Northern Territory Economy
2
Northern Territory Economy
Contents
Contents
3
Overview
4
Structure of the Economy
10
Economic Growth
14
External Economic Environment
24
Population
33
Labour Market
41
Prices and Wages
47
Industry Analysis
55
Mining
57
Construction
65
Agriculture, Forestry and Fishing
71
Tourism
78
Defence
84
Retail and Wholesale Trade
89
Manufacturing
93
Government and Community Services
95
Other Services
97
Abbreviations and Acronyms
99
Glossary
100
3
Northern Territory Economy
Overview
Key Points

In 2012-13, the Northern Territory recorded the highest economic growth of all jurisdictions. In addition, in
2012-13, population and employment growth strengthened and the Territory had one of the lowest
unemployment rates in Australia.

Economic growth in the Territory is forecast to remain strong over the next two years, supported by onshore
construction activity at the INPEX Ichthys project’s Blaydin Point site. However, the Territory’s economic
growth estimates have been revised down over this period due to the effect of the curtailment of operations
at the Gove alumina refinery.

From 2015-16, private investment is expected to decline from historically high levels, and net exports are
expected to emerge as the primary driver of economic growth as the production phase of the Ichthys
project commences.

As the Territory economy transitions from resource investment to production, Territory employment and
population growth are expected to moderate.
Table i: Key Economic Forecasts (%)
2012-13
2013-14e
2014-15f
2015-16f
2016-17f
2017-18f
Gross state product1
5.6
5.0
6.0
3.0
4.0
3.5
State final demand1
18.3
2.3
- 1.3
- 14.0
- 7.6
0.8
Population2
2.3
2.0
1.6
2.6
1.0
1.0
Employment3
2.6
3.7
3.8
2.1
0.7
0.7
Unemployment rate4
4.7
4.4
4.0
4.2
4.7
4.7
Consumer price index5
2.0
3.9
3.0
2.8
2.5
2.5
Wage price index5
3.4
2.9
3.5
3.7
3.0
3.0
e: estimate; f: forecast
1 Year ended June, year-on-year percentage change, inflation adjusted.
2 As at December, annual percentage change.
3 Year-on-year percentage change.
4 Year average.
5 As at December, year-on-year percentage change.
Source: ABS; Department of Treasury and Finance
Northern Territory Economy
Over the past two years, growth in the Territory economy has outpaced growth in the national economy. Recent
economic growth in the Territory has been underpinned by record levels of private investment, primarily
associated with major resource projects including the Ichthys project, expansions at the Groote Eylandt Mining
Company (GEMCO) and McArthur River mines, the development of the Montara and nearby oilfields (the
Montara project) and the construction of the Marine Supply Base.
The Ichthys liquefied natural gas (LNG) project is a joint venture between INPEX group companies, major partner
TOTAL group companies, and the Australian subsidiaries of Tokyo Gas, Osaka Gas, Chubu Electric Power and
Toho Gas.
Current labour market conditions in the Territory are strong, as highlighted by robust employment growth and
one of the lowest unemployment rates in Australia. Darwin recorded the highest growth in the consumer price
index (CPI) in 2013, due primarily to increases in utility prices and motor vehicle registration fees, and the impact of
4
Northern Territory Economy
the carbon tax. Price pressures are expected to ease over the forward estimates as the impact of the 2013 price
increases to utilities and motor vehicle registration are incorporated in the base.
Continued elevated levels of private investment related to the Ichthys project should continue to support
economic growth in the Territory over the next two years. The impact of low interest rates and improving global
economic conditions should also provide a tailwind for economic growth in the Territory over this period.
In the outer years, the Territory economy is expected to transition from resource investment-driven to production
and exports-driven economic growth. While economic growth is expected to remain solid, it will be based on
increased production and export activity, which is less labour intensive than resource-related development. As
such, demand for labour in the Territory and population growth is expected to moderate in the outer years.
Economic Growth
Territory economic growth strengthened to 5.6 per cent in 2012-13. This was the highest growth rate of all
jurisdictions and more than double the national average of 2.6 per cent (Chart i).
Chart i: Change in Gross State Product and Gross Domestic Product, 2012-131
1 Inflation adjusted.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Economic growth is forecast to remain strong over the budget and forward estimates period. Territory gross state
product (GSP) is estimated to increase by 5.0 per cent in 2013-14 and strengthen to 6.0 per cent in 2014-15.
Growth over this period is expected to be underpinned by onshore construction activity at the Ichthys project’s
Blaydin Point site.
Household consumption growth is forecast to be solid over the next few years, supported by strengthening
employment and wages growth, as well as relatively low interest rates.
The curtailment of operations at the Gove alumina refinery will detract from economic growth in the Territory
through lower consumption growth and decreased net exports. The full impact of the curtailment of operations
at the refinery is expected to be felt in 2014-15. The economic impact of the curtailment will largely depend on
the effectiveness of Rio Tinto’s announced assistance package and other mitigation strategies, as well as the level
of investment and economic activity in other industries in the region.
The Territory economy is expected to undergo a transition over the forward estimates period. Since 2011-12,
elevated levels of private investment in major resource projects have underpinned economic growth in the
Territory. Private investment is forecast to peak in 2014-15 in line with the expected profile of construction activity
on the Ichthys project. From 2015-16, private investment is expected to decline and net exports are expected to
emerge as the primary driver of economic growth as the production phase of the Ichthys project commences.
There is a risk that the transition from the investment to the production phase may not be smooth. The production
phase is not as labour intensive and, as a result, growth in non-resource industries will be required to support
employment and population growth in the Territory over this period.
5
Northern Territory Economy
External Economic Environment
The Australian economy is currently transitioning to non-resource drivers of growth as investment in the mining
industry passes its peak. Current economic conditions support a pick up in the non-resource sector including
improvement in global economic outlook, an increase in household wealth, relatively low interest rates, improving
business sentiment and the depreciation of the Australian dollar to levels that are still high in historical terms.
Despite the conducive conditions, the recovery in the non-resource sector has been slower than anticipated.
In its World Economic Outlook April 2014, the International Monetary Fund (IMF) revised down Australia’s
economic growth forecast by 0.2 percentage points to 2.6 per cent in 2014 and by 0.3 percentage points to
2.7 per cent in 2015. The lower economic growth forecasts are likely to reflect a sharper decline in resource
investment over the next few years than previously anticipated. Despite the downward revision to economic
growth forecasts, IMF expects Australia’s economy to outperform most other advanced economies over the
forward estimates period.
IMF forecasts global economic growth to strengthen to 3.6 per cent in 2014, to 3.9 per cent in 2015 and stabilise
at about 4.0 per cent from 2016. Forecast improvement in global economic activity, in particular in 2014, will
largely be driven by a recovery in advanced economies. Importantly, the performance of the economies of the
Territory’s main trading partners is expected to remain solid over the forward estimates period with the exception
of Japan (Table ii). Weakness in the Japanese economy is not expected to have a significant impact on Territory
goods exports to Japan because they largely comprise LNG traded under long term contracts. Chinese economic
growth is forecast to moderate over the forward estimates period, but remain very high relative to other global
economies.
Table ii: Gross Domestic Product Growth (%)
2007 to 20121
2013
2014e
2015f
2016f
2017f
World
3.3
3.0
3.6
3.9
4.0
3.9
Australia
2.9
2.4
2.6
2.7
2.9
3.0
Japan
0.2
1.5
1.4
1.0
0.7
1.0
China
10.1
7.7
7.5
7.3
7.0
6.8
Indonesia
6.0
5.8
5.4
5.8
6.0
6.0
United States
1.0
1.9
2.8
3.0
3.0
2.9
Korea
3.3
2.8
3.7
3.8
3.8
3.8
e: estimate; f: forecast
1 Five-year average.
Source: IMF
The Korea-Australia Free Trade Agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement
have the potential to deliver significant benefits to the Territory’s cattle and horticulture industries. These
agreements, when they come into force, will progressively reduce tariffs on Australian agricultural commodities,
which will provide increased opportunities for Territory exporters to expand into the Korean and Japanese
markets. In addition, LNG is the Territory’s largest export commodity. The elimination of the 3 per cent tariff on
LNG exports from Australia to Korea, effective immediately when the KAFTA comes into force, presents increased
opportunities for Territory LNG exports to Korea.
The favourable outlook for the national and global economy should continue to support demand for Territory
goods and services.
6
Northern Territory Economy
Population
The Territory’s annual population growth rate was 2.3 per cent in the year to December 2012. Natural increase
(births minus deaths) has typically been the largest and most stable contributor to annual population growth in
the Territory. This changed in 2012 with the contribution to population growth from net overseas migration
exceeding the contribution from natural increase (Chart ii). The gain in population from these components was,
however, partially offset by negative net interstate migration.
Chart ii: Components of Population Growth (moving annual total)
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0
In 2013, net overseas migration is expected to continue to make a strong, albeit slightly lower, contribution and
overall population growth is estimated to be about 2.0 per cent. Population growth is expected to moderate to
1.6 per cent in 2014 reflecting population outflows associated with the curtailment of operations at the Gove
alumina refinery. Growth is expected to rebound to 2.6 per cent in 2015 as the effect from the refinery curtailment
passes and growth is boosted by the demand for labour associated with the Ichthys project and other economic
activity in the Territory.
Annual population growth is forecast to slow to 1.0 per cent in 2016 and 2017 as the construction phase of the
Ichthys project is completed and the bulk of this workforce and its dependents leave the Territory, such that
population growth returns to a level of growth more consistent with natural increase.
Labour Market
Territory employment growth strengthened to 2.6 per cent in 2012-13, with the Australian Bureau of Statistics
(ABS) estimating that on average about 125 700 persons were employed in the Territory, and the unemployment
rate averaged 4.7 per cent during the year.
Despite the strong headline outcome, employment growth was unevenly distributed between industries. The
main industries that contributed to employment growth in the Territory in 2012-13 were health care and social
assistance, construction, mining and manufacturing. This was partly offset by a decline in the number of persons
employed in the agriculture, forestry and fishing, financial and insurance services and retail trade industries over
the same period.
Strong labour market conditions are expected to continue over the next two years, underpinned by acceleration
in construction activity associated with the Ichthys project, which is expected to flow through to other sectors of
the economy. As employment growth strengthens, the Territory’s unemployment rate is expected to decline to
4.0 per cent in 2014-15. Growth in employment in the Territory is expected to be partly offset by job losses
associated with the curtailment of operations at the Gove alumina refinery, the full impact of which should occur
in 2014-15.
From 2015-16 onwards, labour market conditions are forecast to soften as the Ichthys project transitions to the
less labour-intensive production phase and economic activity returns to long-term trend levels.
7
Northern Territory Economy
Prices and Wages
The Darwin CPI increased by 3.9 per cent in 2013. Growth was largely driven by increases in costs of housing,
transportation, recreation and culture, alcohol and tobacco, and health (Chart iii).
Chart iii: Year-on-Year Percentage Point Contribution to CPI, 2013
Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0
The increase in the cost of housing, namely utilities, rents and home purchases, accounted for nearly half the
growth in the Darwin CPI in 2013. However, the impact of housing costs on the Darwin CPI is expected to
moderate substantially. This primarily reflects the lower increases in electricity, water and sewerage tariffs in 2014
and 2015. In addition, the supply of new dwelling stock and further housing developments in the Territory’s major
centres are likely to moderate future growth in home purchase and rental prices.
Relatively strong labour market conditions are expected to heighten wage growth over the next few years. From
2016, demand for labour is expected to soften and wage growth is expected to be more restrained in these outer
years.
Industry Analysis
The structure of the Territory economy is markedly different from other Australian economies. This reflects the
Territory’s different population characteristics and its large land mass, with an abundance of natural endowments.
The largest industries in the Territory are construction, mining, and government and community services. These
industries alone account for nearly half the Territory’s GSP, compared with about one third of the Australian
economy (Chart iv).
8
Northern Territory Economy
Chart iv: Industry Proportion of Gross State Product and Gross Domestic Product, 2012-131
1 Current prices.
2 Government and community services industry comprises: public administration and safety; education and training; and health care and social
assistance industries.
3 The other services industry comprises: accommodation and food services; transport, postal and warehousing; information and media
telecommunications; financial insurance services; rental, hiring and real estate services; professional, scientific and technical services; administrative
and support services; electricity, gas, water and waste services; and arts and recreation services.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Over the past decade, economic growth in the Territory has outpaced growth nationally, however growth has
not been evenly distributed across all sectors of the Territory economy. As such, the relative importance of key
industries in the Territory economy has changed over the period. In particular, the construction industry has risen
in prominence in recent years, coinciding with substantial private investment associated with major resource
projects.
In contrast, the absolute value (in current terms) of the agriculture, forestry and fishing, and tourism industries has
been relatively stable in recent years. However, these industries’ shares of GSP have declined over time in response
to more rapid growth in other industries. Despite the reduction in share of GSP, these industries remain an
important contributor to economic activity and employment in many regional areas of the Territory.
9
Northern Territory Economy
Chapter 1
Structure of the Economy
Key Points
 The structure of the Northern Territory economy is markedly different to other Australian economies, reflecting
its abundance of natural resources, relatively large public sector and significant defence presence.
 Each industry’s contribution to the Territory’s gross state product (GSP) can vary over time and be highly volatile
due to the Territory’s relatively small economy, the influence of major projects and changes in global and
national demand for Territory goods and services.
 Key industries in the Territory, in terms of contribution to GSP, are construction, mining, government and
community services (which comprises industries with outputs predominantly supplied by the public sector,
including defence), and manufacturing.
 The agriculture, forestry and fishing, tourism and retail industries make relatively small contributions to the
Territory’s GSP, however these are vital industries in terms of generating economic activity and employment in
regional areas.

An industry’s contribution to Territory employment can differ greatly from its contribution to GSP. The key
employment industries in the Territory are government and community services, construction, retail trade,
and accommodation and food services.
Industry Structure
The structure of the Territory’s economy is markedly different to other Australian economies. This reflects the
Territory’s different population characteristics and its large land mass with an abundance of natural endowments.
In addition, the Territory has a small and less developed economy that is heavily influenced by international trade
and major projects.
The following uses GSP production data in current prices to allow for analysis of change in industry shares of the
Territory economy over time.
Notable differences between the Territory and Australian economies include a greater contribution from mining,
construction and the public sector in the Territory, and a comparatively small contribution from manufacturing,
retail and wholesale trade, and professional service industries. Chart 1.1 shows that the mining, construction, and
government and community services industries comprise about half the Territory’s GSP compared with about one
third of Australia’s gross domestic product (GDP.)
Chart 1.1: Industry Proportion of GSP and GDP, 2012-131
1 Current prices.
10
Northern Territory Economy
2 Government and community services comprises public administration and safety, education and training, and health care and social assistance
industries.
3 The other services industry comprises: accommodation and food services; transport, postal and warehousing; information and media
telecommunications; financial insurance services; rental, hiring and real estate services; professional, scientific and technical services; administrative
and support services; electricity, gas, water and waste services; and arts and recreation services.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
A further distinction between the Territory and Australian economies is the level of public sector spending. Public
sector consumption accounts for about 40 per cent of total consumption in the Territory. This is the second
highest proportion of all jurisdictions behind the Australian Capital Territory (65 per cent), which has a large
Commonwealth presence. Nationally, public sector consumption accounts for about a quarter of total
consumption.
The Territory’s relatively high level of public sector spending reflects a number of factors. Firstly, the costs of
delivering government services in the Territory is significantly higher than in other jurisdictions due to its highly
dispersed population over a large and remote land mass and its relatively high Indigenous population. Secondly,
the Territory faces diseconomies of small scale in government service provision because the scope of government
services delivered in the Territory is the same as provided in other jurisdictions but to a much smaller population,
leading to higher per capita costs. Thirdly, the Territory’s strategic geographical location has resulted in significant
investment by the Australian Defence Force in infrastructure and positioning of personnel in the Territory.
Industry Share
Each industry’s contribution to the Territory’s GSP can vary over time and be highly volatile due to the Territory’s
relatively small economy and the influence of major projects. Historically, mining has been the dominant industry
in the Territory. However, in 2012-13, in current terms, the construction industry surpassed mining to be the single
largest industry contributor to the Territory’s GSP. The only other times this occurred were in 2003-04 and
2004-05, when construction of the ConocoPhillips Darwin liquefied natural gas plant and the Alcan G3 expansion
were underway (Chart 1.2).
Chart 1.2: Industry Share of Territory GSP
1 Government and community services comprises: public administration and safety; education and training; and health care and social assistance
industries.
2 The other services industry comprises: accommodation and food services; transport, postal and warehousing; information and media
telecommunications; financial insurance services; rental, hiring and real estate services; professional, scientific and technical services; administrative
and support services; electricity, gas, water and waste services; and arts and recreation services.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Since 2010-11, the construction sector has grown by an average of 37.0 per cent per annum, which is
substantially higher than the growth for all industries (7.4 per cent). As a result, the construction industry’s
contribution to the Territory’s GSP has increased from 10.9 per cent in 2010-11 to 17.7 per cent in 2012-13, the
highest level on record. The growth in the construction industry can be largely attributed to the substantial
increase in engineering construction activity associated with major resource-related projects.
11
Northern Territory Economy
The mining sector’s share of the Territory’s economy has declined from 19.3 per cent in 2010-11 to 14.3 per cent
in 2012-13, equating to a decrease of $488 million in the value of mining over this period. The decline in the value
of mining coincided with the fall in commodity prices from its peak in July 2011.
The agriculture, forestry and fishing industry’s share of the Territory’s GSP has been trending downwards over the
past decade. At its peak in 2000-01, the industry contributed 6.9 per cent to the Territory’s output. In 2011-12, the
agriculture, forestry and fishing industry’s share of the Territory’s GSP reached a record low of 2.0 per cent but has
recovered slightly to 2.2 per cent in 2012-13. The decline is due to, among other things, the strong growth in the
mining and construction industries over the past decade.
Employment by Industry
An alternative approach to analysing the structure of the Territory economy is to examine the distribution of
employment by industry.
The government and community services industry accounts for over one third of the Territory’s total civilian
resident employment. While the industry primarily comprises Commonwealth, Territory and local government
employees, it also includes employees of private providers of education, training, health and social assistance
services. The relatively high proportion of public sector employment in the Territory reflects diseconomies of scale,
population dispersion, and high service delivery needs of the population and its labour-intensive nature.
The construction industry accounted for 10.7 per cent of total employment in the Territory in 2012-13 (Chart 1.3).
Between 2007-08 and 2012-13, employment in the construction industry has grown by an average of
7.4 per cent per annum, which was well above the average for all industries of 2.6 per cent. The strength in
employment growth in the construction industry reflects the substantial level of engineering, non-residential and
residential construction activity over this period.
Despite its large contribution to the Territory’s output, the Australian Bureau of Statistics (ABS) reports that there
were about 4800 residents employed in the mining industry in the Territory, which represents 3.9 per cent of the
Territory’s total workforce. While this primarily reflects the capital-intensive nature of the mining industry, the
number of people employed in mining in the Territory is likely to be significantly higher due to the exclusion of
some temporary overseas workers and fly-in fly-out interstate workers in the ABS Labour Force Survey.
Chart 1.3: Employment by Industry, 2012-13
1 Government and community services comprises: public administration and safety; education and training; and health care and social assistance.
2 Other services comprises: accommodation and food services; transport, postal and warehouse; electricity, gas, water and waste services;
information media and telecommunications; financial and insurance services; rental, hiring and real estate services; professional, scientific and
technical services; administrative and support services; arts and recreation; and other services.
Source: ABS, Labour Force, Australia, Cat. No. 6291.0.55.003
Framing the Future
Framing the Future is the Territory Government’s strategic framework to build on the economic, environmental,
cultural and social advantages of the Territory and to maximise new and evolving opportunities within the
Territory, Northern Australia and Asia.
12
Northern Territory Economy
Framing the Future focuses on four strategic goals: prosperous economy, strong society, balanced environment
and confident culture.
The strategic outcome for the prosperous economy goal is an economy that creates wealth and jobs; is open,
competitive and innovative; is built on exports and the needs of the Territory’s trading partners; captures the ideas,
energy and opportunities across the Territory; and encourages new local, national and international investment.
Framing the Future provides a plan to develop regional economies, with a particular focus on encouraging new
investment and growth in existing industries including tourism, agriculture, forestry and fishing, mining and
construction. In addition, Framing the Future is intended to build on trade relationships with the Territory’s Asian
neighbours and foster investment and provide export opportunities for Territory goods and services.
Developing the North
Developing the North is the Territory Government’s agenda to achieve long-term sustainable growth in Northern
Australia through collaboration with the Commonwealth, Queensland and Western Australian governments.
Under the Developing the North agenda, the key enablers identified for accelerating development in Northern
Australia are infrastructure, human capital, population growth and lifestyle, and land and water resources.
Key aims of the Developing the North agenda include:
 increased infrastructure investment across the Territory to strengthen transport and freight corridor connections
to integrate supply chains across Northern Australia;
 increased investment in services to remote and Indigenous communities in the Territory to support job creation,
economic participation and reduce welfare reliance;
 accelerating investigation and research into the development potential of the Territory’s soil, vegetation, water
and marine resources; and
 developing and implementing relocation incentives to stimulate population growth and economic
development in the Territory.
13
Northern Territory Economy
Chapter 2
Economic Growth
Key Points
 The Northern Territory economy is relatively small, accounting for about 1.3 per cent of Australian gross
domestic product (GDP).
 Due to the small size of the Territory economy, economic growth can be heavily influenced by major projects
and be more volatile from year to year than other states.
 In 2012-13, the Territory economy grew by 5.6 per cent in real terms. This was the highest growth rate of all
jurisdictions and more than double the national average of 2.6 per cent.
 Economic growth in 2012-13 was driven by record levels of private investment, primarily related to major
resource construction projects, as well as strengthening household consumption and an increase in net exports.
 The Territory economy is expected to grow strongly over the budget and forward estimates period. Growth
over the next two years is expected to be supported primarily by construction activity related to the Ichthys
liquefied natural gas (LNG) project.
 From 2015-16, the Territory economy is forecast to undergo a significant transition, with economic growth
underpinned by a substantial increase in export volumes as the Ichthys project moves into the production
phase.
 A favourable global outlook, as well as relatively low interest rates and an increase in household wealth, is likely
to support investment and growth from outside the resource and energy sector.
Table 2.1: Economic Growth1 (%)
2012-13
2013-14e
2014-15f
2015-16f
2016-17f
2017-18f
Gross state product
5.6
5.0
6.0
3.0
4.0
3.5
State final demand
18.3
2.3
- 1.3
- 14.0
- 7.6
0.8
e: estimate; f: forecast
1 Inflation adjusted.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Background
The internationally accepted standard for measuring economic growth is change in GDP, which is the market
value of all final goods and services produced within an economy. The equivalent measure at a state and territory
level is gross state product (GSP). The Australian Bureau of Statistics (ABS) uses three different approaches to
measure GDP and GSP: expenditure, income and production. For the purpose of this analysis, the expenditure
approach has been adopted.
The measured components of the expenditure approach to GSP are consumption (household and public);
investment (private and public); and net exports. In addition to the measured components, a balancing item
adjustment is also made for interstate trade, changes in inventories and to account for other items such as
progress payments for machinery and components required for Territory projects that are constructed overseas.
The balancing item is a significant component of the Territory’s GSP and can be highly volatile.
GSP is published on an annual basis. In the interim, the ABS publishes quarterly estimates of state final demand
(SFD). SFD measures consumption and investment only, and therefore is a partial measure of economic activity.
SFD excludes international trade, which is a large component of economic activity in the Territory. In addition,
unlike GSP, SFD does not make adjustments for interstate trade, changes in inventories or any balance of
14
Northern Territory Economy
payments adjustments such as progress payments for machinery and equipment constructed outside the
Territory.
Growth in Territory SFD is expected to moderate substantially from 18.3 per cent in 2012-13 to an estimated 2.3
per cent in 2013-14. SFD is then forecast to decline over the next three years, which is inconsistent with the
relatively solid Territory GSP growth forecasts over the same period.
The forecast decline in Territory SFD is largely due to the timing of progress payments for pre-assembled modules
under construction overseas for the Ichthys project. The Ichthys LNG project is a joint venture between INPEX
group companies, major partner TOTAL group companies and the Australian subsidiaries of Tokyo Gas, Osaka
Gas, Chubu Electric Power and Toho Gas.
Progress payments for the pre-assembled modules for the Ichthys project are recorded in SFD at the time the
payment is made, whereas these payments are netted off through a balancing adjustment in the Territory’s GSP.
Due to the size of these progress payments, changes in Territory SFD will be a less reliable measure of actual
onshore economic activity in the Territory over the coming years.
The Territory’s GSP is forecast to show a more orderly growth pattern over the budget and forward estimates
period that reflects actual onshore construction activity related to the Ichthys project.
Unless otherwise stated, all figures and analysis in this chapter are in inflation-adjusted (chain volume) terms.
Gross State Product
In 2012-13, the Territory economy expanded by 5.6 per cent. This was the highest growth rate of all jurisdictions
(Chart 2.1) and was over twice the level of national growth (2.6 per cent).
Chart 2.1: Change in Gross State Product and Gross Domestic Product, 2012-131
1 Inflation adjusted.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Economic growth in the Territory in 2012-13 was primarily driven by a 62.2 per cent increase in private
investment (Table 2.2). This coincided with record levels of engineering construction associated with several major
projects, predominantly in the resource sector. A significant component of private investment expenditure in
2012-13 related to progress payments for pre-assembled modules constructed overseas for the Ichthys project.
Progress payments for work done overseas are included in private investment and then netted out through the
balancing item. As a result, the balancing item detracted $8.6 billion from Territory GSP in 2012-13, substantially
higher than the $5.3 billion detraction in 2011-12.
Economic growth in the Territory in 2012-13 was also supported by a 6.2 per cent increase in household
consumption and a 14.1 per cent increase in net exports. Partly offsetting economic growth was a 5.6 per cent
decline in public final demand, comprising decreases of 23.5 per cent in public investment and 0.7 per cent in
public consumption.
Table 2.2: Components of GSP1
15
Northern Territory Economy
2011-12
2012-13
Contribution to
GSP Growth
$M
$M
ppt
Household consumption
8 403
8 925
2.8
Private investment
6 569
10 652
21.7
Public final demand
7 800
7 362
- 2.3
Net exports
1 368
1 561
1.0
Balancing item2
- 5 327
- 8 639
- 17.6
GSP
18 813
19 860
5.6
ppt: percentage point
1 Inflation adjusted.
2 Balancing item incorporates interstate trade, change in inventories, balance of payment adjustments and statistical discrepancy.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Household Consumption
Growth in household consumption in the Territory strengthened from 1.2 per cent in 2011-12 to 6.2 per cent in
2012-13.
The largest contributor to growth in household consumption in 2012-13 was net expenditure interstate. Net
expenditure interstate is the difference between the estimated level of expenditure by Territory residents in other
states and spending by interstate travellers in the Territory. In 2012-13, the Territory recorded a net expenditure
interstate of $238 million, up from -$139 million in 2011-12. This was the first time on record that the Territory’s net
expenditure interstate added to household consumption.
Removing net expenditure interstate, underlying household consumption in the Territory increased by
1.7 per cent in 2012-13. This compares with the average annual growth rate of 4.0 per cent over the past decade
and extends a run of relatively weak growth in underlying household consumption since 2009-10.
Weak growth in underlying household consumption coincided with changes in household behaviour that
followed the global financial crisis in 2008-09. Since that time, consumers have been more cautious with their
spending, leading to higher levels of household savings and lower spending on discretionary goods and services.
For example, between 2010-11 and 2012-13, household consumption on discretionary items such as hotels, cafés
and takeaway services, and household equipment declined, while spending on non-discretionary items such as
health and food increased in real terms.
Favourable economic conditions are expected to encourage a pick up in household consumption over the
medium term. Household consumption growth is expected to be supported by strengthening employment and
wages growth, as well as relatively low interest rates. Recent SFD and retail trade data suggests a recovery is
underway in household consumption. Retail trade sales have grown at a reasonable rate for the first nine months
of 2013-14, following subdued growth for most of 2012-13.
Household consumption is forecast to grow by 3.9 per cent in 2013-14 and by 3.2 per cent in 2014-15. The
moderation in growth in 2014-15 is partly due to the impact of Rio Tinto’s decision to curtail operations of the
Gove alumina refinery, which will result in a reduction in Rio Tinto’s expenditure on goods, services, wages and
salaries. While growth in household consumption is forecast to be solid over this period, it is expected to be below
the ten-year historical average (Chart 2.2).
Household consumption growth is expected to strengthen in 2015-16, before declining in 2016-17 and 2017-18,
coinciding with forecast slowing in employment and population growth following the completion of the
construction phase of the Ichthys project.
Chart 2.2: Household Consumption Growth1,2
16
Northern Territory Economy
e: estimate; f: forecast
1 Inflation adjusted.
2 Year-on-year change.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Private Investment
Private investment has been a key driver of growth in the Territory’s GSP over the past two years. In 2012-13,
private investment increased by 62.2 per cent to $10.7 billion. This amount is more than 2.5 times higher than the
level of private investment recorded in 2010-11.
Over the past decade, private investment in the Territory has been underpinned by investment in the resources
sector (Chart 2.3). The recent surge in private investment primarily reflects the commencement of the Ichthys
project, which includes construction of onshore facilities as well as progress payments for components of the
project under construction overseas. Several other major resource projects also contributed to the record level of
private investment in the Territory over the past two years, including expansions at the Groote Eylandt Mining
Company (GEMCO) manganese processing plant and the McArthur River zinc/lead mine, and the development
of the Montara project.
Chart 2.3: Private Investment1 (moving annual total)
e: estimate; f: forecast
1 Inflation adjusted.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Nationally, resource investment is expected to have passed its peak and to decline significantly over the next few
years. In contrast, resource-related private investment in the Territory is expected to remain at historically elevated
levels over the next two years before declining from 2015-16 as the Ichthys project transitions from the
construction to the production phase.
The sheer scale of expenditure on major resource projects in recent years means that since 2010-11,
non-resource-related private investment has comprised a relatively small component of overall private investment.
17
Northern Territory Economy
However, non-resource-related investment, primarily construction, makes an important contribution to onshore
economic activity and employment in the Territory.
Recent and ongoing non-resource projects that have contributed to investment growth in the Territory include
construction of the Darwin Correctional Precinct; the new Australian Agricultural Company Limited beef
processing facility at Livingstone; construction of the Paspaley Charles Darwin Centre; development of several new
suburbs in Darwin and Palmerston; development of industrial land including the Berrimah Business Park; and
construction of hotels, serviced apartments and other short-term accommodation facilities in Greater Darwin. In
addition, a number of developments will commence over the budget and forward estimates period, including the
commencement of residential construction in the new Alice Springs suburb of Kilgariff and the development of a
52-hectare site in Katherine.
In the 2014-15 Budget, the Territory Government introduced changes to the First Home Owners Grant (FHOG)
scheme. The FHOG for contracts for the purchase or construction of a new home entered into on or after 13 May
2014, will increase to $26 000 and the value cap of $600 000 will be removed. That is, the FHOG applies to all
new homes regardless of value.
The $600 000 cap will still apply to grants for established homes. However, contracts for the purchase of
established homes signed on or after 1 January 2015 will no longer be eligible for FHOG. The abolition of FHOG
on established properties is consistent with changes to the FHOG scheme in other states. From 1 July 2014, in all
jurisdictions except for Western Australia and the Territory, the FHOG will no longer be available for contracts
entered into for the purchase of established properties.
Targeting of the FHOG and removal of the value cap on new homes is expected to provide incentives for first
home buyers to build new homes, which will support the construction industry and private dwelling investment
in the Territory.
The outlook is for private investment in the Territory to increase by 3.7 per cent in 2013-14 before declining
marginally in 2014-15. In 2015-16 and 2016-17, private investment is expected to decline sharply as construction
activity on the Ichthys project winds down. Private investment in the Territory is expected to return to long-term
average levels in the outer years but its share of Territory GSP is expected to fall below historical levels due to an
expected increase in the contribution by net exports (Chart 2.4).
Chart 2.4: Private Investment as a Proportion of Territory GSP1
e: estimate; f: forecast
1 Inflation adjusted.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Public Final Demand
Public final demand includes public consumption and investment at all levels of government (national, state and
local), including defence. Territory public final demand declined by 5.6 per cent in 2012-13, reflecting a
23.5 per cent decline in public investment and a 0.7 per cent decline in public consumption.
18
Northern Territory Economy
Public final demand is expected to remain subdued over the budget and forward estimates period. Public final
demand share of Territory’s GSP is expected to decline from the peak of 44 per cent in 2010-11 to 28 per cent in
2017-18 (Chart 2.5).
Public consumption is expected to increase marginally in 2013-14, before remaining relatively flat over the budget
and forward estimates period. This is consistent with the fiscal consolidation occurring at the Commonwealth and
Territory government levels.
Public investment reached record levels in 2010-11 following temporary increases in capital works and
infrastructure programs aimed at stimulating the Australian and Territory economies in the aftermath of the global
financial crisis. Since 2010-11, public investment has declined by about 26 per cent (or $465 million) to $1.3 billion
in 2012-13, but remains higher than historical levels.
Public investment is expected to continue to decline over the budget and forward estimates period and return to
historical levels.
Chart 2.5: Public Final Demand as a Proportion of Territory GSP1
e: estimate; f: forecast
1 Inflation adjusted.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Net Exports
The Territory’s net exports have fluctuated substantially over the past decade. Historically, the Territory has
recorded positive net exports, which add to GSP.
Net exports are expected to make a substantial contribution to Territory GSP growth in 2013-14 reflecting the
commencement of exports from the Montara project, increased mineral and liquefied natural gas (LNG)
production, as well as lower imports following the arrival of the Montara Venture floating, production, storage
and offload facility in 2012-13.
Imports are expected to increase in 2014-15 due to the arrival of machinery and equipment imports related to the
Ichthys project. This will be partly offset by decreased imports of bunker oil used to power the Gove alumina
refinery following curtailment of operations at the refinery from 2014-15 onwards.
Territory exports are expected to remain relatively flat in 2014-15 and 2015-16. The forecast increase in exports
from the Montara project and mineral exports following expansion at the GEMCO and McArthur River mines is
expected to be offset by the loss of alumina exports from the Gove alumina refinery. The outlook is for exports to
increase substantially in 2016-17 and 2017-18 following the expected commencement of LNG production from
the Ichthys plant (Chart 2.6).
As a result of these influences, the outlook is for net exports to decline in 2014-15 before recovering in 2015-16
and growing strongly from 2016-17 onwards. Net exports’ share of the Territory’s GSP is forecast to increase
substantially from 7.9 per cent in 2012-13 to more than 35 per cent in 2017-18.
19
Northern Territory Economy
Chart 2.6: Net Exports1
e: estimate; f: forecast
1 Inflation adjusted.
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Economic Impact of the Curtailment of Operations at the Gove Alumina Refinery
In November 2013, Rio Tinto announced that it would be curtailing refinery operations at the Gove alumina
refinery. The curtailment commenced in early 2014, with the refinery expected to be placed in care and
maintenance mode by August 2014.
Following the curtailment of the refinery, the size of the workforce at Rio Tinto’s Gove operations is expected to
decline by about 1000 people, with about 400 jobs to remain in the bauxite mining and export operations.
Rio Tinto has stated that the bauxite previously used in the manufacture of alumina will now be exported.
Currently, about 8 million tonnes of bauxite are produced per annum at the Gove operations, with about 1
million tonnes exported as the majority is refined into alumina. Following the curtailment of refinery operations,
annual bauxite exports are expected to initially increase to 6.1 million tonnes in 2014-15. Rio Tinto is expected to
invest about $65 million to upgrade ship loaders and other machinery and equipment, which will enable bauxite
exports to increase to 8.1 million tonnes from 2016-17, as well as for the care and maintenance of the refinery.
Rio Tinto estimates that the resident population of Nhulunbuy will decrease from 4000 to about 2100 following
the curtailment of operations at the Gove alumina refinery.
The total impact on employment and population of the region will depend on the effectiveness of Rio Tinto’s
announced assistance package and the level of investment and economic activity in other industries in the region.
The assistance package over the next three years (2014 to 2016) includes:
 reduction in power tariffs and rates for local businesses;
 reduction in rents for commercial properties owned by Rio Tinto in Nhulunbuy; and
 subsidising rates, sewerage and rubbish charges and providing mortgage subsidies for homeowners
experiencing financial hardship.
Rio Tinto has announced a $50 million package to help attract new economic activity and support community
transition in Nhulunbuy and the East Arnhem region. A regional economic development fund will be established
to explore opportunities to attract new investment and industries to the region. The regional economic
development fund will be jointly funded by Rio Tinto and the Territory Government. In addition, Rio Tinto will
establish a community investment fund to support local arts, recreation, sporting groups and community
organisations; provide additional funding and training to assist building capacity in Indigenous businesses; and
offer professional advisors and financial assistance for community members and local businesses.
20
Northern Territory Economy
The curtailment of operations at the Gove alumina refinery will detract from Territory economic output from
2013-14 onwards through lower consumption growth and decreased net exports, however the full impact will
not be felt until 2014-15.
Territory consumption growth will be directly affected by a reduction in Rio Tinto’s expenditure on goods and
services, which are estimated to decline by about $140 million, and through a reduction in salaries and wages
that Rio Tinto estimate will decline by about $100 million.
Net exports are expected to be impacted from 2013-14 onwards, with the Territory’s alumina exports (currently
valued at about $800 million per year) significantly reduced in 2014-15 and ceased by 2015-16. This is expected to
be partly offset by a decrease in the imports of goods required for the refining process, including caustic soda and
fuel oil. Following the curtailment of operations at the Gove alumina refinery, the value of these imports is expected
to decline from about $600 million per annum to about $50 million of fuel imports per annum from
2014-15 onwards.
Outlook
The Territory economy is expected to perform strongly over the budget and forward estimates period and
continue to outperform most other jurisdictions, with economic growth forecast to average 4.3 per cent per
annum over this period.
Over the next three years (to 2015-16), Territory economic growth will be underpinned by construction activity
related to the Ichthys project. Following 2015-16, the Territory economy is expected to transition away from the
investment phase to the production phase, with a substantial increase in net exports emerging as the primary
driver of economic growth.
The Territory economy is forecast to grow by 5.0 per cent in 2013-14, driven primarily by an increase in net
exports reflecting the commencement of oil exports from the Montara project in late 2013. Higher levels of private
investment and household consumption are expected to support growth, with private investment forecast to
increase by 3.7 per cent and household consumption forecast to increase by 3.9 per cent.
This is supported by the latest data on SFD, which showed that in the first two quarters of 2013-14, private
investment continued to increase from already historically high levels, albeit at a slower pace than in 2012-13, and
household consumption continued to grow relatively strongly.
A continued reduction in government capital works spending from the relatively high levels observed between
2009-10 and 2011-12 is projected to partly offset growth in 2013-14, with public investment forecast to fall by
10.2 per cent.
Territory GSP growth is forecast to strengthen to 6.0 per cent in 2014-15, in line with the expected peak in
onshore construction activity at the Ichthys project’s Blaydin Point site.
Household consumption is expected to support GSP growth in 2014-15. However, the rate of household
consumption growth is forecast to moderate to 3.2 per cent, reflecting the impact on population and
employment growth resulting from Rio Tinto’s decision to curtail operations at the Gove alumina refinery.
The Territory’s net exports are forecast to decline in 2014-15 and are expected to be the most significant detractor
from GSP growth. The forecast decline in the Territory’s net exports is due to a large increase in project cargo
related to the Ichthys project, including a number of high value pre-assembled modules. Territory exports are also
forecast to decline in 2014-15, with increased production of manganese and zinc/lead concentrate more than
offset by a reduction in alumina exports.
GSP growth is expected to moderate to 3.0 per cent in 2015-16, as the construction phase of the Ichthys project
moves past its peak levels. Private investment is forecast to fall substantially, albeit from very high levels, and public
sector investment is forecast to continue to decline.
21
Northern Territory Economy
Consumption growth is forecast to strengthen with strong growth in private consumption partly offset by
relatively flat public sector consumption as measures aimed at restoring the Territory budget to a fiscal balance are
implemented. A reduction in the imports of project cargo related to the Ichthys project is also forecast to result in a
recovery in the Territory’s net exports and support economic growth in 2015-16.
Territory economic growth is forecast to strengthen to 4.0 per cent in 2016-17 due to the projected
commencement of LNG exports from the Ichthys plant in late 2016. A partial year of LNG exports is forecast to
increase Territory exports substantially, however this will be partly offset by an increase in the import of feedstock
gas from the Ichthys field.
Private investment is forecast to continue to decline, as it returns towards long-term average levels following the
completion of the construction phase of the Ichthys project in late 2016. A decline in consumption is also forecast
to detract from growth, reflecting a reduction in the Territory’s population and employment growth as the Ichthys
construction workforce winds down.
A further increase in Territory net exports, resulting from a full year of LNG at the Ichthys plant, is forecast to underpin
GSP growth of 3.5 per cent in 2017-18. A stabilisation of private investment at around long-term trend levels and
modest private consumption growth will also support GSP.
Due to the unprecedented level of private investment in the Territory expected to occur over the next few years,
there is a risk that the transition from the construction to the production phase may not be smooth. While net
exports are expected to underpin economic growth in the Territory in the outer years, this is not as
labour-intensive as the construction phase. As a result, growth in non-resource activity will be required to support
employment and population growth in the Territory during this period.
While growth in resources-related investment has been the primary driver of the recent surge in economic activity
in the Territory, conditions are present for a pick up in non-resource industries. The targeting of the FHOG scheme
to the purchase or construction of new homes and the removal of the value cap for new homes from 13 May
2014, is expected to support private dwelling investment. In addition, relatively low interest rates and the freeing
up of labour and capital capacity constraints as the Ichthys project transitions away from the construction phase
should support economic growth outside the resource sector. The Territory is well positioned to take advantage of
the recovery in global activity and the shift in global growth towards Asia.
22
Northern Territory Economy
Table 2.3 Components of GSP
Value ($M)1,2
12-13 13-14e
08-09
09-10
10-11
11-12
13 632
7 914
5 719
13 713
7 908
5 805
14 405
8 305
6 099
14 515
8 403
6 112
14 996
8 925
6 071
7 106
6 123
5 950
4 403
5 804
4 061
8 256
6 569
643
282
5 099
856
271
3 260
1 234
198
2 622
Public investment
State final demand
Net exports
Total exports
Total imports
Balancing item 3
989
20 763
257
5 872
5 615
- 3 576
1 556
19 649
2 234
6 600
4 366
- 4 219
Gross state product
17 444
Total consumption
Household consumption
Public consumption
Total investment
Private investment
Dwelling investment
Ownership transfer costs
Business Investment
Total consumption
Household consumption
Public consumption
Total investment
Private investment
Dwelling investment
Ownership transfer costs
Business Investment
Public investment
State final demand
Net exports
Total exports
Total imports
Balancing item 3
14-15f
15-16f
16-17f
17-18f
15 359
9 269
6 089
15 666
9 564
6 102
16 144
10 065
6 079
16 121
10 065
6 057
16 279
10 209
6 069
11 943
10 652
12 204
11 046
11 534
10 575
7 256
6 377
5 507
4 681
5 518
4 740
891
219
5 458
672
256
9 723
812
268
9 966
851
273
9 450
872
279
5 226
808
279
3 594
772
279
3 688
1 756
20 187
1 626
6 488
4 862
- 3 812
1 688
22 772
1 368
6 048
4 680
- 5 327
1 291
26 939
1 561
6 964
5 403
- 8 639
1 159
27 563
2 297
7 394
5 097
- 9 000
960
27 200
21
6 867
6 846
- 5 100
879
23 400
825
7 116
6 291
- 1 450
826
21 629
6 052
10 275
4 223
- 4 000
778
21 796
8 965
13 353
4 387
- 6 250
17 664
18 002
18 813 19 860 20 860 22 122
Year-on-Year Change (%)
22 775
23 680
24 512
3.2
2.5
4.2
21.2
24.1
0.6
- 0.1
1.5
- 16.3
- 28.1
5.0
5.0
5.1
- 2.5
- 7.8
0.8
1.2
0.2
42.2
61.8
3.3
6.2
- 0.7
44.7
62.2
2.4
3.9
0.3
2.2
3.7
2.0
3.2
0.2
- 5.5
- 4.3
3.1
5.2
- 0.4
- 37.1
- 39.7
- 0.1
- 0.0
- 0.4
- 24.1
- 26.6
1.0
1.4
0.2
0.2
1.3
- 5.3
- 2.4
29.9
33.1
- 3.9
- 36.1
44.2
- 26.9
- 19.6
- 27.8
10.6
108.2
- 24.6
16.9
78.1
20.8
4.8
2.5
4.9
1.9
- 5.2
2.4
1.9
- 44.7
- 7.3
0.1
- 31.2
- 4.4
0.1
2.6
5.7
8.9
- 66.9
16.5
31.7
11.5
57.3
- 5.4
769.3
12.4
- 22.2
18.0
12.9
2.7
- 27.2
- 1.7
11.4
- 9.6
- 3.9
12.8
- 15.9
- 6.8
- 3.7
39.7
- 23.5
18.3
14.1
15.1
15.4
62.2
- 10.2
2.3
47.2
6.2
- 5.7
4.2
- 17.2
- 1.3
- 99.1
- 7.1
34.3
- 43.3
- 8.4
- 14.0
3749.1
3.6
- 8.1
- 71.6
-6.0
- 7.6
633.4
44.4
- 32.9
175.9
- 5.9
0.8
48.1
30.0
3.9
56.3
4.0
3.5
Gross state product
4.9
Total consumption
Household consumption
Public consumption
Total investment
Private investment
2.5
1.1
1.4
7.5
7.1
0.5
- 0.0
0.5
- 6.6
- 9.9
3.9
2.2
1.7
- 0.8
- 1.9
0.6
0.5
0.1
13.6
13.9
2.6
2.8
- 0.2
19.6
21.7
1.8
1.7
0.1
1.3
2.0
1.5
1.4
0.1
- 3.2
- 2.3
2.2
2.3
- 0.1
- 19.3
- 19.0
- 0.1
- 0.0
- 0.1
- 7.7
- 7.4
0.7
0.6
0.1
0.0
0.2
- 0.2
- 0.0
7.1
1.2
- 0.1
- 10.5
2.1
- 0.4
- 3.6
- 1.9
0.1
15.8
- 1.2
0.2
22.7
0.7
0.1
1.2
0.2
0.0
- 2.5
0.1
0.0
- 19.1
- 0.3
0.0
- 7.2
- 0.1
0.0
0.4
0.3
10.2
- 3.1
5.0
- 8.1
- 2.2
3.3
- 6.4
11.3
4.2
7.2
- 3.7
1.1
3.0
- 3.4
- 0.6
- 2.8
2.3
- 0.4
14.4
- 1.4
- 2.4
1.0
- 8.4
- 2.1
22.1
1.0
4.9
- 3.8
- 17.6
- 0.7
3.1
3.7
2.2
1.5
- 1.8
- 1.0
- 1.7
- 10.9
- 2.5
- 8.4
18.7
- 0.4
- 17.2
3.6
1.1
2.5
16.5
- 0.2
- 7.8
22.9
13.9
9.1
- 11.2
- 0.2
0.7
12.3
13.0
- 0.7
- 9.5
4.9
1.3
1.9
4.5
5.6
5.0
6.0
3.0
4.0
3.5
Dwelling investment
Ownership transfer costs
Business Investment
Public investment
State final demand
Net exports
Total exports
Total imports
Balancing item 3
Gross state product
1.3
1.9
4.5
5.6
5.0
6.0
3.0
Percentage Point Contribution to Year-on-Year GSP Change (ppt)
e: estimate; f: forecast
1 Inflation adjusted.
2 Components may not add to totals, as chain volume measures are not additive.
3 Balancing item includes statistical discrepancy.
23
Northern Territory Economy
Source: Department of Treasury and Finance; ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Chapter 3
External Economic Environment
Key Points
 The Northern Territory has a relatively small, open economy that is influenced by international trade, overseas
investment, tourism and population movements from within Australia and overseas.
 The Territory’s international trade surplus (that is, exports less imports) decreased from $1.2 billion in 2011-12 to
$0.9 billion in 2012-13.
 The main markets for Territory exports are Japan, China, Indonesia, the United States and Korea. Economic
conditions in these countries are expected to remain favourable over the medium term, supporting demand for
Territory exports.
 National economic activity is also expected to support demand for Territory goods and services.
 Risks to a generally positive outlook include a greater than expected slowdown in the Chinese economy and
continued historically low numbers of visitors to the Territory.
Background
The Territory has a small and open economy that can be influenced by changes to economic conditions beyond
its borders. The performance of the Australian economy impacts on the level of interstate trade and population
migration between the Territory and other jurisdictions, as well as the amount of Commonwealth revenue
received by the Territory. Global economic conditions influence the level of private investment, demand for
Territory-produced goods and services and migration to the Territory.
Territory International Trade
Historically, the Territory’s net trade balance has been in surplus, primarily due to the export of energy and mineral
products (Chart 3.1). The Territory’s trade surplus peaked in 2007-08 following increased production at the
Darwin liquefied natural gas (LNG) plant and the high value of mineral ores exports at that time. Between
2010-11 and 2012-13, the Territory’s trade surplus narrowed primarily due to lower values of mineral ore exports
and the higher level of imports of machinery and transport associated with major projects, feedstock gas and
petroleum. In 2012-13, the Territory’s trade surplus narrowed to $0.9 billion, driven by an increase in imports (up
by $994 million to $5.7 billion) following the arrival of the Montara Venture floating production, storage and
offload facility. This was partly offset by a higher level of exports (up $717 million to $6.6 billion).
Chart 3.1: International Trade Balance1
24
Northern Territory Economy
e: estimate
1 Current prices.
Source: Department of Treasury and Finance; ABS, International Trade in Goods and Services, Cat. No. 5368.0
The largest components of the Territory’s international trade balance are goods exports and goods imports.
Service exports and service imports, primarily consisting of travel, transport and government services, account for a
small proportion of the Territory’s international trade.
Australian Bureau of Statistics (ABS) international goods trade data for the Territory includes a significant
proportion of confidentialised commodities. The ABS classifies items as confidential where the producer’s privacy
may be risked by publication. For example, where there is only one producer of a particular commodity in a
jurisdiction, reporting trade statistics for this good or service would unfairly identify the sole operator in a way that
does not occur when there are multiple producers.
Goods Exports
In 2012-13, Territory goods exports grew by 12.9 per cent to $6.0 billion. The main goods exports were petroleum
and gas (largely LNG), crude materials (mainly mineral ores), and food and live animals (largely live cattle). The
value of Territory goods exports has grown over the past decade, particularly as a result of increased exports of
petroleum and gas products including LNG (Chart 3.2). The value of mineral ore exports in 2012-13 is higher than
a decade ago due to higher production levels and international commodity prices as well as appreciation of the
Australian dollar.
Chart 3.2: International Goods Exports1
1 Current prices.
2 Primarily alumina.
Source: Department of Treasury and Finance; ABS, International Trade in Goods and Services, Cat. No. 5368.0
The level of goods exports for the first eight months of 2013-14 is higher than at the same time the previous year,
which suggests that goods exports will grow in 2013-14. Over the budget and forward estimates period, the level
of goods exports is expected to grow substantially, coinciding with an expected increase in LNG exports once
production commences at the Ichthys plant.
Goods Imports
In 2012-13, Territory goods imports increased by 23.5 per cent to $5.1 billion, with the main imports being
petroleum and gas (largely feedstock gas and petroleum products), and machinery and transport equipment
(Chart 3.3). These goods have been the key drivers of growth over the past ten years. Feedstock gas imports have
increased in that time following the commencement of LNG production at the Darwin LNG plant in 2005-06.
Increased petroleum products, which include automotive and aviation fuel as well as bunker oil, have been driven
by growth in demand. Higher levels of machinery and transport equipment imports have primarily been a result
of higher demand associated with major projects such as the Darwin LNG plant and the development of the
Montara project.
25
Northern Territory Economy
Chart 3.3: International Goods Imports1
1 Current prices.
2 Primarily bunker oil.
Source: Department of Treasury and Finance; ABS, International Trade in Goods and Services, Cat. No. 5368.0
In the eight months to February 2014, goods imports have declined substantially compared with the same period
last year. However, the final value of imports to the Territory in 2013-14 will largely depend on the timing of arrival
of the pre-assembled modules for the Ichthys project, which can considerably add to the value of imports.
Service Exports and Imports
In 2012-13 the net trade balance for services increased from $64 million in 2011-12 to $82 million. This was driven
by a 6.0 per cent increase in service exports to $634 million, partly offset by a 3.4 per cent increase in service
imports to $552 million (Chart 3.4).
Chart 3.4: International Services Exports and Imports 1
1 Current prices.
Source: Department of Treasury and Finance; ABS, International Trade in Goods and Services, Cat. No. 5368.0
International service exports represent income received by local businesses from overseas travellers, foreign
businesses and foreign government personnel (mostly defence), for services provided including meals,
accommodation, entertainment and tourism activities. The majority of Territory service exports are ‘travel services’
(65.5 per cent) followed by ‘government services’ (18.1 per cent). The largest proportion of ‘travel services’ exports
were personal travel for reasons other than education. This accounted for almost 40 per cent of all service exports
in the Territory and covered spending by visitors to the Territory for health reasons as well as for recreation and
culture (including holidays, and visiting friends and family). Service exports increased in 2012-13 mainly due to
higher levels of business travel services and technical, trade-related and other business services.
Service imports in the Territory are primarily driven by demand for overseas travel by Territorians (54.9 per cent)
and transportation services (42.2 per cent) such as shipment and freight services provided by foreign operators
26
Northern Territory Economy
and passenger fares. In 2012-13, growth in import services was primarily due to increased freight services
reflecting increased international goods imports, which require international freight services.
National Economy
The national economy is important to the Territory primarily through interstate trade and Commonwealth
revenue. Goods and services tax (GST) revenue accounts for around 50 per cent of the Territory Government
revenue, while a further 20 per cent is provided in the form of tied Commonwealth grants and subsidies. The
Territory’s GST revenue is directly impacted by the economic performance of the national economy with growth
in economic activity generally increasing national GST collections. A key interstate trade item for the Territory is
tourism and, in general, positive economic conditions nationally are likely to encourage more interstate visitors to
holiday in the Territory.
Australia’s economic growth moderated from 3.6 per cent in 2012 to 2.4 per cent in 2013. This was driven by
lower contributions to growth from private investment and household consumption as the drivers of growth in
the Australian economy transition from the resource sector to the non-resource sectors. Public investment also
declined as state and national governments continue to constrain fiscal expenditure.
Resource investment, which has been a key driver of economic growth in the past decade, is expected to decline
sharply as the mining industry transitions to the production phase following a period of major development.
Offsetting the decline in resource investment is an expected increase in exports, but this is likely to make a much
smaller contribution to economic growth than the construction phase of resource investment.
The decline in resource investment is also expected to be offset by a recovery in the non-resource sectors, with
favourable conditions supporting the transition. The depreciation of the Australian dollar against the United States
(US) dollar from the high of 1.10 in mid-2011, combined with improving global economic activity, should support
recovery in trade-exposed sectors. In addition, an increase in household wealth driven by higher house prices,
combined with relatively low interest rates is likely to increase consumer confidence and spending. These factors
should support a recovery in Australia’s retail and wholesale sectors.
While conditions are more favourable, the recovery in the non-resource sectors is likely to be slower than
previously anticipated. In addition, the decline in resource investment is expected to be much sharper than
previously anticipated. These factors have resulted in downward revisions to Australia’s gross domestic product
(GDP) estimates by the International Monetary Fund (IMF) by 0.2 percentage points to 2.6 per cent in 2014, by
0.3 percentage points to 2.7 per cent in 2015 and by 0.1 percentage points to 2.9 per cent in 2016. Despite the
lower growth forecast, the Australian economy is still expected to outperform many other advanced economies
over the forward estimates period.
The relatively slower recovery in the non-resource sectors has resulted in a weak domestic labour market. In the
medium term, Australia’s unemployment rate is expected to rise, while employment growth is expected to remain
constrained. Slower growth in employment is expected to lead to moderation in wages growth.
Global Economy
The Territory’s five largest export markets are Japan, China, Indonesia, the US and Korea. The level of economic
activity in these key export markets will directly affect the value of goods exports from the Territory.
The following sections provide an analysis of the Territory’s major trading partners and other key markets
influencing global trade. The estimates and forecasts used in these sections are sourced from the IMF April 2014
World Economic Outlook. Unless stated otherwise, data is presented on a calendar-year basis in line with IMF
data.
Japan
Japan is the Territory’s largest goods exports destination, accounting for just over 50 per cent or $3.2 billion of
total goods exports in 2013. Territory exports to Japan are dominated by LNG exports. In addition, Japan is the
Territory’s fourth largest tourist source market, with about 22 000 visitors from Japan to the Territory in 2013.
27
Northern Territory Economy
Japan’s economy is expected to have strengthened in 2013, following substantial stimulus policies that supported
private consumption and investment. The IMF forecasts Japan’s economic growth to moderate from 2014
onwards and average about 1.0 per cent between 2014 and 2017. The IMF states that the consumption tax hike
in 2014 and the decline in reconstruction expenditure will more than offset the impact of the government’s
stimulus policies.
The forecast of relatively weak economic growth in Japan over the forward years may affect the number of
Japanese tourists coming to the Territory, but it is not expected to have a significant impact on Territory goods
exports to Japan. LNG exports are sold on long-term contracts, and therefore are less influenced by economic
conditions in Japan. Rather, operational matters are likely to influence exports with a decline in LNG exports
expected in 2014 following a scheduled maintenance shutdown at the Darwin LNG plant. From 2015 onwards,
goods exports to Japan are expected to return to normal levels of production and grow substantially once
production at the Ichthys LNG plant commences (scheduled for 2016-17).
On 7 April 2014, the Prime Minister of Australia announced the conclusion of negotiations for an economic
partnership agreement with Japan. Australia is the first major agriculture exporting nation to conclude an
agreement with Japan. The Japan-Australia Economic Partnership Agreement (JAEPA) has the potential to deliver
significant benefits to the agricultural industry in Australia and the Territory. Once in force, JAEPA has the potential
to deliver Australian exporters a significant competitive advantage, with Australian exporters of beef and
horticulture to benefit through preferential access to the Japanese markets and the progressive reduction in tariffs
on Australian beef and horticultural exports over time.
China
China is the Territory’s second largest export destination, accounting for one quarter or $1.6 billion of the
Territory’s total goods exports. The main goods exports to China are metal ores such as manganese and iron ore,
as well as concentrates such as zinc and lead. In addition, China is one of the Territory’s fastest growing tourist
source markets. The number of visitors from China to the Territory has increased from about 1900 in 2004 to an
estimated 5000 in 2013.
In January 2014, the IMF revised upwards its short-term forecast of economic growth in China, reflecting an
investment surge in the second half of 2013, although this is expected to be temporary. The forecasts were
unchanged in the April 2014 publication. China’s economic growth is expected to moderate in the medium term,
but still remain relatively high, due to policy measures aimed at moving the economy to sustainable levels of
growth. The Chinese Government has set a target economic growth rate of 7.5 per cent for 2014, which is lower
than the ten-year average of 10 per cent.
A moderation in China’s economic growth over the medium term would pose a risk to Territory exports to China.
Weaker demand for mineral ores could affect both the volume and price of these exports. Furthermore, slowing
economic growth in China may dampen the rate of increase in the number of Chinese visitors to the Territory.
Imports from China are expected to grow significantly in the short term, reflecting the arrival of pre-assembled
modules and equipment required for the Ichthys project that are currently under construction in China.
Indonesia
Indonesia was the Territory’s third largest export destination and the Territory’s largest export market for live cattle
in 2013. Goods exports to Indonesia accounted for 4.4 per cent or $270 million of total exports in 2013. Of this
amount, about $200 million related to live cattle exports.
Between 2010 and 2012, live cattle exports to Indonesia declined substantially. This was due to a number of
factors including the reduction of quotas, the introduction of weight restrictions by the Indonesian Government
and the live cattle trade ban implemented by the Commonwealth Government in 2011. While the live cattle trade
ban was temporary, lasting just over a month, it was followed by the introduction of the Exporter Supply Chain
Assurance System, which slowed live cattle exports, as agents involved adjusted to the new regulations.
28
Northern Territory Economy
In 2013, the previous downward trend in Territory exports to Indonesia was reversed, with the value of exports
nearly doubling primarily reflecting an increase in live cattle export quotas. Live cattle exports to Indonesia are
forecast to increase in the forward years as Indonesia changes from the quota system to a price-based system,
which is based on whether the beef prices are above or below an affordable level as determined by the
Indonesian Government.
The IMF estimates Indonesia’s economy to grow by 5.4 per cent in 2014, down from 5.8 per cent in 2013.
Indonesia’s economy is forecast to grow by an average of 5.9 per cent from 2015 onwards. The increased
prosperity associated with strong economic growth should benefit the Territory with a growing middle class in
Indonesia consuming more beef and increasing demand for live cattle exports.
United States
The US was the fourth largest merchandise export destination for the Territory, accounting for 2.6 per cent or
$160 million of total goods exports in 2013. In addition, the US is a key source market for international visitors to
the Territory, accounting for about 14 per cent of total international visitors to the Territory in 2013.
Economic growth in the US was weak in 2013, reflecting stronger than expected fiscal consolidation. The IMF
forecasts economic activity to recover in forward years driven by an increase in private demand and an easing of
fiscal constraints. Strengthening economic growth in the US is expected to have a positive impact on Territory
exports, primarily through the trade relationships the US has with the Territory’s major trading partners such as
China, through growing demand for those countries’ export products.
Korea
In 2013, Territory goods exports to Korea totalled $160 million, dominated by metal ores exports. Korea was the
Territory’s fifth largest goods export destination in 2013.
The IMF estimated economic growth in Korea to strengthen to 2.8 per cent in 2013 due to a recovery in exports
as well as higher private consumption and investment, but domestic demand would remain relatively weak. To
support the economy, the Korean Government authorised borrowings to finance increased public spending in its
supplementary budget released in May 2013 and delayed the deadline for restoring balance between revenue
and expenditure.
As a result, the Korean economy is expected to strengthen from 2014 onwards largely due to stronger recovery in
domestic consumption as well as a recovery in investment due to increased exports. Stronger growth in the
Korean economy should continue to support Territory exports to Korea. Pre-assembled modules and equipment
required for the Ichthys project are currently being built in Korea. Once completed and imported to the Territory,
these will detract from the Territory’s net exports.
The Korea-Australia Free Trade Agreement (KAFTA) will assist Australian and Territory exporters to expand into the
Korean market. KAFTA was signed by the Korean and Australian governments on 8 April 2014 and is expected to
be in force by the end of 2014. Key features for Territory exporters under KAFTA include the agreement by Korea
to:
 progressively eliminate the 40 per cent tariff on beef from Australia over the next 15 years, which would allow
Australian beef exporters to compete on an equal footing against US beef exporters for market share in Korea;
 progressively eliminate the 30 per cent tariff on mangoes from Australia over the next ten years; and
 immediately eliminate (when the agreement comes into force) the 3 per cent tariff on natural gas imports from
Australia.
Europe
Europe is important to the Territory through direct and indirect trade links. European countries that directly receive
merchandise goods from the Territory include Belgium, France, Germany, Spain and the Netherlands. These
countries accounted for 1.4 per cent of total Territory merchandise exports. Although Europe does not receive a
29
Northern Territory Economy
significant proportion of the Territory’s goods exports, it has significant trade ties with China, the Territory’s second
largest goods export destination, meaning that European demand for Chinese exports can indirectly influence
Territory exports.
Europe is also a large source market of international tourists. The main source economies are the United Kingdom,
Germany, France, Switzerland, the Netherlands and Scandinavia. European visitors accounted for about
54 per cent of total international visitors to the Territory in 2013, with the largest proportion of international
tourists from the United Kingdom (about 14 per cent of the total number of international visitors). The number of
international visitors from Europe has trended downwards over the past decade, with a significant decline
recorded since 2007, coinciding with the increased uncertainty and weak economic and employment conditions
in the European region during this period.
The IMF expects that economic growth in the European Union was 0.2 in 2013, but growth is expected to
recover over the medium term driven by increasing external demand. High debt and fiscal consolidation is,
however, expected to continue to constrain growth and in these conditions, numbers of European tourists to the
Territory may remain subdued over coming years.
Emerging Export Markets
In the past decade, the Territory has experienced substantial growth in exports to emerging markets in Asia,
coinciding with the robust economic growth and the expanding middle class population in the region. These
markets include Thailand, Vietnam, Malaysia and India.
Thailand
Territory goods exports to Thailand increased from $8 million in 2012 to $134 million in 2013, predominantly due
to the commencement of exports in 2013 from the Montara project, located 690 kilometres west of Darwin.
Thailand was ranked as the sixth largest Territory goods export destination in 2013.
The recent political unrest in Thailand weighed heavily on the economy and the IMF estimates Thailand’s
economy to have only grown by 2.9 per cent in 2013, down from 6.5 per cent in 2012. The IMF expects
economic growth in Thailand to average about 3.9 per cent per annum between 2014 and 2017. Despite the
lower growth forecast, this is not expected to diminish Thailand’s need for Territory exports of oil, with oil
production expected to increase as additional wells come into production at the Montara project. Imports from
Thailand are expected to increase following arrival of pre-assembled modules and equipment required for the
Ichthys project, which are currently being built in Thailand.
Vietnam
Vietnam is emerging as a key export destination for the Territory’s agriculture industry. Historically, Vietnam
accounted for a very small proportion of the Territory’s international exports, however, since late 2012, Vietnam
has grown in prominence, with the value of exports increasing from $4 million in 2012 to $35 million in 2013. The
increase is due to the commencement of regular live cattle exports in October 2012. Vietnam has become the
Territory’s second largest live cattle export market after Indonesia. Vietnam is also projected to become an
important buffalo export market for the Territory, with the first buffalo shipment sent in February 2014.
The IMF expects economic growth in Vietnam to strengthen from 5.4 per cent in 2013 to an average of
5.8 per cent per annum between 2014 and 2017. Strong economic growth and an expanding middle class are
expected to support continued growth in exports of Territory livestock to Vietnam.
India
In India, economic output increased by an average of 7.5 per cent per annum between 2004 and 2013. The
substantial growth in the economy coincided with an increase in the value of Territory goods exports to India,
which comprised mainly mineral ores. The proportion of Territory goods exports to India has grown from
0.6 per cent in 2004 to 2.0 per cent in 2013.
30
Northern Territory Economy
India’s economic performance has weakened substantially in 2012 and 2013, following periods of robust growth.
The IMF estimates that India’s economy expanded by 4.4 per cent in 2013, well below the ten-year average. The
slowdown in growth was mainly due to global economic weakness and domestic supply limits, which resulted in
declines in infrastructure and corporate investment. In addition, the persistently high inflation remains a key
concern for the economy. The IMF forecasts India’s economy to recover from 2014 onwards, with growth
projected to average 6.2 per cent per annum to 2017. Accordingly, there may be only modest growth in Territory
exports to India in the short term, but prospects for growth in the longer term appear more positive.
Malaysia
Malaysia was one of the Territory’s fastest growing emerging export markets in 2013. Territory exports to Malaysia
increased from $15 million in 2012 to $54 million in 2013.
Economic growth in Malaysia moderated in 2013, but remained relatively high at 4.7 per cent, largely due to
strong investment, consumption and external demand. The IMF estimates Malaysia’s growth to strengthen to
5.2 per cent in 2014 and moderate to 5.0 per cent from 2015 onwards. Growth is expected to be supported by
investment projects, household consumption (supported by a strong labour market) and external demand. Robust
economic growth in Malaysia over the budget and forward estimates period should see Malaysia continue to
grow in importance as an export destination.
31
Northern Territory Economy
Outlook
Global activity is expected to improve over the medium term. The IMF expects global growth to strengthen from
3.0 per cent in 2013 to 3.6 per cent in 2014 and average about 3.9 per cent per annum between 2015 and
2017. Growth is expected to be largely driven by the continued recovery in advanced economies. The
improvement in economic activity in the advanced economies is expected to support growth in emerging
economies through increased demand for exports.
Table 3.1: GDP Growth for the Major Territory Goods Exports Destinations (%)
Rank Real GDP Growth
2012
2013e
2014e
2015f
2016f
2017f
1
Japan
1.4
1.5
1.4
1.0
0.7
1.0
2
China
7.7
7.7
7.5
7.3
7.0
6.8
3
Indonesia
6.3
5.8
5.4
5.8
6.0
6.0
4
United States
2.8
1.9
2.8
3.0
3.0
2.9
5
Korea
2.0
2.8
3.7
3.8
3.8
3.8
6
Thailand
6.5
2.9
2.5
3.8
4.8
4.7
7
India
4.7
4.4
5.4
6.4
6.5
6.7
8
Canada
1.7
2.0
2.3
2.4
2.4
2.2
9
Malaysia
5.6
4.7
5.2
5.0
5.0
5.0
10
Oman
5.0
5.1
3.4
3.4
3.8
3.8
n.a.
European Union
- 0.3
0.2
1.6
1.8
1.9
1.9
e: estimate; f: forecast; n.a.: not applicable
Source: IMF
Table 3.1 ranks the Territory’s major export destinations by value of Territory exports in 2013 and shows the IMF’s
economic growth forecasts for each country. Table 3.1 shows that overall economic performance of the
Territory’s major export destinations is expected to remain favourable. The main exceptions are China and Japan,
where economic growth is expected to moderate over the medium term. The outlook is for the Territory’s net
trade surplus to widen over the medium term, largely driven by an expected increase in goods exports. However,
the Territory’s trade balance is likely to be affected by large one-off imports of machinery and equipment for the
Ichthys project as well as the loss of alumina exports following the curtailment of operations at the Gove alumina
refinery.
KAFTA and JAEPA, when in force, represent an opportunity for Territory exporters to expand into the Korean and
Japanese markets. These agreements are expected to benefit the cattle and horticulture industries in the Territory
in the future through the progressive reduction in tariffs on Australian beef and horticultural exports.
32
Northern Territory Economy
Chapter 4
Population
Key Points
 Population growth is a key driver of economic growth in the Northern Territory, increasing production and
consumption of goods and services.
 In annual terms, the Territory’s estimated resident population grew by 2.1 per cent to 240 759, as at 30
June 2013.
 Growth was supported by natural increase (births minus deaths), the most stable component of population
growth, and high levels of net overseas migration.
 In 2014 (calendar year), the Territory’s annual population growth is expected to moderate due to population
losses related to the curtailment of operations at the Gove alumina refinery.
 In 2015, annual population growth is expected to strengthen with growth driven by workforce requirements
for major projects and associated economic activity.
 A key risk to the population forecasts is the extent to which workers employed on the Ichthys project and their
dependents reside in the Territory, and are counted as Territory residents by the Australian Bureau of Statistics
(ABS).
Table 4.1: Population Growth (%)
Calendar Year
Northern Territory
2012
2013e
2014f
2015f
2016f
2017f
2.3
2.0
1.6
2.6
1.0
1.0
e: estimate; f: forecast
Source: Department of Treasury and Finance
Background
The Territory accounts for about 1 per cent of the total Australian population and its small population is dispersed
over a large land mass. Of the Territory’s population, almost one third are Indigenous people, many of whom live
in some of the most remote areas of the Territory.
The Territory has a relatively young age profile with half of the population aged less than 32 years. There is also a
bias towards males, with 111 males for every 100 females in the Territory. This is partly due to the prevalence of
male-dominated industries such as mining, construction and defence, as well as the workforce demands of major
projects. A further characteristic of the Territory’s population is its mobility, with high levels of interstate migration
among the non-Indigenous population and substantial movement within the Territory among the Indigenous
population.
Population growth in the Territory tends to be more volatile than in the Australian population, reflecting variations
in net interstate migration (NIM) and net overseas migration (NOM). NIM in the Territory is typically driven by
changing employment opportunities and seasonal movements of people. Depending on these factors, NIM may
add or detract from population growth. NOM tends to be positive and in recent years it has made a substantial
contribution to population growth in the Territory.
Population Growth
The Territory’s estimated resident population (ERP) for 30 June 2013 is 240 759 people, a 2.1 per cent increase
from 30 June 2012 and above national growth over the same period (1.8 per cent).
Population growth in the Territory is the combined result of natural increase (births minus deaths), NIM
(population change through the movement of people to and from other states) and NOM (population change
33
Northern Territory Economy
through the movement of people from and to overseas). These components determine the extent of population
growth. Chart 4.1 depicts the contribution of each component to total population growth for the Territory over
the ten-year period from June 2003 to June 2013.
Natural increase has been the major contributor to annual population growth in the Territory until 2011-12
when, for the first time since records began in 1982, NOM added more people to the population than natural
increase. This continued in 2012-13, with NOM adding a further 3065 people (1.3 per cent) while natural increase
contributed 3033 people (1.3 per cent) to the Territory’s population. These gains were, however, partly offset by
NIM with a net loss of 1220 people (-0.5 per cent) to other jurisdictions.
Chart 4.1: Components of Population Growth (moving annual total)
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0
Natural Increase
The difference between the number of births and deaths, termed natural increase, is an important component of
population change because it shows, in the absence of any migration, whether a population will grow or decline.
In the Territory, natural increase is the most stable contributor to population growth, with an average annual
contribution to growth of 1.3 per cent over the past five years (Table 4.2).
Table 4.2: Natural Increase, 2007-08 to 2012-13
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
219 874
226 027
229 778
231 292
235 881
240 759
2 850
2 890
2 964
2 945
2 994
3 033
Births
3 895
3 905
3 901
3 922
4 014
4 062
Deaths
1 045
1 015
937
977
1 020
1 029
21 249.2
21 691.7
22 031.8
22 340.0
22 728.3
23 135.3
154.5
156.4
162.5
155.7
158.8
162.6
Births (000)
295.2
300.1
304.0
301.2
306.0
311.4
Deaths (000)
140.7
143.7
141.5
145.4
147.2
148.8
Northern Territory1
Natural increase
Australia1 (000)
Natural increase (000)
1 Total population.
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0
34
Northern Territory Economy
Births
In 2012-13, there were 4062 births recorded in the Territory, a 1.2 per cent increase on the previous year and well
above the five-year annual average of 0.8 per cent.
The Territory is characterised by high fertility rates. Fertility is measured by the total fertility rate (TFR), which
represents the average number of children that would be born to a woman if she experienced the current
age-specific fertility rates through her reproductive life (ages 15 to 49).
In 2012-13, the Territory had the highest TFR (2.238) among jurisdictions followed by New South Wales (1.994)
and Queensland (1.980). The TFR for Australia as a whole was 1.951. Key contributors to the Territory’s high TFR
are high fertility among Indigenous women and the relative size of this population in the Territory, and the
relatively high proportion of non-Indigenous women of child-bearing age.
Deaths
In 2012-13, there were 1029 deaths registered in the Territory, a slight increase (nine additional deaths) on the
previous year.
Death trends in the Territory over the past five years differed to those nationally. The number of deaths recorded
in Australia has risen steadily at an average rate of 1.1 per cent per annum between 2007-08 and 2012-13,
consistent with an increasing number of Australians moving into older age groups. In contrast, the annual
number of deaths in the Territory declined from 1045 in 2007-08 to 937 in 2009-10 before trending upwards to
1029 in 2012-13. The pattern in the number of deaths in the Territory is likely influenced by high out-migration of
older aged people, particularly in the non-Indigenous population, and health care investments that improve the
longevity of Indigenous Territorians.
Age standardised death rates enable the comparison of deaths rates between jurisdictions after accounting for
the different age profiles of each state and territory. In 2012-13, the age standardised death rate (deaths per 1000
persons) in the Territory increased from 7.88 in 2011-12 to 8.04 in 2012-13. However, the Territory’s age
standardised death rate is well below the level recorded in 2007-08 of 9.48 deaths per 1000 persons.
Despite the decrease in the Territory’s age standardised death rate over the past five years, it remains substantially
higher than in other jurisdictions and above the national rate of 5.50 deaths per 1000 persons. The Territory’s
higher age standardised death rate can be attributed to the influence of the Indigenous population, which has a
lower life expectancy, and the size of this population in the Territory relative to other jurisdictions.
Interstate Migration
Interstate migration is a volatile contributor to population growth in the Territory. Historically, NIM has more often
detracted from growth than contributed to growth. This was the case in 2012-13, where NIM detracted 1220
people from the Territory’s population, lower than the net loss of 1423 people in 2011-12. The total volume of
people arriving and departing from the Territory reduced in 2012-13, but the reduction in arrivals was less than
the reduction in departures (764 fewer people arrived while 967 fewer people departed) leading to a lower net
loss.
NIM disguises the highly transient nature of the Territory’s population and the large flows of people that move to
and from the Territory each year. Over the past 20 years, NIM has ranged between -2788 and 1754 people per
annum with an average outflow of about 600 people per annum. As Chart 4.2 shows, the actual number of
migrants, both inward and outward, tends to be much larger, averaging more than 16 000 people per annum.
These movements are concentrated within the non-Indigenous population with the Indigenous population also
being mobile, but their movement is generally within the Territory.
It is important to note that fly-in fly-out (FIFO) workers, who live outside the Territory but work within the Territory,
are not included in counts of interstate migration, and there may be delays between interstate migrants arriving
and updating of data. Typically, inward migration has been heavily influenced by employment opportunities in
the Territory, particularly for major projects. However, with the increasing popularity of FIFO as a style of
35
Northern Territory Economy
employment, there may be increasing numbers of people who spend a substantial amount of time in the Territory
but are not classified as usual residents.
Chart 4.2: Interstate Migration Flows (moving annual total)
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0
Overseas Migration
In 2012-13, there were 6997 overseas arrivals to the Territory and 3932 overseas departures, contributing a net
gain of 3065 people to the Territory’s population. This was an additional 47 people (1.6 per cent growth)
compared with the previous year, where NOM had been at a historically high level.
Temporary visa holders have been the key driver of NOM both in the Territory and at the national level. In the year
to June 2012, temporary visa holders in the Territory comprised two thirds of overseas migration. This category
includes international students, working holiday makers, visitors and subclass 457 visa workers. Of these
categories, growth has been greatest among working holiday makers and people arriving on subclass 457 visas
(Chart 4.3), drawn by positive employment conditions in the Territory.
Chart 4.3: Number of Arrivals and Departures, Working Holiday and Subclass 457 Visa Holders,
2004-05 to 2011-12
Source: Department of Immigration and Border Protection
Indigenous Population
At 30 June 2011, there were 68 850 Indigenous people living in the Territory, an increase of 7.6 per cent since
June 2006. Growth in the Indigenous population was, however, outpaced by the increase in the Territory’s
non-Indigenous population (10.8 per cent). As a result, the Indigenous share of the total Territory population has
decreased from 30.6 per cent in June 2006 to 29.8 per cent in June 2011.
The Territory was the only jurisdiction to record a decline in the proportion of the Indigenous population between
June 2006 and June 2011. Other jurisdictions experienced substantially higher rates of growth in their Indigenous
36
Northern Territory Economy
populations, ranging from 24.4 per cent in Western Australia to 43.9 per cent in the Australian Capital Territory,
which increased the proportion of Indigenous people in their population (Table 4.3). Key contributors to the
higher rate of growth in other jurisdictions were a high number of people newly identifying as Indigenous;
natural increase enhanced by mixed partnering (a person who identifies as Indigenous is partnered with a person
identifying as non-Indigenous), which tends to be more prevalent in other jurisdictions; and possible
underestimation of the Indigenous population in those jurisdictions in 2006.
The lower rate of growth in the Indigenous population in the Territory compared with other jurisdictions has
resulted in a decline in the Territory’s share of the national Indigenous population from 12.4 per cent in June 2006
to 10.3 per cent in June 2011.
Table 4.3: Indigenous Shares of Total State/Territory Population and Total Indigenous Population (%)
Growth
Indigenous Proportion of
State/Territory Population
2006-11
June 2006
June 2011
Proportion of Total Indigenous
Population
June 2006
June 2011
New South Wales
36.5
2.3
2.9
29.5
31.1
Victoria
41.2
0.7
0.9
6.5
7.1
Queensland
30.4
3.6
4.2
28.0
28.2
Western Australia
24.4
3.5
3.8
13.7
13.2
South Australia
33.3
1.8
2.3
5.4
5.6
Tasmania
31.2
3.8
4.7
3.6
3.6
Australian Capital Territory
43.9
1.3
1.7
0.8
0.9
7.6
30.6
29.8
12.4
10.3
29.6
2.5
3.0
100.0
100.0
Northern Territory
Australia
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0
Regional Population
Table 4.4 shows the ERP (at 30 June 2013), population share, annual and five-year growth rates (2008 to 2013)
for the regions and major towns of the Territory. Between June 2012 and June 2013, the population in the
Greater Darwin region grew by 3.0 per cent, which was three times the annual growth rate for the remainder of
the Territory (0.9 per cent). This was higher than the five-year trend, which showed Greater Darwin expanding at
about twice the rate of the remainder of the Territory (2.4 per cent compared with 1.2 per cent).
Within the Greater Darwin region, growth in 2012-13 was greatest in Palmerston (4.9 per cent) reflecting the
new housing developments in Bellamack and Johnston. Similarly, within Darwin, Lyons in the northern suburbs
and Parap recorded strong growth (9.9 and 4.7 per cent, respectively), reflecting the construction of new housing
and apartments in those areas. The population of Litchfield grew by 2.8 per cent in 2012-13 with Virginia
(3.2 per cent) and Howard Springs (2.9 per cent) the fastest growing suburbs.
Outside Greater Darwin, the Daly-Tiwi-West Arnhem region recorded the strongest growth with a 1.6 per cent
increase in population in 2012-13. Growth in the region was however, lower than the five-year annual average
growth rate of 2.5 per cent.
Growth rates were lowest in the East Arnhem and Alice Springs regions, and in the case of East Arnhem, well
below the five-year annual average (0.5 per cent compared with 1.0 per cent). This was due to a reduction in the
population of Nhulunbuy (-1.7 per cent or 78 people), a trend that is likely to continue with the curtailment of
operations at the Gove alumina refinery in 2014. Outside Nhulunbuy, growth in the East Arnhem region was
1.4 per cent, largely reflecting natural increase.
In the Alice Springs region, low population growth in the Alice Springs township subdued overall growth in the
region. Outside the township, growth rates were more consistent with expected growth from natural increase,
37
Northern Territory Economy
ranging from 0.7 per cent in Ross and Petermann-Simpson (includes Finke, Kaltukatjara, Mutitjulu and Yulara) to
1.2 per cent in Yuendumu-Anmatjere and Tanami (includes Hermannsburg, Kintore and Papunya).
Table 4.4: Regional Population and Major Townships Estimated Resident Population
5-Year Average
Annual Population Annual Population
Change2
Change3
ERP1
Proportion of
Total Population
No.
%
%
%
41 637
17.3
0.7
0.6
6 736
2.8
1.0
1.0
Daly-Tiwi-West Arnhem
18 755
7.8
1.6
2.5
East Arnhem
16 357
6.8
0.5
1.0
136 245
56.6
3.0
2.4
21 029
8.7
1.1
1.2
26 140
10.9
0.5
0.9
Darwin6
115 300
47.9
3.0
2.2
Katherine
10 957
4.6
1.5
1.5
Nhulunbuy
4 436
1.8
- 1.7
- 0.9
Tennant Creek
3 619
1.5
0.9
0.8
Region4
Alice Springs
Barkly
Greater Darwin
Katherine
Major Townships
Alice Springs5
1 ERP at 30 June 2013.
2 Annual change in ERP between 30 June 2012 and 30 June 2013.
3 Average annual change in ERP between 30 June 2008 and 30 June 2013.
4 ABS Statistical Area 3 (SA3) and SA4 (Greater Darwin).
5 Comprising SA2s of Charles, East Side, Flynn, Larapinta and Mount Johns.
6 Comprising SA3s of Darwin City, Darwin Suburbs and Palmerston.
Source: ABS, Regional Population Growth, Australia, Cat. No. 3218.0
Outlook
Forecasts of annual population growth are as at 31 December for each year in the budget and forward estimates
period, enabling assessment of expected growth at the mid-point of each financial year.
At 31 December 2012, annual population growth in the Territory was 2.3 per cent (Table 4.5). Population growth
of 2.0 per cent is expected in 2013 before moderating further in 2014 as population outflows related to the
curtailment of operations at the Gove alumina refinery offset inflows associated with the demand for labour by
major projects and other economic activity. Population growth in 2015 is forecast to strengthen as the effect from
the reduced refinery activity passes and workforce requirements for the construction phase of the Ichthys project
peak. Growth is then forecast to moderate in 2016 and 2017 as the Ichthys project moves to the production
phase and the focus of economic activity shifts to new projects and other activities.
38
Northern Territory Economy
Table 4.5: Population Growth, Forecasts (%)
Northern Territory
2012
2013e
2014f
2015f
2016f
2017f
2.3
2.0
1.6
2.6
1.0
1.0
e: estimate; f: forecast
Source: Department of Treasury and Finance; ABS, Australian Demographic Statistics, Cat. No. 3101.0
The Ichthys project will be the major determinant of variations to population growth over the forecast period.
Labour requirements for the construction phase of the Ichthys project are expected to peak in 2014 and 2015,
and the operations phase is expected to commence in 2016. The forecasts account for the impact on population
growth of direct labour requirements from the Ichthys project and indirect employment opportunities due to
increased economic activity, particularly in the service sectors. In addition to this multiplier effect, some employees
will come with dependents (spouses and children) who also contribute to population growth.
Population impacts associated with the curtailment of operations at the Gove alumina refinery have drawn on
internal estimates by Rio Tinto and reflect people who are expected to relocate from Nhulunbuy to locations
outside the Territory (interstate or overseas). It has been assumed that mitigation strategies proposed by Rio Tinto
will partially ameliorate the short-term population impact associated with the reduction in operations at Gove.
Comparison to Previous Forecasts
The ABS revised its estimate of population growth in the Territory in 2012 upward from 1.8 per cent to
2.3 per cent following revisions to NOM and NIM.
The Department of Treasury and Finance’s estimate of annual population growth for 2013 of 2.0 per cent remains
the same as the 2013-14 Budget, with growth constrained by the anticipated population impact of the
Territory Government’s fiscal consolidation measures.
The estimate for 2014 has been revised down from 2.5 per cent in the 2013-14 Budget to 1.6 per cent, reflecting
anticipated population losses from Nhulunbuy. Population growth of 1.0 per cent in 2016 is unchanged and
reflects a return to a level of growth more consistent with natural increase.
Risks to the Forecasts
Changes in population growth in the Territory are driven primarily by migration, with overseas migration
historically a relatively stable contributor to growth and interstate migration being far more volatile. Accordingly,
the greatest risk to the forecasts is likely to be higher or lower levels of net migration than implied by the
assumptions underpinning the forecasts. This risk primarily relates to the Territory’s non-Indigenous population,
with historical evidence suggesting that migration has not been a substantial driver of Indigenous population
growth in the Territory.
A further risk to the forecasts is the accuracy of migration estimates. The measurement of interstate migration is
largely measured by change in Medicare data, however, the unprecedented nature of current project
development may mean movements are not fully captured in a timely manner by the current systems. This could
lead to substantial differences between the true and measured population and measured population estimates
may underestimate true population growth.
Substantial differences in the build up and winding down of the construction workforce of the Ichthys project
would also impact the forecasts. Furthermore, should the actual composition of the workforce, primarily the
proportion of migrants who would become residents and are counted in the population and FIFO workers who
tend not to be counted in the population, differ from that anticipated, it will affect the accuracy of the forecasts.
The forecasts would also be at risk if the Ichthys project has a substantially different impact on the broader
population (such as population growth relating to the service sectors) than anticipated. Such differences could be
caused by different economic, business or regulatory circumstances at different points in time.
Finally, future projects that have not specifically been taken into account in the forecasts, provide potential upside
risk to the forecasts.
39
Northern Territory Economy
Appendix 1: Population Projections
The population forecasts for the 2014-15 Budget are intended to provide a short-term estimate of population
growth including the expected impact of known changes in government policy and major construction and
resource projects.
The Territory Government also publishes population projections to provide insights into the future growth of
populations and as a tool for long-term planning and resource allocation. The projections are produced using a
projections model (NTPOP) developed by the Territory Government in partnership with Charles Darwin University.
The model uses historical patterns in the components of population change (natural increase, overseas and
interstate migration) to formulate estimates that illustrate what the Territory population would look like if those
trends were to persist into the future.
By varying the input assumptions in NTPOP, the projections can be used in a number of ways, for example, to
demonstrate the consequences of increased migration driven by large projects or the consequences of closing
the gap between Indigenous and non-Indigenous populations on the size, age and gender structure of the
overall population.
The projections are updated regularly as new ABS data becomes available. The most recent update is based on
final ABS ERPs and other data derived from the 2011 Census of Population and Housing and provides annual
projections of the Territory’s Indigenous and non-Indigenous population over the 30-year period from 2011 to
2041. Population projections at a broad regional level are also on a five-yearly basis covering the period 2011 to
2026.
The projections and further information on the projections model are available at:
http://www.treasury.nt.gov.au/Economy/populationprojections/Pages/default.aspx
40
Northern Territory Economy
Chapter 5
Labour Market
Key Points
 Over 2012-13, employment in the Northern Territory, as measured by the Australian Bureau of Statistics’ (ABS)
Labour Force Survey, grew by 2.6 per cent to an average of 125 700 persons.
 The ABS Labour Force Survey excludes full-time defence personnel, temporary overseas workers and fly-in fly-out
(FIFO) workers who reside in another jurisdiction. As such, ABS figures likely underestimate actual employment
numbers in the Territory.
 Employment growth in the Territory is expected to strengthen to 3.7 per cent in 2013-14 and to 3.8 per cent in
2014-15, during the construction peak of the Ichthys project, with the acceleration of construction activity
expected to flow through to industries such as retail trade, accommodation and food services, and rental, hiring
and real estate services.
 From 2015-16 onwards, employment growth is forecast to moderate as the Ichthys project transitions to the less
labour-intensive production phase.
 The Territory’s unemployment rate rose through 2012-13 to 4.7 per cent, as growth in employment was
outpaced by growth in the labour force.
 The unemployment rate is expected to decline to 4.4 per cent in 2013-14 and to 4.0 per cent in 2014-15, due to
both increased employment opportunities and slower growth in the labour force.
 The Territory’s unemployment rate is expected to rise from 2015-16 as construction of the Ichthys project
reaches completion and economic activity returns to long-term trend levels.
Table 5.1: Labour Market (%)
2012-13
2013-14e
2014-15f
2015-16f
2016-17f
2017-18f
Employment growth1
2.6
3.7
3.8
2.1
0.7
0.7
Unemployment rate2
4.7
4.4
4.0
4.2
4.7
4.7
e: estimate; f: forecast
1 Year-on-year change.
2 Year average.
Source: ABS, Labour Force, Australia, Cat. No. 6202.0; Department of Treasury and Finance
Background
The Territory’s labour market is characterised by low unemployment, high labour force participation and a young
mobile workforce. This reflects the tendency of many people, particularly those in younger age groups, to come
to the Territory for employment opportunities.
Change in the demand for labour in the Territory is strongly associated with major projects. This was evident in
the mid-to-late 2000s when the Territory experienced an extended period of strong employment growth (Chart
5.1) that coincided with heightened levels of economic activity, driven by a series of major projects including the
development of the Darwin Waterfront, expansion of the Gove alumina refinery and development of the
Blacktip gas field.
41
Northern Territory Economy
Chart 5.1: Territory Year-on-Year Employment Growth
Source: ABS, Labour Force, Australia, Cat. No. 6202.0
Employment growth moderated both nationally and locally following the global financial crisis in 2008-09. The
deceleration of employment growth was compounded by a lull in major projects occurring in the Territory during
2010-11 and 2011-12. In 2012-13, the Territory’s employment growth rebounded, supported by a number of
major projects including the Ichthys project, expansion activity at Groote Eylandt Mining Company (GEMCO) and
McArthur River mines, and construction of the Marine Supply Base and Darwin Correctional Precinct.
Employment
The ABS estimates that, on average, there were about 125 700 residents employed in the Territory during
2012-13, representing 1.1 per cent of the national total.
Growth in resident employment in the Territory strengthened from 1.2 per cent in 2011-12 to 2.6 per cent in
2012-13. This equates to an additional 3100 persons employed in the Territory, of whom about 2350 were
employed in full---time positions and about 750 were employed in part-time positions.
Tasmania was the only jurisdiction to report a decline (down by 1.0 per cent) in the number of residents
employed between 2011-12 and 2012-13. In other states, employment growth ranged between 0.1 per cent in
South Australia and 3.5 per cent in Western Australia over this period. Nationally, the number of persons
employed increased by 1.2 per cent between 2011-12 and 2012-13.
ABS data shows that the increase in employment levels in the Territory in 2012-13 was driven by increased
resident employment in health and social assistance (up by 11.9 per cent), construction (up by 10.4 per cent),
mining (up by 12.4 per cent) and manufacturing (up by 16.3 per cent). The main detractors from employment
growth in the Territory in 2012-13 were agriculture, forestry and fishing (down by 37.2 per cent), financial and
insurance services (down by 18.5 per cent) and retail trade (down by 1.7 per cent). However, due to the small
sample of employees in the ABS survey, employment numbers by industry in the Territory can be highly volatile
and care should be taken in interpreting changes.
Defence is also a major employer in the Territory, however full-time defence members are not included in the ABS
Labour Force Survey. The Australian Defence Force reported 5198 permanent defence force members in the
Territory as at June 2013.
The Territory consistently has the highest labour force participation rate of any jurisdiction in Australia, as well as
one of the lowest unemployment rates. As such, it has little capacity to provide extra workers from within the local
labour market as major projects commence. Consequently, the use of FIFO workers and/or a reliance on migrants
from interstate and overseas is critical to meeting the labour force demand for these projects.
ABS reports on the employment of Australian resident workers in the jurisdiction where they usually reside rather
than the place they are usually employed. Consequently, FIFO workers in the Territory will be recorded in labour
42
Northern Territory Economy
force data by their residential state. As such, changes in employment data in the Territory as reported in the ABS
Labour Force Survey may not reflect the actual change in employment in the Territory.
Specific time series data on the number of FIFO workers in the Territory is not available. The most recent data
available is from the 2011 Census, which reported that the Territory’s non-resident workforce was 5200.
Permanent and temporary international migration is another vital means of meeting the skilled labour demands in
the Territory. The subclass 457 visa, lasting for up to four years, is designed to assist employers who have been
unable to recruit a worker domestically in an occupation that has been designated as having a shortage of
workers. In 2012-13, there were 913 subclass 457 visas issued for the Territory (Table 5.2), of which about a
quarter were sponsored by the construction industry. The number of construction industry-sponsored 457 visas
has increased substantially in the last two years, with 230 visas sponsored by the construction sector in 2012-13
compared to only 80 in 2010-11.
There were also 839 permanent visas granted in the Territory in 2012-13 through the General Skilled Migration
Program, the Regional Sponsored Migration Scheme and the Employer Nomination Scheme. The most common
occupations for the skilled visa schemes were technicians and trades workers, and professionals, consistent with
major project activity in the Territory.
Table 5.2: Number of Visas Granted for the Territory by Type and Occupation, 2012-13
Temporary
Permanent
Subclass 457
Regional
Sponsored
Employer
Nomination
General Skilled
Professionals
341
138
19
208
Technicians and trades workers
377
253
11
43
Managers
143
53
10
15
Community and personal service workers
19
43
7
7
Clerical and administrative workers
23
15
1
2
Machinery operators and drivers
8
5
0
0
Sales workers
2
1
0
1
Labourers
0
7
0
0
913
515
48
276
Total
Source: Commonwealth Department of Immigration and Border Protection
Employment Outlook
Employment growth is expected to strengthen to 3.7 per cent in 2013-14 and to 3.8 per cent in 2014-15 (Table
5.3), underpinned by the acceleration of construction activity associated with the Ichthys project, which is
expected to flow through to industries such as retail trade, accommodation and food services, and rental, hiring
and real estate services. In addition, improvements in agricultural markets should result in increased demand for
labour in this sector over the same period. Growth in employment in the Territory is expected to be partly offset by
job losses associated with the curtailment of operations at the Gove alumina refinery, the full impact of which is
expected to be incurred in 2014-15.
ABS labour force data shows that employment growth has continued to strengthen in the first nine months
of 2013-14. Residential employment in the construction and professional, scientific and technical services sectors
has been trending up, likely related to the current impact of major projects. Employment in the agriculture, forestry
and fishing sector has shown a decline in the first half of 2013-14, however employment data for this industry has
historically been highly volatile.
43
Northern Territory Economy
From 2015-16 onwards, it is anticipated that resident employment growth will moderate as the Ichthys project
transitions to the less labour-intensive production phase and economic activity returns to long-term trend levels.
Resident employment numbers are projected to grow by 2.1 per cent in 2015-16, before slowing further to
0.7 per cent growth in 2016-17 and 2017-18.
Table 5.3: Year-on-Year Employment Growth Forecast (%)
Employment growth
2012-13
2013-14e
2014-15f
2015-16f
2016-17f
2017-18f
2.6
3.7
3.8
2.1
0.7
0.7
e: estimate; f: forecast
Source: ABS, Labour Force, Australia, Cat. No. 6202.0; Department of Treasury and Finance
Unemployment
The Territory’s average annual unemployment rate rose from 4.4 per cent in 2011-12 to 4.7 per cent in 2012-13,
despite the Territory recording strong employment growth over this period. This resulted largely from the increase
in the number of persons employed in the Territory in 2012-13 (3100 extra persons) being outpaced by the
increase in the number of persons participating in the labour force (3700 extra persons). The increase in the
participation rate may indicate increased optimism as positive economic conditions encourage people to enter the
labour force in the Territory and look for work.
All jurisdictions recorded an increase in the annual average unemployment rate between 2011-12 and 2012-13,
except New South Wales, which was unchanged (Chart 5.2). Nationally, the annual average unemployment rate
increased from 5.2 per cent in 2011-12 to 5.4 per cent in 2012-13.
Chart 5.2: Average Annual Unemployment Rate
Source: ABS, Labour Force, Australia, Cat. No. 6202.0
Unemployment by Region
The Commonwealth Department of Employment publishes estimates of the unemployment rate for small regions.
The data shows that there are disparities in the unemployment rates between regions in the Territory, reflecting
the challenges to employment in remote areas that have small private employment markets. According to the
Commonwealth Department of Employment, Greater Darwin recorded an unemployment rate of 2.2 per cent as
at June 2013, the lowest rate of all Territory regions (Table 5.4). This is consistent with the concentration of
employment opportunities and population in the area. Outside the Darwin region, as at June 2013, the
unemployment rate varied from 6.5 per cent in the Alice Springs region to 14.0 per cent in the Daly-Tiwi-West
Arnhem region.
44
Northern Territory Economy
Table 5.4: Regional Unemployment Rates (%)
As at June 2012
As at June 2013
Greater Darwin region 1
2.1
2.2
Alice Springs region
6.3
6.5
Katherine region
7.7
8.1
Barkly region
8.3
8.3
East Arnhem region
6.4
7.0
12.4
14.0
Daly-Tiwi-West Arnhem region
1 Includes Darwin, Palmerston and Litchfield.
Source: Commonwealth Department of Employment
Unemployment Outlook
Due to strong employment growth, the number of unemployed Territory residents has been trending down over
the first nine months of 2013-14. However, as a result of the elevated number of residents participating in the
labour force, the unemployment rate remains higher than might be expected considering the increase in
employment. It is expected that the Territory’s unemployment rate will decrease to an average of 4.4 per cent over
2013-14 (Table 5.5).
The Territory’s unemployment rate is expected to further decline to 4.0 per cent in 2014-15, due to both increased
employment opportunities and more moderate labour force growth. As the number of new jobs being created
slows due to the completion of the construction phase of the Ichthys project, the unemployment rate is expected
to rise to 4.2 per cent in 2015-16 and to 4.7 per cent in 2016-17 and 2017-18 as economic activity returns to
long-term trend levels.
Table 5.5: Year Average Unemployment Rate Forecast (%)
Unemployment rate
2012-13
2013-14e
2014-15f
2015-16f
2016-17f
2017-18f
4.7
4.4
4.0
4.2
4.7
4.7
e: estimate; f: forecast
Source: ABS, Labour Force, Australia, Cat. No. 6202.0; Department of Treasury and Finance
Labour Force Participation
The labour force participation rate measures the proportion of the civilian population that is either employed or
actively looking for work.
The Territory has recorded the highest participation rate of all jurisdictions in each month since July 2012, with the
exception of February and March 2013. Participation rates for females, in particular, are significantly higher in the
Territory than the national average. This may be attributed to the comparatively young population in the Territory
and the tendency for people to move to and from the Territory dependent on the relative strength of
employment opportunities compared to other jurisdictions.
The Territory’s labour force participation rate increased from an average of 73.6 per cent in 2011-12 to
74.0 per cent in 2012-13. This equates to an additional 3700 people entering the Territory workforce over this
period, of which 2300 were males and 1400 were females. The disproportionate growth in the number of males
in the labour force is likely due to the perceived job opportunities within the male-dominated industries associated
with current major projects in the Territory.
The participation rate in the Territory is expected to remain at elevated levels throughout the major project period,
with the Territory’s strong economic and employment growth generating optimism regarding employment
opportunities. As the Ichthys project transitions out of the labour-intensive construction phase and employment
45
Northern Territory Economy
growth slows, it is anticipated that the participation rate will moderate slightly, although remaining well above the
national average.
46
Northern Territory Economy
Chapter 6
Prices and Wages
Key Points
 In 2013, growth in the Darwin consumer price index (CPI) strengthened to 3.9 per cent in year-on-year terms.
This primarily reflected increases in costs in the housing, transport, recreation and culture, alcohol and tobacco,
and health categories.
 Key influences on the Darwin CPI in 2013 were increases in utility prices and motor vehicle registration fees as
well as the impact of the carbon tax.
 Growth in the Darwin CPI is expected to moderate over the budget and forward estimates period.
 In the December quarter 2013, the Real Estate Institute of Australia (REIA) reported that Darwin and Palmerston
had the third highest median house and unit prices across all the capital cities.
 Compared with the December quarter 2012, REIA reported that the median price of houses sold in Darwin and
Palmerston increased by 5.5 per cent to $610 000 in the December quarter 2013, while unit prices increased by
3.5 per cent to $445 000 over the same period.
 Wages growth in the Northern Territory moderated in 2013 to 2.9 per cent in year-on-year terms as a result of
weaker public sector wages growth.
 Wages growth is expected to strengthen in forward years, reflecting increases in private sector wages as
competition for labour in industries such as construction and mining increases.
Table 6.1: Growth in Consumer Price Index and Wage Price Index
2013
2014e
2015f
2016f
2017f
Darwin
3.9
3.0
2.8
2.5
2.5
Eight capital cities
2.4
2.8
2.3
3.0
2.7
Northern Territory
2.9
3.5
3.7
3.0
3.0
Australia
2.9
2.6
2.8
3.5
3.9
Consumer price index1 (%)
Wage price index1 (%)
e: estimate; f: forecast
1 Year-on-year percentage change, calendar year.
Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0, Wage Price Index, Australia, Cat. No. 6345.0; Department of Treasury and Finance
(Darwin CPI); Deloitte Access Economics (Capital Cities CPI and Australia WPI)
Background
Inflation is a measure of the change in the general level of consumer prices over a given period of time and is a
key economic indicator. Elevated inflation may reflect an overheating economy, where supply is unable to keep
pace with growing demand and generally coincides with economic growth, while low inflation may reflect
subdued demand.
In Australia, the Australian Bureau of Statistics (ABS) measures inflation in the economy through changes in the
CPI. CPI measures the price of a representative basket of goods and services that accounts for a high proportion of
expenditure by households in each Australian capital city. This basket includes the following 11 groups: food and
47
Northern Territory Economy
non-alcoholic beverages; alcohol and tobacco; clothing and footwear; housing; household contents and services;
health; transportation; communication; recreation and culture; education; and financial and insurance services.
Each group in the CPI is given a weighting depending on its relative importance. To determine the index, the
price change in each group is combined according to its weighting. Housing has the largest weighting in the
index and accounts for around a quarter of the Darwin CPI basket. This group comprises rents, house purchase,
utilities and other housing costs. Changes in housing-related prices have a considerable impact on changes in
inflation.
Food and non-alcoholic beverages is the second largest item in the Darwin CPI and accounts for about
15 per cent of the basket. Recreation and culture, and transport are the next largest groups and each account for
about 12 per cent. The remaining groups each account for less than 10 per cent of the basket.
Consumer Price Index
The year-on-year percentage change in the Darwin CPI is preferred as a relatively stable measure of inflation, which
compares the past four quarters’ CPI to the previous four quarters’ CPI.
In 2013, the Darwin CPI increased by 3.9 per cent. This was the highest increase of all capital cities, which ranged
from 1.8 per cent in Hobart to 2.6 per cent in Perth. Average CPI across the eight capital cities in Australia
increased by 2.4 per cent in 2013. The main contributors to growth in the eight capital cities’ CPI were higher
costs of housing, alcohol and tobacco, and health. These categories, as well as transport and recreation and
culture, were also the primary contributors to growth in the Darwin CPI in 2013 (Chart 6.1).
Chart 6.1: Year-on-Year Percentage Point Contribution to Change in CPI, 2013
Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0
Housing
The housing category contributed nearly half (1.92 percentage points) of the total increase in the Darwin CPI in
2013. This was largely driven by increases in domestic utility prices, rents and house purchase prices.
The utilities category in the Darwin CPI increased by 24.0 per cent and contributed 0.85 percentage points to the
total change in the Darwin CPI in 2013. This reflects the Territory Government’s policy decision to stagger price
increases for electricity, water and sewerage over three years, with the majority of the price rise introduced from
1 January 2013. A smaller price increase (5 per cent) was introduced from 1 January 2014 and a further
5 per cent increase will be applied from 1 January 2015. Accordingly, the impact of utility prices on Darwin’s
inflation is expected to moderate substantially in 2014 and remain stable in 2015.
Darwin recorded the highest growth in the utilities category in CPI in 2013. In other capital cities, the increase in
the utilities category ranged between 5.6 per cent in Hobart and 12.1 per cent in Melbourne over the same
period. However, over the past decade, the average annual increase in the utilities category was lower in the
Darwin CPI than in the eight capital cities’ CPI (Chart 6.2).
48
Northern Territory Economy
Between 2003 and 2013, Darwin’s household utility prices have grown on average by 7.1 per cent per annum,
lower than the eight capital cities’ average of 8.4 per cent per annum. National utility prices have increased at
regular intervals over the past decade, while Darwin’s utility prices were relatively stable between 2003 and 2008,
followed by staged increases in prices in subsequent years.
Chart 6.2: Relative Change in the Utilities Category in CPI
Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0
In 2013, the rents category increased by 7.6 per cent in the Darwin CPI and 3.3 per cent in the eight capital cities’
CPI. The house purchase prices category in the Darwin CPI recorded an increase of 3.4 per cent in 2013, the same
level of growth in the eight capital cities’ CPI. A more detailed analysis of house purchase prices and rents is
provided in the House Prices and Rents section of this chapter.
Transport
The transport category in the Darwin CPI increased by 4.1 per cent and contributed 0.50 percentage points to
total growth in 2013. The primary contributor to growth in transport costs was the increase in motor vehicle
registration fees that came into effect in the Territory from 1 January 2013. Other contributors to the increase in
transport costs in 2013 were higher fuel prices (up 4.3 per cent) and higher costs of maintenance and repair of
motor vehicles (up 7.0 per cent). This was partly offset by an 8.6 per cent decline in motor vehicle prices over the
same period.
Alcohol and Tobacco
In 2013, the alcohol and tobacco category in the Darwin CPI increased by 3.4 per cent and accounted for
0.31 percentage points of the total increase. This was largely driven by an 8.4 per cent growth in tobacco prices,
following increases in the Commonwealth’s tobacco excise duty. Alcohol prices in the Territory increased by
1.1 per cent in 2013, comprising a 3.5 per cent increase in the price of spirits and a 2.0 per cent increase in wine
prices, partly offset by a 0.2 per cent decline in beer prices.
Recreation and Culture
The recreation and culture category in the Darwin CPI increased by 2.7 per cent and contributed 0.32 percentage
points to the increase in the Darwin CPI in 2013. This was largely due to an increase in the costs of airfares for
Darwin residents travelling interstate and higher accommodation costs for Darwin residents travelling within the
Territory and interstate.
49
Northern Territory Economy
Health
An increase in health costs was a major contributor to growth in the Darwin and the eight capital cities’ CPI in
2013. The health category increased by 5.0 per cent in the Darwin CPI and by 5.3 per cent in the eight capital
cities’ CPI over the period. This likely reflects higher medical and hospital services costs following the increase in
private health funds’ premiums that came into effect from 1 April 2013, as well as the introduction of income
testing for Private Health Insurance Rebate, as of 1 July 2012.
Food and Non-Alcoholic Beverages
Food and non-alcoholic beverages is the second largest item in the Darwin CPI basket, after housing. This
category increased by 1.0 per cent in 2013, largely driven by a 4.4 per cent increase in meals out and takeaway
foods, partly offset by a decline in prices of meat and seafood (down by 1.8 per cent), dairy and related products
(down by 2.2 per cent), and fruit and vegetables (down by 2.6 per cent) over the period.
Furnishings, Household Equipment and Services
In 2013, the furnishings, household equipment and services category increased by 2.1 per cent. This was largely
driven by a 13.8 per cent increase in the cost of child care services in 2013, which alone contributed 0.12
percentage points to the total increase in the Darwin CPI. This was partly offset by a decline in major household
appliances (down by 6.3 per cent) and small electrical household appliances (down by 8.1 per cent).
Outlook for CPI
The Darwin CPI is forecast to moderate in forward years as impacts of the increases in 2013 to utility prices and
motor vehicle registration costs are incorporated in the base (Table 6.2). Utility prices are expected to have a
smaller impact on the Darwin CPI in 2014 and 2015, reflecting the lower increases to electricity, water and
sewerage tariffs of 5 per cent over this period. The impact of house purchase prices and house rents on the
Darwin CPI is expected to moderate due to an increase in supply of new dwelling stock and further housing
developments in the Territory. If the carbon price is repealed in 2014, Darwin CPI growth is likely to be lower than
estimated.
Table 6.2: CPI Forecast, Year-on-Year Change (%)
Darwin CPI
2013
2014e
2015f
2016f
2017f
3.9
3.0
2.8
2.5
2.5
e: estimate; f: forecast
Source: ABS, Consumer Price Index, Australia, Cat. No. 6401.0; Department of Treasury and Finance
Looking further ahead, inflation is likely to moderate to 2.5 per cent in 2016 and 2017 following the expected
departure of the construction workforce after completion of the construction phase of the Ichthys project in
mid-2016. As the Ichthys project passes peak construction, it is likely to result in lower employment and population
growth in the Territory. This is expected to lead to a decline in aggregate demand for Territory goods and services
and place downward pressure on prices.
House Prices and Rents
The Territory property market has strengthened since the recent trough in 2010 and 2011 when there was a
substantial reduction in sales activity and median property prices declined in some markets. Recovery in the
property market has primarily been driven by new investment in the Territory, particularly in the resource sector,
which has seen strong demand for labour and is underpinning the Territory’s strengthening population and
employment growth. In addition, the growth in the property market has coincided with the Reserve Bank of
Australia’s decision to gradually cut the target cash rate from 4.75 per cent in October 2011 to 2.5 per cent in
August 2013, where it has since remained.
REIA reports median house prices for all capital cities across Australia. Compared with other capital cities in the
December quarter 2013, REIA reports that Darwin (which includes Palmerston) had the third highest median
house price at $610 000 and the third highest median unit price (equal with Perth) at $445 000 (Chart 6.3). In
50
Northern Territory Economy
other capital cities, the median house price ranged between $370 000 in Hobart and $763 169 in Sydney, while
the median unit price ranged between $280 000 in Hobart and $541 992 in Sydney.
Chart 6.3: Median House and Unit Prices, December Quarter 2013
Source: REIA
The Darwin housing market continued to make gains in 2013 following strong growth in 2012. REIA reports that
the median price of houses sold in Darwin and Palmerston increased by 5.5 per cent between the December
quarter 2012 and December quarter 2013. This follows the 12.0 per cent increase in median house price in
Darwin and Palmerston recorded between the December quarter 2011 and December quarter 2012. The
slowing growth in median house prices may be due to, among other things, an increase in supply of new
housing from developments in Lyons, Muirhead, Bellamack and Johnston.
The decelerating growth in median house prices in Darwin resulted in a decline in the price gap between Darwin
and the eight capital cities. In the December quarter 2012, the median house price in Darwin was 9.3 per cent
higher than the eight capital cities’ average. The gap narrowed to 2.0 per cent in the December quarter 2013
with the median house price for the eight capital cities increasing by 13.1 per cent between the
December quarter 2012 and December quarter 2013 (compared with 5.5 per cent in Darwin), primarily driven by
strong growth in median house prices in Sydney and Melbourne.
Since 2012, growth in the median price for units sold in Darwin and Palmerston has not kept pace with growth in
median house prices. This may be due to a higher supply of units following the completion of a large number of
higher value residential units in Darwin between 2007 and 2010. The existing residential unit stock appears to
have absorbed some of the recent increase in demand.
The median unit price in Darwin was 3.0 per cent lower than the eight capital cities’ average in December 2012.
This gap widened to 7.8 per cent in December 2013 as a result of higher growth in the median unit price for the
eight capital cities’ relative to Darwin over the period. The median unit price for Darwin increased by 3.5 per cent
while the eight capital cities’ average median price increased by 8.9 per cent between December 2012 and
December 2013.
Changes in median house and unit prices are impacted by compositional factors, such as the size, quality, age and
location of dwellings sold in a given period. New houses and units typically sell at a higher price than existing
dwellings. The recent increase in supply of new houses and units in Darwin and Palmerston has resulted in a
higher weighting towards new dwellings in the determination of median property prices.
51
Northern Territory Economy
Regional Median House and Unit Prices
Real Estate Institute of the Northern Territory (REINT) reports the median price of houses and units sold in major
centres in the Territory. REINT reports that the Territory’s major centres all recorded an increase in the median
house price between the December quarter 2012 and December quarter 2013. The largest annual growth was
reported for Katherine, where the median house price increased by 15.2 per cent to $380 000. Tennant Creek
also recorded strong annual growth in the median house price of 11.5 per cent to $290 000 in the
December quarter 2013. Compared with the December quarter 2012, REINT reports that the median house price
in Alice Springs increased by 4.6 per cent to $455 000 in the December quarter 2013.
In the December quarter 2013, the median unit price was $341 000 in Alice Springs and $270 000 in Katherine
(Table 6.3). Katherine recorded the highest annual increase in the median unit price of 58.8 per cent between the
December quarter 2012 and the December quarter 2013, however this is likely to be driven by compositional
factors as the reported median price of a unit sold in Katherine in the December quarter 2012 was unusually low.
The median unit price in Alice Springs declined by 2.2 per cent over the same period.
Table 6.3: Median House and Unit Prices, Major Regional Centres, December Quarter 2013
Median House Price
Median Unit Price
Dec Qtr 12
Dec Qtr 13
Change
Dec Qtr 12
Dec Qtr 13
Change
$
$
%
$
$
%
Darwin and Palmerston
578 000
610 000
5.5
430 000
445 000
3.5
Alice Springs
435 000
455 000
4.6
348 500
341 000
- 2.2
Katherine
330 000
380 000
15.2
170 000
270 000
58.8
Tennant Creek
260 000
290 000
11.5
n.a.
n.a.
n.a.
n.a.: not available
Source: REINT
Rents
REINT reports that the growth in the median weekly rent for a three-bedroom house and a two-bedroom unit in
Darwin and Palmerston moderated between the December quarter 2012 and December quarter 2013. The
median rent for a three-bedroom house declined by 0.3 per cent, while the median rent for a two-bedroom unit
increased by 3 per cent. This followed high growth rates of median rent of 22.0 per cent for a three-bedroom
house and 14.3 per cent for a two-bedroom unit in the previous period.
In the December quarter 2013, REINT reports that the median rent for a three-bedroom house in Darwin and
Palmerston was $636, while the median rent for a two-bedroom unit was $486 (Chart 6.4). The median rent for a
three-bedroom house in Katherine increased by 5.6 per cent to $450, while the median rent for a two-bedroom
unit increased by 9.6 per cent to $343 between the December quarter 2012 and December quarter 2013. In
Alice Springs, the median rent for a three-bedroom house increased by 1.4 per cent to $524, while the median
rent for a two-bedroom unit declined by 0.5 per cent to $396 over the same period. REINT does not report
median rent for Tennant Creek.
REIA reports that as at December quarter 2013, Darwin had the highest median weekly rent for a three-bedroom
house at $636 and the second highest median weekly rent for a two-bedroom unit at $486. In other capital cities,
the median rent for a three-bedroom house ranged from $325 in Adelaide to $470 in Perth, while the median
rent for a two-bedroom unit ranged from $270 in Hobart to $490 in Sydney.
52
Northern Territory Economy
Chart 6.4: Median House and Unit Rents, December Quarter 2013
Source: REIA
Wage Price Index
The wage price index (WPI) measures changes in the price employers pay for a standard unit of labour that arise
from market factors. To establish a standard unit of labour, the quantity and quality of labour services are held
constant by excluding changes in the composition of the labour force, hours worked and changes in
characteristics of employees (such as performance) from the index.
Growth in the Territory WPI has moderated from 3.4 per cent in 2012 to 2.9 per cent in 2013 (Chart 6.5). This was
predominantly due to lower growth in the public sector WPI, while growth in the private sector WPI was relatively
stable. Growth in the public sector WPI moderated from 3.7 per cent in 2012 to 2.5 per cent in 2013. The slowing
in wage growth in the public sector, in part, reflects the timing of the new enterprise agreement for the majority
of the Territory Government public sector. The Territory private sector WPI grew by 3.1 per cent in 2013, higher
than the national average of 2.8 per cent. The higher rate of growth in the private sector WPI in the Territory in
2013 is likely to be due to strong employment demand, particularly in the construction industry, as a result of
increased economic activity in the Territory.
Chart 6.5: Year-on-Year Percentage Change in the Territory’s WPI
Source: ABS, Wage Price Index, Australia, Cat. No. 6345.0
Outlook for WPI
The Territory WPI growth is forecast to strengthen in forward years to 2015 (Table 6.4). This is consistent with a
strengthening Territory labour market as construction for the Ichthys project escalates over the period. The
presence of fly-in fly-out workers and labour shortages as locally based workers are drawn to the Ichthys project
will place upward pressure on growth of the private sector WPI. The Territory WPI growth is expected to
moderate in 2016 and remain stable in 2017 following the conclusion of the construction phase of the Ichthys
53
Northern Territory Economy
project. Growth in public sector wages, however, is expected to remain stable over the forward years reflecting
fiscal consolidation in government finances across all tiers of government.
Table 6.4: WPI Forecast, Year-on-Year Change (%)
Northern Territory
2013
2014e
2015f
2016f
2017f
2.9
3.5
3.7
3.0
3.0
e: estimate; f: forecast
Source: ABS, Wage Price Index, Australia, Cat. No. 6345.0; Department of Treasury and Finance
54
Northern Territory Economy
Chapter 7
Industry Analysis
Key Points

The largest industries in the Northern Territory are construction, mining, public administration and safety, and
health care and social assistance. Combined, these industries account for nearly half of the Territory’s gross
state product (GSP).

The largest employment industries in the Territory are public administration and safety, health care and social
assistance, construction, and education and training.

In 2012-13, in current terms, the construction industry surpassed mining as the single largest industry in the
Territory.

The construction industry is likely to remain the largest contributor to Territory GSP over the short term as
construction activity remains at historically elevated levels due to the Ichthys project.
Background
Over the past decade, economic growth in the Territory has outpaced growth nationally. However, growth has
not been evenly distributed across all sectors of the Territory economy. As a result, the structure of the Territory
economy has changed over the period. In recent years, the construction industry has risen in prominence
coinciding with substantial private investment associated with major resource projects. On the other hand,
growth in the tourism and agriculture, forestry and fishing industries has not kept pace with other industries, and
consequently the contributions of these industries to total economic output have trended down over time (Table
7.1).
Table 7.1: Industry Share of GSP (%)1
2003-04
2006-07
2009-10
2012-13
Mining
13.3
16.1
17.2
14.3
Construction
14.2
12.1
11.4
17.7
Agriculture, forestry and fishing
4.1
3.0
2.9
2.2
Tourism2
n.a.
7.1
5.8
4.5
Defence3
9.7
8.6
8.2
7.0
Retail and wholesale trade
5.0
5.0
4.8
4.8
Manufacturing
6.1
5.9
7.1
4.2
Government and community services
22.4
19.4
18.9
18.8
Other services
22.8
25.3
23.4
24.1
GSP: gross state product; n.a.: not available
1 Current prices.
2 The tourism industry’s contribution to GSP is captured in other industries including accommodation and food services, arts and recreation, retail
trade, education and transport.
3 The defence industry’s contribution to GSP is captured in public administration and safety.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0; TRA, State Tourism Satellite Accounts
This chapter examines the contributions made by key industries to the Territory’s economy, including the key
features of each industry and the outlook.
55
Northern Territory Economy
The public administration and safety, education and training, and health care and social assistance industries have
been grouped together and are referred to as government and community services. These industries are grouped
to recognise that the services are largely provided by the public sector.
The other services industry comprises: accommodation and food services; transport, postal and warehousing;
information and media telecommunications; financial insurance services; rental, hiring and real estate services;
professional, scientific and technical services; administrative and support services; electricity, gas, water and waste
services; and arts and recreation services. Although disparate, these industries have been grouped because
individually they make a relatively small contribution to the Territory economy.
Tourism and defence are not separate industries for the purpose of reporting by the Australian Bureau of Statistics
(ABS) in national accounts. Rather, the contributions made by these industries are captured in other industries.
These industries are, however, discussed individually due to their relative importance in the Territory.
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Northern Territory Economy
Mining
Table 7.2: Mining Sector Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
18.0
14.3
16.7
4 300
4 800
3 300
3.5
3.9
2.9
9.0
8.0
7.3
246 800
265 600
166 000
2.2
2.3
1.6
Northern Territory
Share of GSP1 (%)
Industry resident employment 2
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current price.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
The mining industry impacts on the Territory economy through trade, investment and employment. In 2012-13,
mining’s contribution to gross state product (GSP) in the Territory was 14.3 per cent, much greater than the
contribution nationally (8.0 per cent). Mining was the largest industry contributor to Territory GSP from 2005-06 to
2011-12, however it was overtaken by construction in 2012-13. The contribution of the mining sector to Territory
GSP dropped below the ten-year average in 2012-13, with the value of the industry’s contribution decreasing in
current terms, led by declines in commodity prices. Strong growth in the construction industry has also
contributed to the decline in relative importance of the mining sector. However this is likely to be a temporary
occurrence with mining expected to resume primacy once the Ichthys project moves from the construction to
production phase.
Despite mining being one of the largest contributors to the Territory economy, the capital-intensive nature and
non-resident status of a significant proportion of the labour force means the industry comprised only 3.9 per cent
(about 4800 persons) of Territory resident employment in 2012-13. This number includes fly-in fly-out (FIFO)
workers who are residents of the Territory but excludes FIFO workers who are residents in other jurisdictions and
can comprise a substantial proportion of the workforce at Territory mine sites. While the number of people
employed directly by the industry is relatively low, the industry is responsible for generating employment in a
number of other industries such as trade and technical services, transportation and manufacturing.
The nominal value of mining production is influenced by commodity prices, which are subject to cyclical
movements determined by supply and demand, exchange rate movements and inventories. To reflect the
underlying level of output and activity, this analysis focuses on the value of real production, derived by holding the
effects of price constant over time.
In real terms, mineral and energy production in the Territory increased in value from $5.5 billion in 2011-12 to an
estimated $5.9 billion in 2012-13. The increase was driven by higher manganese production due to increased
production capacity, as well as increased uranium and offshore gas production. Combined, gas and liquids,
manganese and uranium comprised about 65 per cent of the total value of mineral and energy production in the
Territory in 2012-13 (Chart 7.1).
57
Northern Territory Economy
Chart 7.1: Value of Mineral and Energy Production, 2012-131
1 Inflation adjusted, base year 2011-12.
Source: Department of Treasury and Finance; Department of Mines and Energy
Mineral Production
There are a number of world-class resources in the Territory including some of Australia’s largest deposits of
uranium, zinc/lead, bauxite and manganese. Smaller quantities of other commodities such as gold, copper,
iron ore, rare earths, tungsten, zircon sands and potash are also produced in the Territory (Map 1). The value of
mineral production is estimated to have increased from $2.1 billion to $2.2 billion in 2012-13, driven by an
increase in manganese and gold production (Chart 7.2). There was also a substantial increase in the production
of crushed rock (up by 132.8 per cent) and sand (up by 61.1 per cent), with high levels of construction activity in
the Territory driving demand for these products.
Chart 7.2: Value of Mineral Production1
1 Inflation adjusted, base year 2011-12.
Source: Department of Treasury and Finance; Department of Mines and Energy
58
Northern Territory Economy
Map 1: Current and Pending Mineral and Onshore Energy Operations
59
Northern Territory Economy
Manganese
Manganese is produced at the Groote Eylandt Mining Company (GEMCO) mine on Groote Eylandt and at Bootu
Creek, 110 kilometres north of Tennant Creek. In 2012-13, manganese accounted for about half of the total value
of mineral production in the Territory. The value of manganese production in the Territory increased from
$895 million in 2011-12 to an estimated $996 million in 2012-13, due to increased capacity at the GEMCO mine.
The second stage of the Groote Eylandt expansion project was completed in the first half of 2013-14, increasing
the capacity of production from 4.2 million tonnes per annum (mtpa) to 4.8 mtpa, as well as developing road and
port facilities to handle production of up to 5.9 mtpa. The expansion should mean that production levels continue
to grow in the forward years.
Production at the manganese mine at Bootu Creek decreased in 2012-13 during the implementation of a new
mining model, however the first half of 2013-14 has seen production return to higher levels. Further increases
should occur in the forward years, with the mine moving closer to maximum production capacity.
Zinc/Lead Concentrate
The McArthur River Mine, located 65 kilometres southwest of Borroloola, is the Territory’s only operating zinc/lead
mine. In 2012-13, the value of zinc/lead concentrate production decreased to $315 million from $345 million in
2011-12, following lower than planned production levels.
The McArthur River Mine has expanded operations twice since commencing in 1995. In June 2013, project
approval was received for the Phase 3 development project, which is expected to be completed in the second
half of 2014. The project will increase capacity from around 2.5 million tonnes to 5.5 million tonnes of high grade
bulk zinc/lead concentrate per annum, as well as increasing the number of jobs at the mine.
Gold
The largest producing gold mine in the Territory is the Granites mine owned by Newmont Mining Corporation in
the Tanami Desert. Gold is also produced by Crocodile Gold near Pine Creek. The value of gold production in the
Territory increased from $353 million in 2011-12 to $397 million in 2012-13, reflecting development at Crocodile
Gold’s Cosmo mine throughout the year.
The Cosmo mine reached commercial production in March 2013 and its full production rate in the second half
of 2013. It is estimated the mine will produce an average of 75 000 to 90 000 ounces per annum. In future years,
further growth in gold production is expected, with a number of proposals for the development of new mines
over the next four years (refer to pending developments listed at the end of this section).
Bauxite
Bauxite is mined at the Gove peninsula in the Territory and used primarily as feedstock to manufacture alumina at
the nearby Pacific Aluminium refinery with the remaining product exported in raw form to Asia. The value of
bauxite production in the Territory increased from $268 million in 2011-12 to $281 million in 2012-13.
In November 2013, Rio Tinto announced the suspension of production at the Gove alumina refinery. The
curtailment of operations at the refinery commenced in the first half of 2014, and initially the value of bauxite
production is expected to decrease. However, Rio Tinto has stated that the bauxite used in the manufacture of
alumina will now be exported. Increased bauxite exports will not occur immediately as capital investment is
required on ship loaders and other machinery and equipment to facilitate the increased level of exports. Refer to
Chapter 2: Economic Growth for a detailed analysis of the economic impact of the curtailment of operations at
the Gove alumina refinery.
60
Northern Territory Economy
Iron Ore
The Frances Creek iron ore mine, located near the town of Pine Creek, was the only operating iron ore mine in
2012-13. The value of iron ore production declined to $134 million in 2012-13 from $142 million in 2011-12.
Future years should see an increase in iron ore production with Western Desert Resources commencing Roper
Bar iron ore mining operations in the second half of 2013, which has an expected output of 1.5 mtpa in its first
year, increasing to 3 mtpa by year three. Sherwin Iron is also developing its Roper River iron ore project. Pending
approvals, production is anticipated to commence in mid-2014, with output expected to reach 3.0 mtpa by the
end of 2014.
Energy Production
Energy resources in the Territory include natural gas, liquefied petroleum gas (LPG), condensate (a light
hydrocarbon liquid used to manufacture petrol and other liquid fuels), oil and uranium. The value of energy
production in the Territory increased from $3.5 billion in 2011-12 to an estimated $3.7 billion in 2012-13, driven by
increased production of uranium and offshore gas (Chart 7.3).
Chart 7.3: Value of Energy Production1
1 Inflation adjusted, base year 2011-12.
Source: Department of Treasury and Finance; Department of Mines and Energy
Kitan and Bayu-Undan are currently the only two producing fields in the Joint Petroleum Development Area
(JPDA) between Timor-Leste and Australia, about 500 kilometres north of Darwin (Map 2). As the JPDA is shared
between the two countries, the ABS treats it as a separate economic area. Any economic activity that occurs in the
JPDA is divided equally between Australia and Timor-Leste, with the Australian proportion allocated to the
Territory.
61
Northern Territory Economy
Map 2: Timor Sea Oil and Gas
Oil
In 2012-13, offshore oil production occurred at the Kitan, Laminaria-Corallina and Montara oilfields, while the
Mereenie oilfield in Central Australia was the only onshore oil producer in the Territory. Oil production in the
Territory declined slightly in 2012-13 to an estimated $863 million, driven by the natural decline in production at
the ageing Laminaria-Corallina oilfield. In addition, well performance at the Kitan oilfield was not as strong as
anticipated in its first full year of production.
The Montara project, located 690 kilometres west of Darwin, commenced production in the June quarter 2013
and will increase output throughout 2013-14. At capacity, Montara is expected to produce up to 35 000 barrels of
oil per day.
Although accounting for only a small proportion of total oil produced in the Territory, the value of production at
the Mereenie oilfield increased in 2012-13. Onshore oil production should further increase in the coming years
with Central Petroleum commencing production in March 2014 at the Surprise development in Central Australia.
There is potential for further development in the future with exploration drilling campaigns currently underway in
the area.
Gas and Liquids
The majority of gas and liquids production in the Territory comes from the Bayu-Undan field in the JPDA. It is
estimated to have recoverable reserves of more than 3.4 trillion cubic feet (tcf) of natural gas and 400 million
barrels of LPG and condensate. Gas from the Bayu-Undan field is transported via a subsea pipeline to Wickham
Point near Darwin and used as feedstock in the manufacture of liquefied natural gas (LNG) at the ConocoPhillips’
Darwin LNG plant.
In 2012-13, the value of gas and liquids production (including condensate and LPG) increased from $2.22 billion
in 2011-12 to $2.34 billion, reflecting a step up in production following the scheduled maintenance shutdown at
62
Northern Territory Economy
the Darwin LNG plant in May and June 2012, as well as efficiency gains and upgrades made during the
shutdown.
Uranium
The Ranger uranium mine, located within the boundaries of the Kakadu National Park, accounted for about
13 per cent of the Territory’s energy production in 2012-13. Open-cut mining at Ranger was ceased in late 2012
due to the depletion of resources available for the open-cut mining process.
Despite the cessation of open-cut mining at Ranger, the value of uranium oxide production in the Territory
increased from $360 million in 2011-12 to $473 million in 2012-13 due to production from existing stockpiles of
high-grade ore. Production value will decrease in 2013-14 as a result of lower grade ore as well as the suspension
of processing following a leach tank failure in December 2013. Current stockpiles are estimated to allow for a
further two years’ production once approval is received to recommence operations. A substantial exploration
program is currently underway to extend the mine life through the underground Ranger 3 Deeps project.
Outlook
The International Monetary Fund (IMF) is forecasting global economic growth to strengthen in 2014 and remain
at about 4 per cent from 2015 onwards (refer to Chapter 3: External Economic Environment). This is expected to
underpin demand for mineral and energy resources, which will support mining production throughout the
Territory over the forward estimates period.
However, China’s economic growth is expected to moderate in the medium term, but still remain relatively high
(about 7 per cent annual growth). As one of the Territory’s key mineral ore export markets, weaker Chinese
demand for minerals is a risk that could affect the volume and price of exports. Conversely, the Korean economy,
another key market for Territory mineral exports, is expected to strengthen from 2014 onwards and increase
demand for Territory mineral ores.
Recent capital investments at GEMCO and McArthur River Mine will enable higher production over coming years,
contributing to growth of the mineral sector in the Territory. Increased iron ore production resulting from the new
mine in the Roper region will also contribute to growth. While output may rise, the actual value of production
may be tempered by movements in iron ore prices, which could decline as a result of expanding global supply.
Despite new onshore oil production and exploration activity, oil production is forecast to peak in 2014-15 as the
Montara project operates at capacity for a full year, before reducing over time as a result of natural declines in
output at the Kitan and Montara oilfields. Uranium production is also expected to decline as existing stockpiles are
depleted unless a decision is made to commence underground mining at Ranger uranium mine.
In addition to current mining production, there are a number of pending developments expected in the
upcoming year, including:
 Sherwin Iron’s $170 million Roper River iron ore project located 475 kilometres south-east of Darwin along the
Roper Highway. The mine is expected to produce around 3 mtpa of iron ore;
 Australian Abrasive Minerals’ garnet sands deposit, 170 kilometres north-east of Alice Springs at Spinifex Bore.
The mine is estimated to have a 25-year supply of high quality mineral sands;
 Aard Metals’ reprocessing of five tailings dams, located 48 kilometres west of Tennant Creek, in order to extract
magnetite, gold and copper; and
 new gold mines by ABM Resources (Twin Bonanza in the Tanami), Thor Mining (Spring Hill near Pine Creek)
and Primary Gold (re-opening Tom’s Gully gold mine).
There are also a number of proposed energy developments in the Territory for the medium term, including:
 the Evans Shoal gas field by Eni, 300 kilometres north-west of Darwin, estimated to contain up to 8 tcf of gas;
 an appraisal drilling program led by ConocoPhillips, undertaken at Caldita-Barossa, 270 kilometres north-west of
Darwin; and
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Northern Territory Economy
Central Petroleum’s development of the Dingo gas field, 65 kilometres south of Alice Springs. The gas field is under
contract to supply 31 petajoules of gas over 20 years, with production expected in early 2015.
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Northern Territory Economy
Construction
Table 7.3: Construction Sector Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
13.7
17.7
13.6
12 200
13 500
10 100
10.0
10.7
9.0
7.7
7.7
7.2
1 003 500
986 800
931 800
8.9
8.7
8.8
Northern Territory
Share of GSP1 (%)
Industry resident employment 2
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
The construction industry is one of the Territory’s largest industries in terms of its contribution to GSP and Territory
employment.
In 2012-13, the construction industry accounted for 17.7 per cent of the Territory’s GSP, up from 13.7 per cent in
the previous year. This made construction the largest industry by value, in current terms, in 2012-13, ahead of
mining, which accounted for 14.3 per cent of Territory GSP.
The increase in construction’s share of GSP reflects the ongoing activity associated with a number of major
resource projects in the Territory including the Ichthys project, expansions at major Territory mine sites and the
development of the Montara project. Construction of the new Darwin Correctional Precinct and record levels of
private residential construction also supported growth in the construction industry in 2012-13.
In addition to the significant contribution to Territory GSP, the Territory construction industry employed about 13
500 people during 2012-13. This accounted for 10.7 per cent of Territory resident employment and made the
construction industry one of the Territory’s largest employers.
While the construction industry’s contribution to GSP is shown in current prices in Table 7.2, the following analysis
of the components of construction activity is in inflation-adjusted terms. It is based on ABS data on construction
work done, which provides more detailed data on the components of construction activity. The ABS splits
construction into three major categories: engineering construction, non-residential building and residential
building.
Engineering Construction
Engineering construction includes mining, oil and gas and other heavy industry developments, as well as
infrastructure including roads, railways and bridges. Engineering has been the largest component by value of
Territory construction work done since the early 2000s, reflecting a series of major projects (Chart 7.4).
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Northern Territory Economy
Chart 7.4: Construction Work Done1 (moving annual total)
1 Inflation adjusted.
Source: ABS, Construction Work Done, Cat. No. 8755.0
After falling to a decade low of $947 million in 2010-11, the inflation-adjusted value of engineering construction
has increased by nearly 300 per cent to reach $3.8 billion in 2012-13. The rapid increase in the value of
engineering construction activity was driven by a number of major resource projects.
The most significant of these projects is the Ichthys project, which has an estimated onshore capital expenditure of
more than $13 billion in the Territory, making it the largest single construction project in the Territory’s history. The
project received a final investment decision in January 2012 and work commenced shortly thereafter.
Construction work on the Ichthys project is expected to be the largest contributor to Territory engineering
construction through to 2015-16, with peak levels of construction activity expected in 2014-15.
The project includes extraction, processing and other infrastructure at the Ichthys field, which is located off the
coast of Western Australia in the Browse Basin, construction of an 889 kilometre subsea pipeline to transport
natural gas and liquids to Blaydin Point near Darwin, and construction of an LNG plant and associated facilities at
the Blaydin Point site.
Construction activity relating to the Ichthys field and a portion of the pipeline will not be allocated to the Territory
as it is in Western Australian waters, however the construction of the LNG plant and associated onshore facilities
will be included in Territory engineering activity. Territory engineering activity should reflect construction that
actually occurs within the Territory, but for reporting purposes, the ABS will also include the value of imported
modules for the LNG plant when they are installed on the Blaydin Point site, even though these have been
constructed overseas.
Engineering work in the Territory for the Ichthys project includes:
 civil works such as piling, foundations and roads;
 dredging of Darwin Harbour;
 construction of buildings including an operations complex, offices, a central control building and workshops;
 construction of a module offload facility used to offload the modules required to assemble the LNG plant;
 construction of a product-loading jetty, which will include two separate vessel berths – one for LNG carriers and
the second for LPG and condensate carriers;
 construction of a 500 megawatt power plant;
 construction of storage tanks for LNG, LPG and liquid condensates; and
 the assembly, installation and commissioning of the pre-assembled modules required for the two LNG
processing facilities.
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Northern Territory Economy
Other major engineering projects that contributed to engineering construction in 2012-13 included the Phase 2
expansion at the GEMCO manganese refinery on Groote Eylandt, the Phase 3 expansion at the McArthur River
zinc/lead mine near Borroloola, the development of the Montara project, and the construction of the
Marine Supply Base adjacent to the East Arm Wharf in Darwin.
The value of engineering construction is expected to increase strongly through to 2014-15, with data released for
the first two quarters of 2013-14 showing that engineering activity has continued to increase at a rapid pace.
Following the expected peak in 2014-15, engineering construction activity is expected to return towards longterm average levels.
Non-Residential Building
Non-residential building includes hotels and other non-residential accommodation facilities, shopping centres,
factories, offices, warehouses, schools, medical centres, correctional facilities and other similar buildings.
Non-residential building has typically been the smallest component of Territory construction activity until 2011-12,
when it overtook residential construction to be the second largest component of construction activity.
In 2012-13, non-residential construction increased by 49.0 per cent to $1.0 billion, the highest level on record
(Chart 7.5). This was driven by private sector work relating to several major non-residential building projects
including the $521 million Darwin Correctional Precinct (which is a public private partnership arrangement and
classified by the ABS as private sector construction) and the $330 million Ichthys workers’ accommodation village.
In addition to these projects, other non-residential building projects that have contributed to growth include the
Australian Agricultural Company Limited beef processing facility at Livingstone, the Charles Darwin Centre office
building in the Smith Street Mall, development of industrial land including the Berrimah Business Park and
construction and expansion of hotels, serviced apartments and other short-term accommodation facilities in
Greater Darwin.
Public sector non-residential construction has followed a different pattern of growth to the private sector.
Between 2009-10 and 2011-12, public sector non-residential construction increased to record levels, driven by
public sector spending associated with Commonwealth stimulus programs initiated in response to the
global financial crisis (GFC) and a record level of Territory Government capital works expenditure. Since then, the
public sector contribution to total non-residential construction has fallen in a counter-cyclical approach, which
balances strong growth in the private sector.
Chart 7.5: Non-Residential Building1 (moving annual total)
1 Inflation adjusted.
Source: ABS, Construction Work Done, Cat. No. 8755.0
Residential Building
In 2012-13, the value of residential construction decreased by 15.3 per cent to $610 million. The decline was driven
by public sector residential construction, which decreased by more than 70 per cent to $70 million (Chart 7.6). This
67
Northern Territory Economy
was primarily due to a reduction in expenditure from the Commonwealth and Territory governments in line with
timing of construction of remote Indigenous housing built under the ten-year National Partnership Agreement on
Remote Indigenous Housing. The agreement, which incorporates the former Strategic Indigenous Housing and
Infrastructure Program (SIHIP), commenced in 2008 and is the largest Indigenous housing program undertaken. The
bulk of construction under the program occurred in the first five years of the agreement, delivering more than 900
new houses and more than 2900 refurbishments and rebuilds in remote Indigenous communities across the
Territory to 2013. Construction activity is expected to wind down to 2018 with around 500 additional dwellings to
be completed by 2018.
In contrast to declining public sector activity, private residential construction work increased by 15.1 per cent to
$540 million in 2012-13, the highest level on record. The increase in private sector activity reflects strong demand
for dwellings across most of the Territory’s major urban centres, as well as substantial land release and the
development of several major unit projects.
Chart 7.6: Residential Building1 (moving annual total)
1 Inflation adjusted.
Source: ABS, Construction Work Done, Cat. No. 8755.0
The composition between construction of houses and units has also changed substantially over the past two
years. The value of new house construction in 2012-13 decreased by 18.3 per cent to $286 million, while the
value of new unit construction increased by 15.8 per cent to $249 million.
Over the last ten years, residential construction has on average accounted for 19.1 per cent of the total value of
Territory construction activity, albeit with a substantial peak within that period (Chart 7.7). The contribution of
residential construction to total Territory construction activity was highest in 2010-11 at 35.4 per cent, which
reflected historically high levels of residential construction due to the peak of construction activity under the SIHIP
program, as well as relatively low levels of non-residential building and engineering construction activity. Since
2010-11, residential construction as a proportion of total construction has declined substantially, reflecting lower
levels of residential construction and substantially higher levels of non-residential building and engineering activity
following the commencement of several major projects.
Despite the decline in the contribution of residential construction to the value of overall Territory construction
activity, residential construction remains at historically elevated levels and continues to be an important part of the
Territory construction industry, with significant employment and flow-on effects due to a large percentage of
construction materials and equipment being sourced locally.
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Northern Territory Economy
Chart 7.7: Proportion of Residential Building to Total Construction, Territory
Source: ABS, Construction Work Done, Cat. No. 8755.0
Outlook
The outlook for the construction industry over the budget and forward estimates period is strong. Engineering
construction activity is expected to continue to increase from already elevated levels, although at a more
moderate pace of growth than seen over the last two years. Growth will be supported by construction activity on
the Ichthys project, which is expected to reach peak levels in 2014-15.
Residential construction activity is also expected to pick up and contribute to growth, with private residential
construction activity to continue performing strongly and public residential work to stabilise as the impact of the
SIHIP program flows though.
Residential construction is expected to be supported by continued land release in the Darwin suburb of Muirhead
and Palmerston suburbs of Johnston and Zuccoli. New land release at Kilgariff in Alice Springs and a 52-hectare
site at Katherine East are also expected to contribute to new house construction. Construction of new units is
expected to remain strong, with several developments recently commencing or in the pipeline. Growth may,
however, begin to moderate following the completion of a number of large developments in 2013-14 including
The Avenue and SOHO.
The Territory Government’s Real Housing for Growth Plan is expected to contribute substantially to residential
construction over the budget and forward estimates period. The program aims to increase housing supply and
has a target of 2000 new homes to be constructed across the Territory by 2016-17. To date, more than 250 new
dwellings have already been delivered through Real Housing for Growth initiatives, with a further 650 scheduled
for completion during 2014-15. The Department of Housing has also entered into agreements with private
developers to head lease more than 150 properties at ten sites across Darwin, Palmerston, Alice Springs and
Tennant Creek for the purpose of delivering affordable rentals to key service industry workers.
The changes to the First Home Owners Grant (FHOG) scheme announced in the 2014-15 Budget are also expected
to contribute to residential construction activity. For contracts to purchase or build a new home entered into on or
after 13 May 2014, the FHOG will increase to $26 000 and the value cap will be removed. The changes to the
FHOG scheme are expected to encourage first home buyers to buy or build new housing and support private new
residential construction.
Non-residential construction is likely to decline over the coming years, albeit from record high levels, as major
projects such as the Darwin Correctional Precinct and Ichthys workers’ accommodation village are completed.
Despite this, non-residential building is expected to remain relatively high by historical standards, supported by
projects such as the Charles Darwin Centre office development and the Palmerston Regional Hospital. There are
also a number of potential projects that could provide a substantial boost to non-residential construction such as
expansion and redevelopment at the Casuarina Square shopping centre, the proposed Gateway shopping centre
in Palmerston and a new four-star hotel in Palmerston.
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Northern Territory Economy
70
Northern Territory Economy
Agriculture, Forestry and Fishing
Table 7.4: Agriculture, Forestry and Fishing Sector Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
2.0
2.2
2.9
5 000
3 100
3 000
4.1
2.5
2.7
2.3
2.2
2.5
321 000
301 700
341 300
2.9
2.6
3.2
Northern Territory
Share of GSP1 (%)
Industry resident employment2
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
Agriculture, forestry and fishing plays a vital role in many of the Territory’s regional and remote areas, contributing
to employment and economic activity. The industry also has important linkages with other sectors of the
economy, including retail and wholesale trade, manufacturing and transport.
In 2012-13, the agriculture, forestry and fishing industry accounted for 2.2 per cent of the Territory’s GSP. The
industry’s contribution to the Territory’s economy can, however, vary significantly from year to year, owing to
changes in production from other industries as well as seasonal conditions and changes in global and domestic
demand for Territory commodities.
In current terms, the amount contributed by the agriculture, forestry and fishing industry to Territory GSP over the
past 15 years has been relatively stable, notwithstanding the volatility from year to year. For example, the industry
added $441 million to the Territory economy in 2012-13 compared with $452 million in 1998-99. In contrast, the
value of the Territory’s GSP has more than doubled over the same period. As a result, over the longer term, the
agriculture, forestry and fishing industry share of Territory GSP has declined.
The ABS estimates that there were about 1000 agriculture, forestry and fishing businesses actively operating in the
Territory at June 2012. The majority of these businesses (about 70 per cent) were sole traders/owner operators. In
2012-13, about 3100 persons were employed in the agriculture, forestry and fishing industry in the Territory.
Although this was a decline compared with the previous year, the number of people employed in the industry
remains higher than the historical ten-year average.
The following analysis provides more detail on each of the sectors within the agriculture, forestry and fishing
industry. The analysis is based on estimates from a survey undertaken by the Northern Territory Department of
Primary Industry and Fisheries. Caution is needed when interpreting annual changes in the value of production
for commodities reported in this chapter due to changes in the scope and coverage of producers in the survey,
changes in the level of detail on commodities reported by producers, large percentage changes from a small
base, one-off weather events occurring in the Territory and in adjoining states, and changes in live cattle policies
by the Australian and Indonesian governments.
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Northern Territory Economy
Map 3: Northern Territory Agriculture, Forestry and Fishing
72
Northern Territory Economy
Agriculture
The agriculture sector dominates the agriculture, forestry and fishing industry, accounting for about 90 per cent of
the total value of production in the industry.
In 2012-13, the largest contributor to agricultural production in the Territory was live cattle (about 55 per cent),
followed by horticulture (about 40 per cent) and other livestock (about 5 per cent).
Live Cattle
The cattle industry has a large economic impact on the Territory through its linkage with expenditure on cattle
transport, stock feed, wages, port charges and demand for services such as quarantine inspection and veterinary
requirements. In turn, this provides significant employment opportunities, particularly in regional parts of the
Territory, and substantial export income, which supports regional economic growth.
The ABS estimates that there were 2.2 million head of cattle across 250 businesses in the Territory in 2011-12.
Virtually all Territory livestock cattle are raised for the purpose of meat production, with a small proportion raised
as dairy cattle. Nationally, in 2011-12, there were about 28.5 million head of cattle, of which about 90 per cent
were meat cattle.
The live cattle industry in the Territory comprises live cattle exported overseas and interstate. Chart 7.8 shows the
number of live cattle movements from the Territory to these markets. It should be noted that the international live
cattle trade figures do not include live Territory cattle that are exported overseas through ports outside the
Territory.
Chart 7.8: Annual Number of Live Territory Cattle Movements
Source: Department of Primary Industry and Fisheries
International Live Cattle Exports
Indonesia is the Territory’s major overseas destination for live cattle, accounting for about 78 per cent of total live
Territory overseas exports in 2012-13. Other major overseas export destinations for live Territory cattle in 2012-13
were the Philippines (10 per cent), Vietnam (6 per cent), Malaysia (4 per cent) and Brunei (2 per cent). The
Territory exported live cattle to Egypt in 2011-12 (Chart 7.9).
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Northern Territory Economy
Chart 7.9: Annual Number of Live Territory Cattle Overseas Exports
Source: Department of Primary Industry and Fisheries
The number of live Territory cattle exported overseas declined by 7.0 per cent from 266 000 head in 2011-12 to
247 000 head in 2012-13. The decline was largely due to a decrease in exports to Indonesia (down by 28 000
head) and Egypt (down by 5000 head), partly offset by an increase in exports to Vietnam (up by 15 000 head).
The decline follows a pattern since 2007-08 largely due to decreased exports to Indonesia. Between 2007-08 and
2012-13, live Territory cattle exports to Indonesia declined by 27 per cent. The decline coincided with policy
changes by the Indonesian Government, including the enforcement of weight restrictions and a reduction in
export permits to promote local production of cattle in order to be self sufficient over the long term. In addition,
the ban on live cattle exports put in place by the Commonwealth in mid-2011 had a further adverse effect on the
Territory’s live cattle industry. This was followed by the introduction of a new regulatory framework, the Exporter
Supply Chain Assurance System (ESCAS), to oversee the welfare of live animals exported from Australia.
The decline in live cattle exports to Indonesia over the past five years has led to the emergence of new markets, in
particular Vietnam with regular exports commencing in 2012-13. In that year, Vietnam became the third largest
overseas export destination, receiving about 16 000 head of cattle. In the first nine months of 2013-14, the
number of live Territory cattle exported to Vietnam has already surpassed the total for 2012-13, with more than
24 000 head exported during this period.
Recent data shows that the number of live Territory cattle exported overseas in the first nine months of 2013-14 is
about 78 000 head higher than over the same period in 2012-13. This is primarily due to a pick up in live Territory
cattle exports to Indonesia and Vietnam, partly offset by lower exports to the Philippines. Live cattle exports to
Indonesia are expected to continue to increase over the forward years as Indonesia changes from the quota
system to a price-based system, where exports are influenced by the price being above or below an affordable
level as determined by the Indonesian Government.
Interstate Live Cattle
In 2012-13, there were 336 470 live Territory cattle sent interstate with an estimated value of $160 million. The
bulk of Territory cattle sent interstate went to Queensland (62.7 per cent) and South Australia (20.8 per cent). The
remaining live Territory cattle were sent to New South Wales (6.4 per cent), Western Australia (6.4 per cent) and
Victoria (3.6 per cent) (Chart 7.10).
74
Northern Territory Economy
Chart 7.10: Annual Number of Live Territory Cattle Interstate Exports
Source: Department of Primary Industry and Fisheries
Other Livestock
Other livestock production in the Territory was valued at an estimated $20 million in 2012-13. Crocodile
production alone accounted for about 93 per cent of other livestock production, with the remaining share from
the production of buffaloes, horses, camels, goats and sheep.
Other livestock production is expected to decline marginally in 2013-14. Crocodile production is expected to fall
due to demand for higher quality skins, which has increased processing times. This is expected to be partly offset
by an increase in buffalo exports, coinciding with higher demand from emerging markets such as Vietnam.
Horticulture
The horticulture industry comprises fruit, vegetables, nursery products, turf and cut flowers. The ABS estimates that
there were 317 horticultural businesses actively operating in the Territory at June 2012. The majority of these
businesses (about 74 per cent) were sole traders/owner operators.
The value of horticulture production in the Territory in 2012-13 was estimated to be $217 million. This amount
comprised $141 million for fruit production, $60 million for vegetable production and $16 million for nursery and
cut flowers production (Chart 7.11). The main fruits produced in the Territory are mangoes, melons and bananas.
The main vegetables produced in the Territory are okra, bitter melon, snake beans, pumpkin and cucumber.
Chart 7.11: Horticulture Value of Production, by Individual Commodity, 2012-13
Source: Department of Primary Industry and Fisheries
It is estimated that the value of horticulture production in the Territory will decline by 25.0 per cent to about
$163 million in 2013-14, largely due to a decrease in value of mangoes and vegetable production.
Mangoes are the largest horticultural industry in the Territory. In 2011-12 and 2012-13, about 30 000 tonnes per
annum of mangoes were produced. This was nearly double the average volume of mangoes produced in the
75
Northern Territory Economy
five years preceding 2011-12. The value of mango production in the Territory was $70 million in 2012-13, but
production is expected to decline by about 35 per cent to an estimated $45 million in 2013-14. This reflects an
estimated 40 per cent reduction in the quantity of mangoes produced following a poor wet season, warmer
dry season conditions and mass fruit-drop events. The value of vegetable production in the Territory is estimated
to decline by about 50 per cent to an estimated $30 million in 2013-14. This reflects a decrease in the quantity of
bitter melon, okra and snake beans produced in the Territory, following record production in 2012-13.
Fisheries
Crustacean production in the Territory is dominated by prawns and mud crabs. Fish production largely comprises
snapper, barramundi and shark. Aquaculture in the Territory is largely related to pearls and barramundi
fingerlings, with a small contribution from aquarium fish and spirulina production (used as a human diet
supplement and a feed supplement in the aquaculture, aquarium and poultry industries).
In 2012-13, the estimated value of fisheries production in the Territory was about $80 million. Fish and crustacean
production each accounted for 35 per cent of total fisheries production in 2012-13 (Chart 7.12). Aquaculture
production accounted for the remaining 30 per cent of total fisheries production in the Territory.
Chart 7.12: Fisheries Production, Northern Territory, 2012-13
Source: Department of Primary Industry and Fisheries
In the ten years to 2012-13, the value of fisheries production in the Territory has been trending downwards,
largely driven by falls in the production of prawns and pearls. This was partly offset by growth in mud crab and
fish production over the same period. It is estimated that fisheries production in the Territory will decline by about
14 per cent to $68 million in 2013-14, largely driven by a fall in aquaculture production.
Forestry
Forestry is a developing industry in the Territory with about 30 000 hectares of acacia on the Tiwi Islands and
about 12 000 hectares of African mahogany in the Daly region of the Territory.
In February 2014, the Tiwi Plantation Corporation and Japanese company Mitsui and Co. signed a memorandum
of understanding to develop markets for the sale of acacia woodchips from Melville Island. The memorandum of
understanding is for an initial five-year period and could result in 200 000 to 400 000 metric tonnes of Tiwi
woodchips exported to Japan, China and India each year. The estimated annual gross value of production is
$30 million to $40 million.
Outlook
The outlook is for the agriculture, forestry and fishing industry’s share of Territory GSP to continue to decline
moderately over the budget and forward estimates period as growth in this industry is anticipated to be outpaced
by growth in other sectors of the Territory economy. However, more importantly in absolute terms, the value of
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Northern Territory Economy
agriculture, forestry and fishing production is expected to trend upwards over the medium term, notwithstanding
the volatility from year to year, led by a recovery in the live cattle industry and the increase in forestry production.
Conditions in the Territory’s live cattle industry are expected to improve with a pick up in live cattle exports to
Indonesia following three consecutive years of declining export numbers. This reflects changes to Indonesian
Government policies and increased familiarity and implementation of ESCAS. In addition, the emergence of
Vietnam as a key export destination for live Territory cattle is expected to support growth.
The outlook for the other livestock industry is positive. This reflects investment in infrastructure by Territory
crocodile farms to further improve the quality of the skins. Furthermore, buffalo exports are expected to increase,
due to increased demand from emerging markets.
The outlook for the Territory’s forestry industry is positive following the signing of a memorandum of
understanding between the Tiwi Land Council and Mitsui and Co. to export Tiwi woodchips to overseas markets.
This will support economic growth and increase employment opportunities in the region as well as increase
Territory exports.
Horticulture production is highly influenced by climatic conditions. Mango and vegetable production is expected
to recover in 2014-15 following a good wet season in 2014. In the medium term, overall horticulture production
is expected to remain stable.
Fisheries production in the Territory has declined over the past decade, primarily due to lower prawn production
and, more recently, lower pearl production. Fisheries production is expected to decline in 2013-14 largely driven
by a decrease in aquaculture production. The value of fisheries production over the forward estimates period will
be highly dependent on climatic conditions and its influence on fish and crustacean stocks.
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Northern Territory Economy
Tourism
Table 7.5: Direct Tourism Industry Share of GSP, GDP and Employment
10-Year
Average
2011-12
2012-13
4.6
4.5
n.a.
8 000
8 000
n.a.
6.6
6.6
n.a.
2.7
2.8
n.a.
532 000
544 000
n.a.
4.7
4.7
n.a.
Northern Territory
Share of GSP2 (%)
Industry resident employment 3
Share of total resident employment (%)
Australia
Share of GDP (%)
Industry resident employment
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product; n.a.: not available
Source: TRA, State Tourism Satellite Accounts
Tourism differs from other industries as it is defined by the nature of the consumer rather than the process of
producing goods and services. Accordingly, standard ABS measures of production in the national accounts are
not available for tourism. Rather, tourism’s contribution to state and national economies is captured in a range of
production industries including accommodation and food services, arts and recreation, retail trade, education and
transport.
Tourism Research Australia (TRA) models report the direct and indirect impact of tourism at the state and territory
level based on data from the ABS’ national Tourism Satellite Accounts. Unless stated otherwise, the following
analysis is based on estimates published by TRA.
In 2012-13, TRA estimated that the tourism sector’s direct contribution to the Territory’s GSP was 4.5 per cent. This
was the highest of the jurisdictions (Chart 7.13) with contributions in other states ranging from 1.7 per cent in
Western Australia to 4.3 per cent in Tasmania. TRA estimates employment that can be directly attributable to the
tourism industry accounted for 6.6 per cent of the Territory workforce in 2012-13. This was the second highest
proportion of all states, behind Tasmania (7.2 per cent) and above the national average of 4.7 per cent.
Chart 7.13: Tourism Industry Direct Share of GSP, GDP and Employment, 2012-13
Source: TRA, State Tourism Satellite Accounts
The direct contribution of tourism to the Territory’s economy has declined over time, down from 7.1 per cent in
2006-07, but this trend was not isolated to the Territory. Tourism’s contribution to GSP also declined between
2006-07 and 2012-13 in New South Wales, Queensland, Western Australia, South Australia and the Australian
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Northern Territory Economy
Capital Territory, however the reduction was less pronounced than in the Territory. Caution should be used in
interpreting the declining share of the tourism sector to the Territory’s GSP due to the highly modelled nature of
the estimates produced by TRA.
The tourism industry’s declining share of the Territory’s GSP does not mean that the sector is shrinking in absolute
terms. Chart 7.14 shows that the value added by the tourism sector to the Territory’s GSP has been relatively stable
between 2006-07 and 2012-13, notwithstanding the volatility from year to year. However, the tourism industry’s
share of Territory GSP has declined over this period, which indicates that the value of other sectors, namely mining
and construction, has grown at a faster rate than tourism since 2006-07.
Chart 7.14: Direct Tourism Contribution to Territory GSP
Source: TRA, State Tourism Satellite Accounts
In 2012-13, TRA estimated that the tourism sector employed about 8000 people directly in the Territory and
generated a further 8000 jobs indirectly across other sectors. The sectors that contributed most to direct tourism
employment in the Territory were: cafés, restaurants and takeaway food services (1800 persons); transport (1700
persons); retail trade (1500 persons); accommodation (1100 persons); and education and training (600 persons).
Tourism remains an important contributor to the Territory’s economy, particularly in regional areas, but the decline
in its contribution to GSP reflects a difficult business environment. This is likely to be due to a combination of
factors including difficult world economic conditions in the Territory’s major tourist source markets, the relative
strength of the Australian dollar, and the distance and relatively higher costs of travel to and within the Territory.
The effect of these factors is shown by trends in visitor numbers as estimated from TRA’s International Visitor
Survey and National Visitor Survey. TRA provides estimates of international and domestic visitor numbers on a
quarterly basis, based on the surveys. TRA statistics for domestic visitor numbers are available up to December
2013, however statistics for international visitor numbers are only available up to September 2013. Accordingly,
the Northern Territory Department of Treasury and Finance has estimated international visitor numbers for the
year to December 2013.
International Visitors
The number of international visitors to the Territory has declined over the past decade. In 2013, the Department of
Treasury and Finance estimated that there were about 260 000 international visitors to the Territory. This
represents a 40 per cent decrease from the peak of over 400 000 overseas visitors during 2001.
A likely contributing factor to the decline in international visitors to the Territory over the past decade was the
relatively weak economic conditions of the Territory’s traditional tourist markets of the United Kingdom, Germany,
United States and Japan. In particular, between 2007 and 2012 ,the economies of these countries have
experienced growth of 1.0 per cent per annum or less and in the case of the United Kingdom the economy
contracted over this period. Since 2001, the fall in number of visitors to the Territory from these four countries
alone accounted for about 80 per cent of the total decrease in international visitors to the Territory (Chart 7.15).
79
Northern Territory Economy
Chart 7.15: Number of International Visitors to the Territory (moving annual total)
e: estimate
Source: TRA, International Visitors in Australia; Department of Treasury and Finance
The relative strength of the Australian dollar over the past decade may have also contributed to the decline in
international visitor numbers to the Territory by increasing the costs of travelling to and within Australia and the
Territory, compared with other destinations. Chart 7.16 shows that between 2001 and 2013, the trade weighted
index of the Australian dollar increased by about 45 per cent while the number of international visitors to the
Territory declined by 40 per cent.
Chart 7.16: Number of International Tourist Visitors to the Territory (moving annual total) and the
Trade Weighted Index of the Australian Dollar
Source: Reserve Bank of Australia; TRA, International Visitors to Australia
The decline in the number of international visitors to the Territory was not mirrored at the national level with
numbers increasing between 2001 and 2013, albeit at a modest rate of growth (estimated
2.3 per cent per annum). This may reflect the different reasons for international visitors travelling to Australia and
to the Territory. Compared to the Territory, a larger proportion of international visitors travel to Australia for
business or other purposes, such as education. Visitors who travel to Australia for these reasons are less influenced
by the value of the Australian dollar than tourists travelling for holiday and pleasure, which make up a significant
proportion of international visitors to the Territory.
An area of growth for tourism in the Territory over the past decade was the increase in the number of visitors
from Asia (excluding Japan). In 2001, there were about 23 000 visitors to the Territory from Asia (excluding
Japan), but by 2013 this number is expected to have risen to about 35 000. As a result, the proportion of visitors
from this region has increased from 5.6 per cent in 2001 to an estimated 13.5 per cent in 2013. The key
contributors to the growth in international visitors from Asia were from China, Taiwan, Hong Kong and Korea,
with the number of visitors from these countries more than doubling over the past decade.
80
Northern Territory Economy
The growth in number of visitors from Asia (excluding Japan) was also reflected at the national level. Most
notably, the number of visitors from China increased by an estimated 350 per cent between 2001 and 2013. As a
result, China has overtaken Korea, Singapore, United States, United Kingdom and Japan to become Australia’s
second largest tourist source market behind New Zealand.
Recent data suggests that the decline in international visitor numbers to the Territory may have reached a trough,
with the number of international visitors stabilising around 260 000 per annum over the past two years. This
coincided with a pick up in global activity, particularly in the key tourist source markets for the Territory and a
decline in the trade weighted index for the Australian dollar to levels that are still high in historical terms.
Domestic Visitors
In 2013, TRA estimates that there were about 897 000 domestic overnight trips in the Territory, a decrease of
13.0 per cent from 2012. This was the lowest annual total (on a calendar-year basis) since the TRA National Visitor
Survey time series began (Chart 7.17). However, after accounting for the relative margin of error in the TRA
estimates, it could be reasoned that the number of domestic overnight trips in the Territory over the past 12 years
has been relatively stable.
Chart 7.17: Number of Overnight Domestic Trips in the Territory
Source: TRA, National Visitor Survey
Across the three main purposes for overnight trips to the Territory, the numbers for 2013 are estimated to be well
below the ten-year average. The estimated number of domestic visitors travelling to the Territory in 2013 for:
 holiday or leisure was 401 000, compared to ten-year average of 470 000;
 business was 316 000, compared to the ten-year average of 335 000; and
 visiting friends and relatives was 143 000, compared to the ten-year average of 167 000.
The strength of the Australian dollar is likely to have impacted domestic visitor numbers to the Territory,
encouraging Australians to travel overseas rather than locally. However, the impact was lessened by the large
proportion of business travellers who are more influenced by economic activity and employment opportunities in
the Territory. Although the number of business travellers has declined compared to the ten-year average, the
impact has not been as great as in the holiday and leisure markets.
Tourism Infrastructure
The Territory’s tourism industry relies heavily on aviation due to the remoteness of Darwin and Alice Springs from
major metropolitan areas in other jurisdictions and the large distances between the Territory’s major tourist
attractions. Over the past year, there have been significant changes to flight routes and frequencies to and from
the Territory.
81
Northern Territory Economy
International airline capacity for the Territory has significantly expanded following the entry of Philippine Airlines
and the recommencement of flights by Malaysia Airlines to and from Darwin. These airlines join existing
international carriers Jetstar, Air Asia, SilkAir and Airnorth operating out of Darwin International Airport.
On the domestic front, Tiger Airways commenced daily flights between Darwin and Brisbane from April 2014 and
Jetstar will commence flights between Melbourne and Uluru from June 2014. Qantas has increased domestic
seat capacity to Darwin and Jetstar has increased the number of flights between Darwin and Cairns. Combined
with Virgin Airlines and Airnorth, interstate domestic airline capacity to and from the Territory is currently at high
levels.
The Darwin International Airport is currently undergoing a significant upgrade, including a $42.5 million terminal
expansion project. Once the project is complete, the terminal will nearly double in size and feature additional
departure lounge areas, improved baggage systems and security screening areas, an expanded check-in area and
upgraded facilities for international travellers. The upgrades to Darwin International Airport are expected to
significantly increase passenger handling capacity at the airport.
Despite the positive developments in tourism infrastructure over the past 12 months, Jetstar recently made a
decision to change its operations in Darwin. As part of the decision, Jetstar has relocated three A320 aircraft
previously based in Darwin to Adelaide, which resulted in a loss of 90 flight attendant and pilot jobs from Darwin.
In addition, Jetstar has reduced the overall number of flights operating out of Darwin from 54 to 49, including the
suspension of flights from Darwin to Tokyo via Manila from March 2014.
Tourism accommodation capacity can be an important influence on the number of international and domestic
visitor numbers to the Territory. Tourism accommodation data covers all hotels, motels, guest houses and service
apartments with 15 or more rooms available to the public.
The ABS reports that the average occupancy rate for Territory tourist accommodation was about 65 per cent in
2012-13. In Darwin, the average occupancy rate for tourist accommodation was about 80 per cent over the same
period, but reached 90 per cent at certain times during the year.
Tourist accommodation capacity is expected to increase over the coming years, easing pressure on occupancy
rates in the Territory, which is currently high by industry standards. A number of tourist accommodation facilities
have been recently completed or are currently under construction in Darwin and Palmerston, including H Hotel,
SOHO suites and Quest Berrimah. In addition, a large number of residential units, serviced apartments and
dedicated workers’ accommodation facilities are under construction or recently completed, which should see
tourism accommodation providers focus on the leisure market.
Outlook
The outlook is for international and domestic visitor numbers to the Territory to stabilise in the short term and
improve over the medium and long term. A key factor in the more positive outlook for the tourism industry in the
Territory is the forecast improvement in economic conditions in the Territory’s key tourist source markets.
Table 7.6 compares the average annual economic growth rate observed for the Territory’s traditional tourist
markets between 2007 and 2012 with the IMF forecasts for economic growth for these countries over the
forward estimates period (2013 to 2017). For all countries, except China, the IMF forecasts the average annual
rate of growth in the economy over the forward estimates period to be significantly higher than the actual
outcome over the previous six years. For China, the IMF forecasts economic growth to moderate, but remain high
relative to growth in other global economies.
Table 7.6: Economic Growth Forecasts of the Territory’s Major International Tourist Source Markets (%)
United Kingdom
82
Proportion of Total
International Visitors
to the Territory
Actual Economic Growth
2007 to 20121
Forecast Economic
Growth 2013 to 2017 1
13.7
0.1
2.3
Northern Territory Economy
United States
13.6
1.0
2.7
Germany
13.1
1.2
1.3
Japan
8.5
0.2
1.1
France
7.0
0.5
1.3
Italy
4.2
- 0.9
0.5
New Zealand
3.9
1.3
2.8
China
2.0
10.1
7.2
1 Average annual change.
Source: IMF
In addition to the improved outlook in the Territory’s key tourism source markets, the tourism industry is expected
to be supported by increased domestic and international airline capacity to and from the Territory. The recent
entry of Philippines Airlines combined with the recommencement of services by Malaysia Airlines and Tiger
Airways have increased airline capacity to the Territory. Improvements in tourism infrastructure, including the
Darwin International Airport upgrade, are expected to encourage domestic and international visitors to the
Territory.
A key risk to the tourism industry remains the value of the Australian dollar against other currencies. While the
Australian dollar has depreciated against the trade weighted index, it remains relatively high by historical
standards.
83
Northern Territory Economy
Defence
Table 7.7: Defence Sector Contribution to GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
Northern Territory
Share of GSP1 (%)
7.6
7.0
8.5
Defence force personnel employment 2
6 659
6 512
6 612
Share of total resident employment 3 (%)
n.a.
n.a.
n.a.
1.9
1.7
2.0
106 453
103 959
96 942
n.a.
n.a.
n.a.
Australia
Share of GDP1 (%)
Defence force personnel employment 2
Share of total resident employment 3
GSP: gross state product; GDP: gross domestic product; n.a.: not applicable
1 Current prices.
2 Comprises permanent defence forces, reserve defence forces and Australian public service.
3 Members of the permanent defence forces are excluded from the ABS’ Labour Force Survey.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, ABS unpublished data; Department of Defence annual reports
Background
Defence makes a significant contribution to the Territory in terms of providing security to Northern Australia as
well as making a stable and long-term contribution to the Territory economy. The positioning of defence force
personnel and families in various regions across the Territory generates significant demand for goods and services
in the regions. In addition, the Australian Defence Force (ADF) presence in the Territory contributes to the
economy more broadly through:
 investment in new infrastructure and maintenance of existing facilities that typically engage Territory-based
businesses;
 residential development and the maintenance and management of existing properties by Defence Housing
Australia (DHA); and
 major ADF operations and exercises held in the Territory.
Defence is not classified as a separate industry for the purpose of the ABS reporting in national accounts. Rather,
defence expenditure is reported against a number of industries, but is predominantly included in the public
administration and safety industry.
Defence Force Personnel
In 2012-13, the Department of Defence reports that there were 6512 defence force personnel employed in the
Territory. This amount comprises 5198 persons in the permanent forces, 960 persons in the reserve forces and
354 in the Australian public service.
In 2012-13, 9.3 per cent of Australia’s permanent forces were based in the Territory. Including reserve forces and
Australian public sector employees in the Department of Defence, about 6.3 per cent of total defence force
personnel are located in the Territory. Over the past five years, the number of defence force personnel employed
in the Territory has declined. At its peak in 2009-10, there were 7234 defence force personnel located in the
Territory, declining to 6512 in 2012-13 (Chart 7.18). As a result, the proportion of defence force personnel in the
Territory fell from 7.3 per cent in 2009-10 to 6.3 per cent in 2012-13.
The decline in the number of defence force personnel in the Territory occurred primarily between 2009-10 and
2010-11, which coincided with the relocation of personnel from the 7th Battalion Royal Australian Regiment and
84
Northern Territory Economy
associated support elements to South Australia. Since 2010-11, the number of defence force personnel in the
Territory has slowly declined, largely due to a fall in the number of permanent forces located in the Territory. At its
peak in 2009-10, there were 5972 permanent defence personnel in the Territory. This number has declined by
13.0 per cent to 5198 in 2012-13.
Chart 7.18: Defence Force Personnel in the Territory
Source: Department of Defence annual reports
Joint Australia-United States Force Posture Initiative
In addition to ADF personnel located in the Territory, under the Joint Australia-United States (US) Force Posture
Initiative, United States Marine Corps (USMC) personnel will be temporarily deployed to the Territory for training
and increased interactions between US Air Force and the Royal Australian Air Force (RAAF) in Northern Australia.
Initial rotations of about 250 USMC personnel occurred in 2012 and 2013. In 2014, the number of USMC
personnel to be temporarily deployed to the Territory is expected to increase to about 1100, with the potential for
this to grow to about 2500 in the future. The USMC presence is expected to contribute to economic activity,
primarily through investment in ADF infrastructure and training facilities to support the deployment and increased
retail and wholesale trade.
Defence Expenditure in the Territory
In current terms, in 2012-13, ABS estimates that defence expenditure in the Territory was $1.42 billion, down by
1.5 per cent (or -$21 million) from 2011-12, and a decrease of 11.5 per cent (or -$184 million) from the record
high in 2010-11 (Chart 7.19). In 2012-13, defence expenditure in the Territory accounted for 5.4 per cent of total
defence expenditure.
85
Northern Territory Economy
Chart 7.19: Territory Defence Expenditure1 (moving annual total)
1 Current prices.
Source: ABS unpublished data
The significant contribution made by defence to the Territory’s economy is reflected in its share of the Territory’s
total output. In 2012-13, defence expenditure accounted for 7.0 per cent of the Territory’s GSP, in current terms.
This was the highest proportion of all jurisdictions, which ranged between 0.9 per cent in Western Australia and
5.1 per cent in the Australian Capital Territory over the same period (Chart 7.20). Nationally, defence expenditure
accounted for 1.7 per cent of Australia’s gross domestic product (GDP).
Chart 7.20: Defence Expenditure Share of GSP and GDP, 2012-131
GSP: gross state product; GDP: gross domestic product
1 Current prices.
Source: ABS unpublished data
Consistent with the decline in defence expenditure in the Territory since 2010-11, defence expenditure share of
the Territory’s GSP, in current terms, has decreased from the recent high of 9.2 per cent in 2010-11 to 7.0 per cent
in 2012-13 and compares with the ten-year average of 8.5 per cent (Chart 7.21). However, this is consistent with
national trend, with defence expenditure at the national level falling during this period. The Territory’s share of
total defence expenditure is relatively stable and has varied between 5.0 per cent and 5.4 per cent over the past
decade.
86
Northern Territory Economy
Chart 7.21: Territory Defence Expenditure1
GSP: gross state product
1 Current prices.
Source: ABS unpublished data
Defence Capital Works Projects
Defence contributes to Territory economic growth through both major and minor capital works projects, which
are often technical in nature and support skill development in the construction industry.
The largest ADF capital works project currently underway in the Territory is the $112 million Robertson Barracks
Defence Logistics Transformation Program. The project is consolidating the Joint Logistics Unit, which is currently
spread over four sites in the Darwin area, to a new central greenfield site at Robertson Barracks. The planned
works include developing 340 000 square metres of Robertson Barracks to provide 11 new buildings and
construction of a new western entrance.
In addition, a number of major capital projects have been recently completed. These include the following capital
projects:
 The Single Living Environment and Accommodation Precinct (LEAP) program, which was part of a national
program to construct over 3000 accommodation units across Australia. In the Territory, 232 units were
constructed at Larrakeyah Barracks and 686 units were constructed at Robertson Barracks as part of the Single
LEAP program. The construction phase in the Territory was completed in March 2014 and valued over
$240 million.
 Upgrade of living and working accommodation at Robertson Barracks and RAAF Base Darwin to support USMC
personnel temporarily deployed to the Territory. The project was completed in early 2014 at an estimated cost
of $11 million.
 Upgrade of the Robertson Barracks electrical reticulation system, which included construction of a new power
station building, upgrades to substations and installation of new high voltage cabling and fibre optic cabling.
The project was valued at $43 million and was completed in 2013.
Defence Operations and Exercises
The major operation based in the Territory at present is Operation Resolute, which supports whole of government
efforts to protect Australia’s borders and maritime security interests. It focuses on a range of maritime security
threats including people smuggling, illegal fishing and protection of offshore oil and gas installations.
The main exercise to be staged in 2014 is Exercise Kakadu, a large multilateral maritime warfare exercise
conducted off the coast of Darwin. The exercise is designed to improve mutual understanding of coalition naval
operations and will be held jointly between ADF and Australia’s regional defence partners.
87
Northern Territory Economy
Defence Housing
At 30 June 2013, DHA managed about 2560 properties in the Territory, accounting for about 14 per cent of the
total DHA-managed properties in Australia.
Of the DHA-managed dwellings in the Territory, about 2190 are located in Darwin and the remaining 370 are
located in Tindal (Katherine). The majority of DHA-managed properties in the Territory are leased from investors,
followed by DHA-owned properties and on-base defence stock.
The number of properties managed by DHA in the Territory has increased by 8.3 per cent from 2360 in 2008-09
to 2560 in 2012-13 (Chart 7.22). Nationally, the number of dwellings managed by DHA increased by 5.4 per cent
over the same period. The growth in number of dwellings managed by DHA in the Territory was primarily driven
by a 190.5 per cent increase in the number of DHA-owned dwellings, reflecting a significant number of
DHA-owned properties built in Muirhead, and an 11.0 per cent increase in the number of properties leased from
investors in Darwin. This was partly offset by a 51.8 per cent decline in the number of on-base defence stock,
primarily due to a reduction in the number of DHA-managed dwellings at the RAAF Base Darwin.
Chart 7.22: Territory Dwellings Managed by DHA
Source: Defence Housing Australia annual reports
In addition to managing defence housing, DHA has been actively involved in residential land development in the
suburbs of Lyons and Muirhead.
Outlook
Defence is expected to continue to be an important part of the Territory economy, contributing significantly to the
Territory’s population, employment and GSP. In addition to major capital works projects already under
construction, there are several further developments and initiatives that may increase the defence industry’s
contribution to the Territory economy.
The relocation of a large number of Bushmaster vehicles to the Territory as part of Plan Beersheba during 2014-15
and the current acquisition of medium and heavy transport vehicles are expected to create employment and
opportunities for local businesses to service and maintain these vehicles.
The planned acquisition of the new Join Strike Fighter and new surveillance aircraft is likely to provide the
opportunity for infrastructure upgrades and associated works at the RAAF Base Tindal and RAAF Base Darwin, out
of which these aircraft will operate.
Following the successful development of Lyons and the first stages of Muirhead, DHA is expected to continue
with residential development of defence-owned land in the Lee Point area. In February 2014, DHA announced
plans for future housing development to the north of Lyons, which is expected to commence in 2017 and deliver
400 homes.
88
Northern Territory Economy
Retail and Wholesale Trade
Table 7.8: Retail and Wholesale Trade Sector Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
4.7
4.8
4.8
13 600
13 600
13 400
11.1
10.8
12.1
8.7
8.6
9.1
1 598 600
1 637 200
1 573 200
14.2
14.4
15.0
Northern Territory
Share of GSP1 (%)
Industry resident employment 2
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
In 2012-13, the retail and wholesale trade industry accounted for 4.8 per cent of the Territory’s GSP. Of this
proportion, retail trade accounted for 3.1 percentage points while 1.7 percentage points were attributed to
wholesale trade. Nationally, these industries comprised a greater share of economic activity with retail trade
accounting for 4.5 per cent of Australia’s GDP in 2012-13 while wholesale trade accounted for 4.1 per cent of
GDP (a combined total of 8.6 per cent).
The contribution made by the retail and wholesale trade industry to the Territory economy is also relatively small
compared with most other jurisdictions (Chart 7.23). The difference is largely due to the small size of the Territory’s
wholesale trade industry. The remoteness and small population of Territory centres does not favour wholesale
activities and many retailers source goods directly from interstate suppliers.
Chart 7.23: Contribution of Retail and Wholesale Trade to GSP and GDP, 2012-13
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Despite its relatively small contribution to the economy, the retail and wholesale trade industry is a key employer in
the Territory. In 2012-13, the industry accounted for 10.8 per cent of resident employment, which equates to
about 13 600 Territory residents. This amount comprises 10 700 employed in retail trade and 2900 employed in
wholesale trade. The relatively high share of employment in the retail and wholesale trade sector reflects the
labour-intensive nature of this industry.
89
Northern Territory Economy
Employment in retail trade has, however, declined in recent years (Chart 7.24). At its peak in 2008-09, there were
about 12 500 persons employed in retail trade in the Territory. In subsequent years, employment in the industry
declined by 14.6 per cent to about 10 700 persons in 2012-13. The decrease over this period coincided with the
subdued retail environment that followed the GFC.
Chart 7.24: Retail Trade Employment and Volume Growth
Source: ABS, Labour Force, Australia, Cat. No. 6291.0.55.003, Retail Trade, Australia, Cat. No. 8501.0
Retail Activity (inflation-adjusted)
Retail activity in the Territory and nationally continues to be constrained in the aftermath of the GFC with
consumers exhibiting more cautious consumption patterns and increased propensity to save and pay down debt.
While global and Australian economic conditions have improved since the GFC, this has yet to be reflected
through more liberal consumer spending. In addition, the relative strength of the Australian dollar has
encouraged overseas online shopping, creating a further challenge for the traditional bricks and mortar retailers.
The effect of these challenges can be seen in retail activity data. In volume terms, retail trade activity in the Territory
increased by 1.0 per cent to $2.9 billion in 2012-13. This was the fourth consecutive year the Territory recorded
below average growth in retail trade turnover. This was mirrored at the national level, which experienced a fifth
consecutive year of below average growth in retail trade turnover in 2012-13.
Retail spending, particularly on discretionary items, in the Territory and nationally has been relatively subdued
since the GFC. A key factor is that households have become more cautious with their spending patterns and have
taken a more conservative approach to saving and borrowing. As a result, the household savings ratio increased
significantly following the GFC despite a recovery in economic conditions.
Table 7.9 compares the growth rate in each retail industry group in 2012-13 with the average annual growth rate
over the past decade. Growth in retail trade in the Territory in 2012-13 was supported by higher levels of
spending on non-discretionary items such as food and clothing as well as pharmaceuticals (a component of other
retailing). Growth in spending on discretionary items such as household goods and cafés, restaurants and
takeaway food services was well below the historical average and detracted from retail spending in the Territory
in 2012-13.
90
Northern Territory Economy
Table 7.9: Retail Trade by Industry Groups, 2012-13
Value
Year-on-Year 10-Year Annual
Change
Average Growth
$M
%
%
1 242
6.5
3.1
Household goods
504
- 4.1
9.4
Clothing, footwear and personal accessories
152
5.3
3.8
Cafés, restaurants and takeaway food services
497
- 6.9
5.6
Other retailing1
463
1.0
4.8
2 858
1.0
4.5
Food
Total
1 Other retailing comprises: department stores; newspaper and book retailing; pharmaceutical, cosmetic and toiletry goods retailing; other
recreation goods retailing; and other retailing (not elsewhere classified).
Source: ABS unpublished data
Household goods retailing has been particularly impacted by change in consumer spending patterns following
the GFC. In the five years prior to the GFC (2002-03 to 2007-08), household goods retailing grew by an average
of 15.9 per cent per annum (Chart 7.25). In the five years following the GFC, average annual growth rate in
household goods retailing was only 2.5 per cent. Within this industry group, a key influence on growth was a
large decline in spending on furniture, floor coverings, housewares and textile goods retailing. In volume terms,
spending on these goods decreased by 36.5 per cent from $126 million in 2007-08 to $80.2 million in 2012-13.
Chart 7.25: Household Goods Retailing
Source: ABS unpublished data
Prior to 2012-13, the ABS reported that spending in the Territory on cafés, restaurants and takeaway food services
had grown strongly in the years following the GFC. In 2012-13, this industry group recorded its first decline since
2008-09. The weak outcome likely reflects the combined impact of several factors including increasing costs of
essential items in the Territory, declining international visitor numbers to the Territory and high rates of household
saving.
Outlook
After a relatively challenging period between 2009-10 and 2012-13, which saw inflation-adjusted Territory retail
trade turnover grow by less than half of the ten-year average growth rate, retail conditions in the Territory are
expected to improve over the budget and forward estimates period.
The positive outlook for retail growth is supported by generally favourable macro-economic conditions including
historically low interest rates and solid population and employment growth forecasts for the Territory. Wages
growth in the Territory is expected to strengthen over the budget and forward estimates period, which should
support an increase in consumer sentiment and household spending.
91
Northern Territory Economy
Construction activity is forecast to remain at elevated levels over the next three years, which is expected to support
growth in retail trade. In particular, the high number of new dwelling completions expected in 2013-14 and
2014-15 should support growth in categories such as household goods, furniture and outdoor equipment as
these new dwellings are furnished and fitted out.
In addition to a favourable economic environment, a number of new developments are expected to add to
Territory retail trade turnover and employment opportunities. Major developments expected to have a positive
impact on the retail trade sector over the next few years include works at the Casuarina Square shopping centre,
the ongoing development of retail outlets at the new Coolalinga subdivision and the potential development of a
new large-scale shopping centre in Palmerston.
92
Northern Territory Economy
Manufacturing
Table 7.10: Manufacturing Industry Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
Northern Territory
Share of GSP1 (%)
Industry resident employment 2
Share of total resident employment (%)
5.4
4.2
5.9
3 400
3 900
3 700
2.8
3.1
3.3
7.1
6.7
8.7
938 300
935 000
998 000
8.3
8.2
9.5
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
In 2012-13, the manufacturing industry accounted for 4.2 per cent of the Territory’s GSP and employed about
3900 persons or 3.1 per cent of the Territory’s workforce. The industry represents a smaller proportion of the
Territory’s economy and employment than it does nationally. Nationally, the manufacturing industry contributed
6.7 per cent to Australia’s GDP and 8.2 per cent to total employment.
The manufacturing industry in the Territory is heavily oriented to mining-related processing. The sector is
dominated by the production of LNG from the Darwin LNG plant and alumina manufactured from the Rio Tinto
refinery at Gove. The Territory also has a helium manufacturing operation owned by BOC Limited that sources
helium from the Bayu-Undan field via the Darwin LNG plant. The balance of manufacturing in the Territory is
distributed among smaller operations that manufacture products for export and local consumption, such as steel,
wood, paper and food.
The Territory’s manufacturing industry experienced significant growth in volume terms over the period 2006-07 to
2009-10 (Chart 7.26). This coincided with the commencement of production at the Darwin LNG plant. The
increase in volume terms over this period was also as a result of increased alumina production reflecting the
completion of the Gove alumina refinery expansion, which increased production capacity from 2.0 mtpa to
3.8 mtpa. More recently, while volumes have still been growing, prices for Territory manufactured goods have
fallen sharply over the last four consecutive years to 2012-13. As a result, in current terms, the value of
manufacturing in the Territory has been trending downwards from the peak of $1.2 billion in 2009-10 to
$0.8 billion in 2012-13, reflecting a decline in commodity prices.
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Northern Territory Economy
Chart 7.26: Territory Manufacturing Growth
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
Outlook
The outlook for the manufacturing industry is negative in the short term. This mainly reflects the decision by Rio
Tinto to curtail operations at the Gove alumina refinery from 2014. The value of alumina production is expected to
fall substantially in 2014-15, with no alumina production expected to occur from 2015-16 onwards. An outline of
the economic impact of the curtailment of operations at the Gove alumina refinery is provided in Chapter 2. In
addition, the planned maintenance shutdown of the Darwin LNG plant in mid-2014 is likely to lead to lower
LNG production in 2014-15.
The decline in alumina and LNG production is expected to be partly offset by an increase in food processing in
2014-15, through a new abattoir currently under construction. The facility will be operated by the Australian
Agricultural Company Limited and is expected to be able to process more than 1000 head of cattle a day at full
capacity. Operations at the abattoir are anticipated to commence from mid-2014, creating about 350 operational
jobs. The products from the facility are expected to be exported to the US, Asia and Europe.
In the medium term, the manufacturing sector is expected to recover and grow rapidly following the
commencement of LNG production at the Ichthys plant, anticipated to be in 2016-17.
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Northern Territory Economy
Government and Community Services
Table 7.11: Government and Community Services Industry Share of GSP, GDP and Employment
2011-12
2012-13
10-Year
Average
18.7
18.8
19.4
42 600
44 400
39 700
34.9
35.4
35.8
15.8
16.3
15.5
2 903 800
2 962 900
2 578 300
25.8
26.0
24.4
Northern Territory
Share of GSP1 (%)
Industry resident employment 2,3
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2,3
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
3 Excludes members of the permanent defence forces.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
The government and community services industry comprises public administration and safety, education and
training, and health care and social assistance. The outputs from these industries are predominantly, but not
exclusively, supplied and funded by the public industry, including Commonwealth, Territory and local
governments. This industry also includes output from private providers of education, health, aged care and other
community services. The government and community services industry also includes the contribution made by
the defence industry. A separate analysis on the defence industry contribution to Territory economy and
employment is provided in the Defence section of this chapter.
In 2012-13, the government and community services industry accounted for 18.8 per cent of the Territory’s GSP in
current terms. This was the fourth highest proportion of all states behind the Australian Capital Territory
(41.7 per cent), Tasmania (23.2 per cent) and South Australia (19.4 per cent) (Chart 7.27).
Chart 7.27: Government and Community Services Industry Share of GSP and GDP, 2012-131
GSP: gross state product; GDP: gross domestic product
1 Current prices.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0
In 2012-13, it is estimated that 44 400 Territory residents were employed in the government and community
services industry. This amount comprised 17 600 persons employed in public administration and safety, 15 400 in
health care and social assistance and 11 400 in education and training.
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Northern Territory Economy
At its peak in early 2000s, the government and community services industry accounted for more than 40 per cent
of total employment in the Territory. Over the past decade, the number of Territory residents employed in the
government and community services industry has grown by an average of 1.1 per cent per annum, well below
the growth rate recorded across all industries (2.2 per cent). As a result, the government and community services
industry’s share of total employment has declined to 35.4 per cent in 2012-13 (Chart 7.28).
Chart 7.28: Government and Community Services Industry Employment1
1 Annual average.
Source: ABS, Labour Force, Australia, Cat. No. 6291.0.55.003
Outlook
Growth in the government and community services industry over the budget and forward estimates period will
be highly dependent on future levels of government expenditure. Continuing fiscal consolidation across all levels
of government means growth in the government and community services industry is likely to be flat in 2013-14
and remain subdued in the following years. As a result, the industry’s share of the Territory’s GSP is expected to
decline over the budget and forward estimates period.
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Northern Territory Economy
Other Services
Table 7.12: Other Services Industry Share of GSP, GDP and Employment
2011-12
10-Year
Average
2012-13
Northern Territory
Share of GSP1 (%)
Industry resident employment 2
23.7
24.1
23.4
41 200
42 100
38 000
33.7
33.6
34.2
35.1
35.7
34.7
4 237 100
4 299 500
3 935 700
37.7
37.8
37.4
Share of total resident employment (%)
Australia
Share of GDP1 (%)
Industry resident employment 2
Share of total resident employment (%)
GSP: gross state product; GDP: gross domestic product
1 Current prices.
2 Year average.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
The other services industry comprises accommodation and food services; transport, postal and warehousing;
information and media telecommunications; financial insurance services; rental, hiring and real estate services;
professional, scientific and technical services; administrative and support services; electricity, gas, water and waste
services; and arts and recreation services.
The other services industry accounted for 24.1 per cent of the Territory’s output in 2012-13, compared to
35.7 per cent nationally. The largest single industry contributor to the other services industry was rental, hiring and
real estate, followed by transport, postal and warehousing, and professional, scientific and technical services (Table
7.13).
Table 7.13: Other Services Industry Contribution to GSP, GDP and Employment, 2012-13 (%)
Share of GSP, GDP
Share of Total Employment
Territory
Australia
Territory
Australia
Accommodation and food services
1.7
2.3
6.6
6.9
Transport, postal and warehousing
4.4
4.8
5.5
5.1
Information media and telecommunications
1.2
2.8
1.4
1.9
Financial and insurance services
2.7
8.1
1.3
3.6
Rental, hiring and real estate services
4.6
2.5
2.0
1.7
Professional, scientific and technical services
3.4
6.8
5.2
8.0
Administrative and support services
2.3
2.9
3.2
3.4
Electricity, gas, water and waste services
1.3
2.9
1.8
1.3
Arts and recreation
1.2
0.8
2.7
1.8
Other services
1.4
1.8
4.0
3.9
24.1
35.7
33.6
37.8
Total other services industry1
1 Figures may not add due to rounding.
Source: ABS, Australian National Accounts: State Accounts, Cat. No. 5220.0, Labour Force, Australia, Cat. No. 6291.0.55.003
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Northern Territory Economy
Although the other services industry accounted for just under a quarter of the Territory’s GSP, the industry
provides direct employment to about one third of the total workforce. For example, the accommodation and food
services industry contributed 1.7 per cent of GSP in 2012-13 but employed 6.6 per cent of the Territory’s
workforce. The largest contributors to employment in the Territory in the other services industry are
accommodation and food services; transport, postal and warehousing; and professional, scientific and technical
services (Table 7.13).
Employment in the other services industry has also grown at a faster rate than the average for all industries over
the past decade. Between 2002-03 and 2012-13, employment in the other services industry has grown at an
average rate of 2.5 per cent per annum compared with 2.2 per cent per annum for all industries. As a result, the
industry’s share of total employment has risen from 32.5 per cent in 2002-03 to 33.6 per cent in 2012-13. A
contributor to the growth was the increase in the number of Territory residents employed in the rental, hiring and
real estate industry, reflecting the strength of the real estate market in the Territory over this period. In addition, the
number of people employed in the professional, scientific and technical services has increased over the past
decade reflecting the major resource projects in the Territory.
Outlook
The outlook for other services industry over the budget and forward estimates period is positive, with forecasts for
robust employment and population growth in the Territory over the next few years expected to support demand
for a wide range of services.
While strengthening population and employment growth is expected to support services industries in general,
some industries are likely to benefit more than others. The construction of the Ichthys project and the associated
large number of non-resident workers relocating to the Territory is expected to underpin strong growth in certain
industries including transport and warehousing; accommodation and food services; and scientific, professional
and technical services. Continued demand for rental accommodation and strength in Territory property markets is
also expected to support growth in the rental, hiring and real estate services industry.
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Northern Territory Economy
Abbreviations and Acronyms
ABS
ACT
ADF
B
Cat. No.
CPI
DHA
e
ERP
ESCAS
f
FHOG
FIFO
GDP
GEMCO
GFC
GSP
GST
IMF
JAEPA
JPDA
KAFTA
LEAP
LHS
LNG
LPG
M
mtpa
n.a.
NIM
NOM
NSW
NT
NTPOP
ppt
Qld
RAAF
REIA
REINT
RHS
SA
SA3
SFD
SIHIP
Tas
tcf
TFR
TRA
Australian Bureau of Statistics
Australian Capital Territory
Australian Defence Force
billion
catalogue number
consumer price index
Defence Housing Australia
estimate
estimated resident population
Exporter Supply Chain Assurance System
forecast
First Home Owner’s Grant
fly-in fly-out
gross domestic product
Groote Eylandt Mining Company
global financial crisis
gross state product
goods and services tax
International Monetary Fund
Japan-Australia Economic Partnership Agreement
Joint Petroleum Development Area
Korea-Australia Free Trade Agreement
Living Environment and Accommodation Precinct
left-hand side
liquefied natural gas
liquefied petroleum gas
million
million tonnes per annum
not applicable; not available
net interstate migration
net overseas migration
New South Wales
Northern Territory
Northern Territory Population Projections Model
percentage point
Queensland
Royal Australian Air Force
Real Estate Institute of Australia
Real Estate Institute of the Northern Territory
right-hand side
South Australia
Statistical Area 3
state final demand
Strategic Indigenous Housing and Infrastructure Program
Tasmania
trillion cubic feet
total fertility rate
Tourism Research Australia
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Northern Territory Economy
US
USMC
Vic
WA
WPI
United States (of America)
United States Marine Corps
Victoria
Western Australia
wage price index
Glossary
Consumer Price Index
A general indicator of the prices paid by household consumers for a specific basket of goods and services in one
period, relative to the cost of the same basket in a base period.
Current Prices
The value in nominal terms, not adjusted for inflation or changes in the purchasing power of money. This is in
contrast to inflation adjusted measures, which factor in changes in prices from year to year.
Employed
Persons 15 years and older who worked for one hour or more in the week as measured by the Labour Force
Survey.
Estimated Resident Population
The official Australian Bureau of Statistics population measure that represents the proportion that resides in a
defined locality for more than six months of the year and for a period of at least 12 out of 16 consecutive months.
European Union
An economic and political union of 27 member states that are located primarily in Europe.
Goods and Services Tax
In July 2000, the Commonwealth introduced a 10 per cent tax on goods and services (GST), replacing the
previous wholesale sales tax regime. Some items such as basic food, health, education and exports are GST-free.
Gross Domestic Product
The total value of goods and services produced in Australia over the period for final consumption. Intermediate
goods, or those used in the production of other goods, are excluded. Gross domestic product can be calculated
by summing total output, total income or total expenditure.
Gross State Product
Similar to gross domestic product, except it measures the total value of goods and services produced in a state or
territory. It is the sum of all income, namely, wages, salaries and profits, plus indirect taxes less subsidies. It can also
be calculated by measuring expenditure, where it is the sum of state final demand and international and interstate
trade, changes in the level of stocks, and a balancing item.
Inflation Adjusted
Inflation adjusted measures provide estimates of real change by factoring in changing price relativities from year to
year.
Labour Force
All persons 15 years and over who are available for work, that is, employed plus unemployed persons actively
seeking work. Excludes Australian Defence Force personnel and non-residents.
Moving Annual Total
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Northern Territory Economy
A method used to smooth data. These smoothing methods iron out the short-term fluctuations in the data by
averaging observations collected over a 12-month period.
Participation Rate
The proportion of the population over 15 years of age who are working or looking for work.
Progress Payments
Periodic payments made for the construction of plant, equipment, machinery and modules in locations outside
the Territory.
State Final Demand
State final demand is a major component of gross state product and is a measure of the demand for goods and
services in an economy. While state final demand includes consumption and investment expenditure, it does not
include the contribution of trade or changes in inventories to economic growth and as such is not a
comprehensive measure of economic growth.
Trade Weighted Index
An index of the average value of the Australian dollar compared with currencies of Australia’s major trading
partners. The weight given to each currency reflects the volume of trade between Australia and that particular
country.
Unemployed
Persons 15 years and older who were not employed during the week of the labour force survey and were
actively looking for work in the last four weeks.
Unemployment Rate
The number of unemployed persons expressed as a percentage of the labour force.
Visitor
Tourism Research Australia defines a visitor as someone who has stayed in a place at least 40 kilometres from their
usual place of residence for at least one night, but who is away from home for less than 12 months. An
international visitor is defined as an overseas arrival who stayed in Australia for less than 12 months.
Wage Price Index
A measure of the change in the price of wage costs over time, unaffected by the change in the quality or quantity
of work performed. It excludes non-wage costs such as superannuation, payroll tax and workers’ compensation.
101