Credit rating agency Moody’s has re-affirmed the Northern Territory’s credit rating at Aa2, but changed the outlook to negative.
Moody’s has taken the rating action “in the wake of slower economic growth and lower Goods and Services Tax revenues.”
The Moody’s assessment states “the main cause of the weakening in the fiscal position are the cumulative effect of the lower GST grants from the Commonwealth Government of Australia (the Commonwealth, Aaa stable) as announced in the fiscal 2018 and fiscal 2019 budgets.
The assessment also notes the Commonwealth's interim response to the Productivity Commission inquiry into horizontal fiscal equalisation (HFE) of a one-off financial assistance payment of $259.6 million for 2018-19, and top-up payments over the four-year period to providing a GST relativity floor of 4.66 for the Territory, a reduction from the ten year average of 5.20.
Treasurer Nicole Manison said: “We said that the first GST cuts in 2017 would have a deep and lasting impact on the Territory and this has been confirmed by Moody’s.
“We came to Government with a detailed plan to create jobs, attract private investment and invest in infrastructure to improve the lives of all Territorians, and that’s what we are doing.”
“Our 2017/18 infrastructure spend was one of the biggest in Territory history – creating and supporting thousands of local jobs for Territorians,” she said.
“Moody’s revised rating acknowledges the deep impact of the further $2.3 billion in estimated GST cuts over the forward years, which have led to the lower credit rating outlook.
“We have put in place a Budget Review Committee to ensure all savings measures are met. The committee will also scrutinise any new expenditure requests and requests for additional staffing and identify further opportunities to minimise current expenditure.
“Savings measures in 2018/19 will total $154 million, growing to $828 million in 2021-22.”
Opposition leader Gary Higgins said the Territory’s changed credit outlook to negative continues to reinforce that the Labor government is leading down the path to insolvency.
Leader of the Opposition, Gary Higgins said that despite the credit rating staying at Aa2, the credit agency’s negative outlook reinforces the need for better fiscal management and action by the Labor government to improve the economy.
“Recently announced GST top-up payments from the Commonwealth, and Federal Government funding is likely what has saved the Northern Territory from a credit rating downgrade.”