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
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
Northern Territory Economy
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 7
Northern Territory Economy
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
Mining and manufacturing 9
Northern Territory Economy
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
10 Mining and manufacturing
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.
Mining and manufacturing 11
Northern Territory Economy
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,
12 Mining and manufacturing
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
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Mining and manufacturing 13
Northern Territory Economy
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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14 Mining and manufacturing
2019-20 Budget
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
Mining and manufacturing 15
Northern Territory Economy
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
Northern Territory Economy
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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village,multi-storey unitdevelopments
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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
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Construction 19
Northern Territory Economy
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
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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.
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
Northern Territory Economy
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
Northern Territory Economy
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
Bradshaw FieldTraining Area
HMASCoonawarra
LarrakeyahBarracks
LEE POINT
DARWIN JABIRU
PINE CREEK
KATHERINE
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NHULUNBUY
TENNANT CREEK
ALICE SPRINGS
YULARA
PALMERSTON
DARWINEAST ARM
SHOAL BAY
RAAF BaseTindal
Mt BundeyTraining Area
Robertson Barracks
Delamere AirWeapons Range
Jindalee Operational Radar Network2
Joint Defence Facility Pine Gap
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 27
Northern Territory Economy
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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Retail and wholesale trade 29
Northern Territory Economy
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
Northern Territory Economy
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
Northern Territory Economy
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
2019-20 Budget
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
Northern Territory Economy
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
Northern Territory Economy
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
38 Agriculture, forestry and fishing
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.
Agriculture, forestry and fishing 39
Northern Territory Economy
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
Rangeland Cattle and other Livestock
AquaculturePotential
Beef Processing
GOULBURN ISLANDS
Aquaculture
Horticulture,Mixed Farming
Aquaculture
JABIRU
BARKLY HIGHWAY
STUART HIGHWAY
Horticulture,Mixed Farming
Rangeland Cattle and other Livestock
KatherineDaly Basin
Forestry
Horticulture,Mixed Farming
40 Agriculture, forestry and fishing
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
Agriculture, forestry and fishing 41
Northern Territory Economy
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
42 Agriculture, forestry and fishing
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
Northern Territory Economy
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.