotheimplementationoftheNationalBananaFreckleEradicationProgram.Inearly2019,theTerritorywasdeclaredfreeofthebananafreckledisease,allowingexportrequirementsimposedduringtheprogramtoberemoved.BusinessesintheTerritoryhavebeenreplantingbananassinceinternalmovementregulationswereliftedinmid-2017.Thebananaindustryisexpectedtoquicklyrecoverovertheoutlookperiod,tappingintoAustralia’s$600millionbananaindustry.

In2017,productionofhayfellsharplyfrom80000tonnesto25000tonnescomparedtothepreviousyear,coincidingwithasignificantdeclineinlivecattleexportsoverthesameperiod.Despitethisdecline,thevalueofhayproductionisexpectedtoincreaseoverthemediumterm.In2018,approximately6000tonnesofhaywassoldinterstate,largelydrivenbydemandfromstatesaffectedbydrought.ThishaspositionedtheTerritoryasanothersourceoffodderhayinthenationalmarket,resultinginpositiveexpectationsforhayexports.

Inearly2018,acontagiousbacterialdiseaseidentifiedascitruscankerwasdetectedincitrusplantsintheTerritory.Thecitruscankereradicationprogramwasimplementedandresultedintheremoval



anddestructionofallcitrusplantsinrestrictedareaswithinthegreaterDarwinregion.Althoughpotentiallydestructivefortheindustry,theoutbreakhasonlyhadasignificantimpactoninterstatesalesofkaffirlimeleavessofar.ThemajorlemonseasoninKatherineisexpectedtoproceed,withnosignificantimpactonlimeproduction.

PineappleproductionintheTerritoryislikelytoincreaseinthemediumtermwithPiñataFarmsexpandingproductionintheTerritory.PiñataFarmsexpectstoproduce150000traysfromitsplantationnearHumptyDooin2019.

ThereareseveralcropsunderconsiderationthatcouldpotentiallyincreasethevalueoftheTerritoryhorticultureindustry.TheTerritoryGovernmentisconsideringlegislationtoallowthecommercialcultivationofindustrialhempandmedicalmarijuana.AnexperimentalcropofhempwastrialledinKatherinein2018,demonstratingrequirementstogrowthecropintheTerritory.Anotherpotentiallyviablecropiscotton.CommercialtrialshavebeenconductedintheOrdIrrigationAreainWestern Australia, near the Territory border. Experimental trials are currently underway within the Territory.ThisresearchisbeingconductedbyDPIRandcontributestothepotentialestablishmentofacottonindustry.TheDouglas-DalyandKatherineregionsareconsideredthemostprospective.FurtherdevelopmentofdrylandandirrigatedcropproductionsystemsintheTerritorywillrequirethe procurement of suitable land use and water use approvals.

KakaduplumsareanativebushfoodharvestedwithintheKakaduNationalParkandsoldonthegrowingtraditionalmedicinemarket.TheGundjeihmiAboriginalCorporationbegantrialsofcommercialharvestsinApril2018.

InAugust2018,theCooperativeResearchCentreforDevelopingNorthernAustralia(CRCNA)provideda$500000granttotheKakaduplumindustryinnorthernAustralia.Thisgrantispartofa$2.7millionresearchprojecttoreviewthesupplychainoftheKakaduplumindustryoverthreeyears.Theprojectisexpectedtoincreasethevalueoftheindustryby$10millionnationallyovertheoutlookperiodandincreaseparticipationbyAboriginalcommunities.

InNovember2018,theIndigenousLandCorporationestablishedtheNorthernAustraliaAboriginalKakaduPlumAlliance(NAAKPA)todevelopandsupportAboriginal-ownedKakaduplumenterprises.TheNAAKPAisaconsortiumofnineAboriginalenterprises,includingtheGundjeihmiAboriginalCorporation,whichwillcollaboratetoprovideamoreconsistentsupplyoffruit.

FisheriesTheoutlookforfisheriesproductionintheTerritoryispositive,drivenbyanticipatedgrowthinaquacultureproduction.

SeafarmsGrouphascontinuedtoprogressProjectSeaDragon,aUS$1.5billionaquacultureprojectinnorthernAustralia.Theprojectaimstoproduceover150000tonnesofblacktigerprawnseachyear.Stage1constitutesaround10percentofthetotalprojectandcommencedconstructionin2018duringthedryseason.InJuly2018,theTerritoryGovernmentgrantedanaquaculturelicenceforproductionpondsatLeguneStation.ThismilestonefollowstheenvironmentalapprovalandIndigenousLandUseAgreementobtainedin2017.ProjectSeaDragonisexpectedtoprovidesignificantemploymentopportunitiesattheLeguneStationontheNorthernTerritoryandWesternAustralianborder,alongwithsupplychainbenefitsatBynoeHarbourandGunnPoint.Theprojecthasyettoreceiveafinalinvestmentdecision.

AtendertoupgradetheKeepRiverRoadwasreleasedinMarch2019.TheupgradedroadwillsupportProjectSeaDragonaswellastheproposedOrdIrrigationSchemestage3thatwouldextend the Ord Channels into the Territory. Works will be delivered in two phases, with stage 1 worksdeliveringtheinitial13kilometresfromtheWesternAustraliabordertowardLeguneStation


2019-20 Budget

andabridgeovertheKeepRiver.TheCommonwealthhascommitted$39.9millionforstage1,whiletheTerritoryGovernmentcommitted$17.5millionforbothstagesoftheproject.

HumptyDooBarramundiistheTerritory’slargestprimaryproduceranddistributorofAustraliansaltwater barramundi. To meet increased demand in recent years, the operators have acquired additionallandandestablishedmoregrowingponds,whichhasdoubledtheproductioncapacityofthefarm.Movingforward,HumptyDooBarramundihassecuredfundingfromtheNAIF,with$7.2millioncommittedinthefirstofathree-stageinfrastructureinvestmentprogram.Thebusinessisintheprocessofdevelopingadditionalproductioncapacityandsupportinginfrastructuretounderpinfuturesustainablegrowth,efficiencyandverticalintegrationin2019-20.

ForestryTheoutlookfortheforestryindustryisgenerallypositive,althoughitseconomicimplicationslielargelyoutsidetheforecastperiodduetothelong-termnatureofforestryproductionandtheearlystage of the industry’s development in the Territory.

TreesfromtheacaciaplantationsontheTiwiIslandscontinuetobeharvestedandsoldontheinternationalwoodchipmarket.Sincetheplantationsstartedtoreachmaturityin2015,upto441278greenmetrictonnes(GMT)havebeenexportedasof2017-18,withagrossvalueofUnitedStatesdollar$26.8million.Inlate2018,Midwayannounceditwillinvest$17millioninitsTiwiplantations.Thisisexpectedtoincreaseproductionfrom196603GMTin2017-18to229000GMTin2018-19.

Africanmahoganyisgrownforitshigh-valuetimberintheDouglas-DalyandKatherineregions.Thetreeshaveanexpectedrotationofbetween18to25yearsandarecurrentlyinmid-rotation.Thestandingvalueofthesetreeswhenharvestedatmaturityisestimatedtobe$100million.

Indiansandalwood,intheDouglas-DalyandKatherineregions,isgrownforhigh-valueoilandpharmaceuticalproducts.ItistheonlyplantationforestryinAustraliathatisroutinelygrowninamixed-speciessystemandwithirrigation.ThecurrentplantationintheTerritoryisstillinitsearly-rotationphaseandwillnotbeharvestedformorethanadecade.

InMarch2019,a$209300researchprojectwasannouncedundertheCRCNAtodeveloptheforestryandforestryproductsindustryinnorthernAustralia.Itisa10-monthprojectbetweenDPIR,Timber Queensland, the Queensland Department of Agriculture and Fisheries, and the University of the Sunshine Coast to develop northern Australia’s forestry industry.

Territory Government agribusiness developmentAgribusinessisakeyfocusoftheTerritoryGovernment’sEDF.ThereareseveralprojectsandopportunitiesmentionedintheTerritoryGovernment’s10-yearInfrastructurePlanfor2018-2027thatfocusondevelopingtheagriculture,forestryandfishingindustryintheTerritory.ThesepriorityprojectsincludetheKatherineLogisticsandAgribusinessHub,theWildmanRiveragriculturalprecinct, the Gunn Point precinct, an improved regional road network, and development of infrastructuretoincreaseexportopportunities.

43


Abbreviations

AbbreviationsandAcronymsABS AustralianBureauofStatistics

Aust Australia

B billion

Cat. No. catalogue number

CBD centralbusinessdistrict

CCTV closed-circuittelevision

CFANT CrocodileFarmersAssociationoftheNorthernTerritory

CPTPP ComprehensiveandProgressiveAgreementforTrans-PacificPartnership

CRCNA CooperativeResearchCentreforDevelopingNorthernAustralia

DHA Defence Housing Australia

DPIR Department of Primary Industry and Resources

e estimate

EDF Economic Development Framework

f forecast

GDP grossdomesticproduct

GEMCO Groote Eylandt Mining Company

GMT Green Metric Tonnes

GSP gross state product

HMAS HerMajesty’sAustralianShip

JPDA JointPetroleumDevelopmentArea

LNG liquefiednaturalgas

LPG liquefiedpetroleumgas

M million

NAAKPA Northern Australia Aboriginal Kakadu Plum Alliance

NAIF Northern Australia Infrastructure Facility

NT Northern Territory

RAAF Royal Australian Air Force

SIHIP Strategic Indigenous Housing and Infrastructure Partnership

TJ/d terajoulesperday

TRA Tourism Research Australia

US United States (of America)

USFPI UnitedStatesForcePostureInitiatives

44

2019-20 Budget

Glossary

GlossaryCurrent prices

Thevalueinnominalterms,notadjustedforinflationorchangesinthepurchasingpowerofmoney.Itisthemarketvalueforthegoodorserviceatthetimeitwasbeingsold.

GrossdomesticproductThetotalvalueofgoodsandservicesproducedinAustraliaovertheperiodforfinalconsumption.Intermediategoods,orthoseusedintheproductionofothergoods,areexcluded.Grossdomesticproduct can be calculated by summing total output, total income or total expenditure.

Gross state productSimilartogrossdomesticproduct,exceptitmeasuresthetotalvalueofgoodsandservicesproducedinastateorterritory.Itisthesumofallincome,namely,wages,salariesandprofits,plusindirect taxes less subsidies. It can also be calculated by measuring expenditure, where it is the sum ofstatefinaldemandandinternationalandinterstatetrade,changesinthelevelofstocks,andabalancing item.

Inflationadjusted(alsoknownaschainvolume)Inflation-adjustedmeasuresprovideestimatesofrealchangesbyfactoringingeneralchangespricesfrom year to year.

Moving annual totalAmethodusedtosmoothdataandremovetheshort-termfluctuationsindatabyaveragingobservationscollectedovera12-monthperiod.

VisitorTourismResearchAustraliadefinesavisitorassomeonewhohasstayedinaplaceatleast40kilometresfromtheirusualplaceofresidenceforatleastonenight,butwhoisawayfromhomeforlessthan12months.AninternationalvisitorisdefinedasanoverseasarrivalwhostayedinAustralia for less than 12 months.

Documents

NORTHERN TERRITORY...Onpril 16 A 2019, the Territory Government released the Fiscal Strategy Panel’s final report: A plan for budget repair, and announced the government’s response