Without policy changes, Northern Territory will miss economic target

The Northern Territory is on track to badly miss its key medium-term economic target—to expand its economy to $40 billion by 2030, up 50 percent on 2020. This is the major finding of a report by consultancy AEC commissioned by the Darwin Major Business Group (DMBG).

Policy changes will be needed.

The miss is no small problem. As the strategic temperature in the Indo-Pacific rises, as climate change accelerates and as economic uncertainty grows, achieving economic policy success in Northern Australia has become increasingly important.

The Northern Territory occupies some of the most important strategic geography in the Indo-Pacific region. Fully exploiting this geography requires economic and development policies to deliver a scalable industry base and multi-user facilities.

The Northern Territory government set the $40 billion target in 2022 after Australia came out of the Covid-19 pandemic. It was based on work by what was known as the Territory Economic Reconstruction Committee (TERC). The target implied annual average growth of about 4 percent from 2020 to 2030.

Chaired by former Dow President Andrew Liveris and former territory chief minister Paul Henderson, the TERC had ensured the target was grounded in high-quality analysis. However, there remained a nagging doubt across the community about the political commitment to the policy goal.

The DMBG commissioned AEC to do a deep dive into 20 Northern Territory development metrics—not just the traditional economic numbers, but also social, capability and capacity indicators.

The leadership of DMBG hasn’t just sought to throw stones at the government. It knows that governments must secure a social licence around economic management, and any conversation equally demands that critics offer legitimate solutions.

AEC’s estimate for the 2030 size of the economy is not $40 billion but $34 billion, implying that gross territory product will have grown not by half during the decade but by less than 30 percent.

In response, DMBG suggests that the government must go much harder at securing private investment—to lean into opportunities, rather than simply facilitate processes that may or may not deliver an outcome.

The same can be said for housing. Construction of houses and flats in the territory has been diabolically weak, putting great pressure on the limited stocks of affordable and social housing. The territory was once a leader around incentives for home ownership, and the DMBG wants to remind everyone of the huge economic benefits that come with it.

The group is also strongly calling for better social order and investment in urban renewal, along with a focus on leveraging public investment.

DMBG has made it clear that its agenda for this work is to spark a conversation—to encourage all sides of politics, the business sector and the broader community to discuss the target and what must be done differently.

It is an unusual move. Usually, political targets are left to the political process to churn through.

The DMBG is not seeking to engage in political theatre. Instead, it is keen for Territorians to buy into the economic growth target with even more gusto than when it was first made, and for very good and ultimately practical reasons.

The $6 billion undershoot would mean fewer jobs, fewer opportunities for the next generation, less self-sustainability for the economy, poorer living standards and weaker tax revenue to fund badly needed social services. For investors, including Defence, it would mean thinner supply chains, a smaller workforce, a weaker infrastructure base and far less surge capacity in times of need.

The current territory government must share DMBG’s and AEC’s concern about reaching the target.

Government officials have privately criticised DMBG for focusing on the target in an election year. But for Territorians and other Australians, the TERC target is more than territory politics. As was the case at federation, economic prosperity in Northern Australia is intrinsically linked to economic and national security. The target is set for that future government, and current policy settings fall short.