The Economics and Policy unit develops and provides strategic economic and policy analysis, services and advice to contribute to achieving a strong, vibrant and expanding Northern Territory economy and growing jobs throughout the Territory.
Northern Territory economy overview
The Northern Territory has a land mass of 1.35 million sq km, the third largest of all States and Territories in Australia.
The Territory’s economy, while small compared to other Australian jurisdictions is vibrant and has an abundance of mineral and energy resources. Its close proximity to Asia, the fastest growing region of the global economy, provides ample potential business opportunities for Territory businesses. NT Gross State Product (GSP) accounts for 1.2% of Australian Gross Domestic Product (GDP).
Gross state product
The Northern Territory’s 10-year average annual economic (GSP) growth rate (2000-01 to 2010-11) was 3.6%. In 2010-11, the value of the Territory’s GSP (inflation adjusted) increased by 1.6% to $16.3 billion. Slower growth was due to the completion of a number of major projects. The national growth rate in 2010-11 was 2.1%.
Territory growth (NT Treasury) is forecast to be 2.3% in 2011-12, driven by a higher trade surplus and a recovery in household consumption. Deloitte Access Economics December 2011 Business Outlook forecasts a higher economic growth of 2.5%. The Territory’s future economic outlook is expected to strengthen with a number of major projects in the pipeline. INPEX’s impact was not included in this outlook but will further strengthen the Territory’s position.
State Final Demand (SFD) is the total domestic expenditure within the local economy. In 2010-11, SFD was valued at $18.8 billion, a slight fall compared to 2009-10. Public and private consumption are the largest component of SFD, comprising 74% of domestic demand. Components as a percentage of SFD for 2010-11 are:
|Private household consumption expenditure
|Public consumption expenditure
In the September quarter 2011, SFD was $4.8 billion, marginally lower than June quarter SFD.
In 2010-11, the value of exported goods and services is estimated to be $6.0 billion while imported goods and services is estimated at $4.0 billion. The Territory’s major exports are LNG, manganese ores and live animals. In comparison, major imports for the NT are petroleum products, machinery and equipment. Major trading partners for exports are Japan, China and the United States, with the vast majority of NT exports destined for the Asia-Pacific region while the main import partners are Singapore and Kuwait.
Key industry sectors
The mining industry remains the largest industry sector of the Territory economy. In 2010-11, major contributions to NT GSP include:
||17.4% ($2.8 billion)|
||10.7% ($1.7 billion)|
|Public Administration and Safety
||9.3% ($1.5 billion) |
||8.4% ($1.4 billion) |
|Retail and Wholesale Trade
||4.7 % ($760 million)|
These five sectors together make up 50.5% of the total of industry sector contributions to the Territory’s GSP, with combined value of their contribution to the NT economy being over $8.2 billion.
The contribution of the retail sector to the GSP in 2010-11 was $536 million, 3.3% of NT GSP. In 2010-11, Territory retail turnover was $2.7 billion, approximately 1.1% of national retail turnover. After strong growth in 2009-10, retail turnover remained relatively stable with a 0.4% increase in 2010-11. Nationally, retail trade turnover growth increased by 1.4% in annual terms.
Turnover from food retailing in 2010-11 contributed to 41.9% of total retail trade turnover in the Territory, followed by household goods retailing 19.2%, cafés, restaurants & takeaway food services 16.5% and clothing, footwear and personal accessories 5.5%.
The contribution of the construction sector to NT GSP in 2010-11 was $1.75 billion, 10.7% of GSP. The value of the construction sector is expected to grow by 4.2% in 2011-12. In 2010-11, engineering construction accounted for 53% of construction work done, residential construction 23% and non-residential construction 24%.
The value of manufacturing in 2010-11 was $1.4 billion, 8.4% of GSP. Alumina and gas manufacturing are two of the largest components of manufacturing in 2010-11.
Mining & energy sector
Mining sector production was $2.8 billion in 2010-11, 17.4% of GSP. ABS has revised down the time series value of the mining sector contribution to GSP gross value added. The main minerals produced and processed in the Northern Territory are bauxite, gold and manganese. Key energy commodities are oil, natural gas and uranium.
In 2010-11, the Northern Territory had 1.2 million visitors with a total expenditure of $1.4 billion. Domestic visitors accounted for over 75% of total visitor to the Territory. International visitors stayed in the NT for 3.7 million visitor nights during 2010-11 while domestic visitors to the NT stayed 5.6 million visitor nights. Holiday makers to the Territory accounted for 56% of total visitors to the Territory.
In the June 2011 quarter, population increased by 0.4% to 230 172 persons compared to previous quarter with the same growth rate compared to 2010 estimates. Population growth is expected at 1.8% in 2012.
Natural increase in the Territory for the June 2011 quarter was the highest on record and is the primary source of population growth. Net overseas migration also contributed to the increase, while net interstate migration was the only negative component, mainly due to major project completion and defence personnel movements.
Similar to other Australian jurisdictions, the capital city attracts the largest percentage of the population. More than 60% of the NT population is located in the Greater Darwin area. The Central region is second with close to 20% with the Katherine and Arnhem regions attracting close to 10% of the population respectively.
In 2009-10, the Territory’s total population was younger on average compared to other Australian jurisdictions with a median age of 31.3 years. The 25-29 age group remained the most populous at 9.1% of the total Territory population.
In December 2011, the number of economically active people in the Territory was 173 775 (trend) and the total NT labour force was 130 569. The total number of people employed was 124 860.
The Territory labour force participation rate was 75.2% in December 2011, an increase of 0.5 percentage points from November 2011, the highest compared to other Australian jurisdictions.
The Territory unemployment rate remained increased to 4.4% (trend) in December 2011 compared to November 2011, the third lowest unemployment rate among Australian jurisdictions and below the national unemployment rate which stood at 5.3%.
The Consumer Price Index (CPI) for Darwin decreased by 0.4% in the December quarter of 2011 compared to the previous quarter. The annual increase for Darwin was 2.4% compared with an increase of 3.1% nationally.
The Northern Territory conducts a biannual Grocery Price Survey in June and December of each year. The survey compares the cost of an identical basket of goods across different regions. The table below shows the cost of the basket of goods for each region as well as the increase in value of the basket from the previous survey and the percentage increase in the cost of the basket.
The results from this survey showed that the most expensive basket of goods in the Northern Territory was purchased in Yulara and the least expensive basket of goods was purchased in Alice Springs.
From December 2010 to June 2011, the price of a basket of goods increased by 12.4% in Yulara and 5.8% in Nhulunbuy in the same period while Darwin experienced the least percentage increase of 3.2%.
From 1 July 2011, the annual payroll tax threshold in the Territory increased from $1.25 million to $1.5 million. A firm pays payroll tax on wages that exceed the threshold at a rate of 5.5%.
Further information on the 2011-12 Budget payroll tax changes is available at the Territory Revenue Office’s website.
When the property purchase price/unencumbered value is equal to or less than $525 000, stamp duty is calculated with the formula:
D = (0.06571441 x V2) + 15 V
*** D = the duty payable in $ and V = (the dutiable value)/1000
Where the property purchase price/unencumbered value is greater than $525 000 and less than $3 million, stamp duty is 4.95% of the value. When the property purchase price/unencumbered value is equal to or more than $3 million, stamp duty is 5.45% of the value.
Further information and a stamp duty calculator is available at the Territory Revenue Office’s website.
As at June 2011, there were 14 525 businesses operating in the Territory, comprised of:
95.9% small businesses (0-19 employees)
3.8% medium businesses (20-199 employees)
0.3% large businesses (200+ employees)
SENSIS® business index
In November 2011, business confidence in the Territory was 18% compared to 27% nationally. This is in line with seasonal patterns where SMEs experienced considerably slower conditions during the quarter.
The primary concern for NT businesses was the fall in demand although Christmas trading is expected to provide an improvement in profitability and sales. Territory businesses reported increased expectations in the November quarter for all indicators with the only exception being prices, which remained unchanged.
Support for the Northern Territory Government was the highest in Australia, followed by NSW, VIC and WA in the November quarter of 2011, key reasons being ‘better awareness of small business needs’, ‘doing a good job’ and ‘they encourage growth’.
In the September quarter 2011, the proportion of family income spent on rent was 24.6% in the Territory and nationally. Similarly, the proportion of median family income needed to meet average weekly loan repayments decreased by 1.4 percentage points to 21.4% in the September quarter. The table below sets out the median purchase and weekly rental prices for a 3 bedroom house and a 2 bedroom unit within the NT:
Source: REINT September Quarter 2011
In the September quarter 2011, established house prices in the Darwin Statistical Division declined by 0.4% compared to the June quarter 2011. Darwin had the highest House Price Index (HPI) of all Australian capital cities at 212.6, compared to the eight capital city average of 144.8.
Australian Property Monitors reports the median house price in Darwin in September 2011 was $614 063, representing a quarterly decrease of 1.6% and an annual decrease of 0.3%.
In the August quarter 2011, average weekly full-time earnings in the Territory were $1400 per week, compared to national average weekly earnings of $1376. The NT maintained its position as having the 3rd highest average weekly earnings among Australian jurisdictions same as in the previous quarter.
In the August quarter 2011, the Wage Price Index (WPI) in the Territory recorded a 1.1% increase from the previous quarter, compared to a 1.2% increase nationally.