The NT Government's credit rating has been downgraded.
Credit rating agency Moody's today downgraded the NT's rating from Aa2 to Aa3.
The government blamed the "brutal" Federal Government $500 million annual GST cuts as the main cause of the downgrade.
The new rating will still see the Territory retain a Prime 1 investment grade, with Moody's also changing the Territory's outlook from 'negative' to 'stable'.
Moody's said the reason for downgrading the Territory to an Aa3 position is:
"The rating action reflects the Territory's deteriorating stand-alone credit profile, as captured by its BCA, due to weakening revenue in the wake of slower economic growth and lower Goods and Services Tax (GST) receipts.
"The main cause of the weakening fiscal position is the cumulative effect of the lower GST grants from the Commonwealth Government of Australia (the Commonwealth, Aaa stable) as announced in the fiscal 2018, 2019 and 2020 budgets."
The last credit downgrade for the Territory occurred in 2016.
While Moody's acknowledged the Government's plan to fix the budget and return to surplus in 2027/28, the decision to downgrade is not a surprise considering the challenging economic times following the wind down of INPEX construction and the Federal Government GST cuts.
Treasurer Nicole Manison said to tackle those challenges, the Government commissioned an independent report, chaired by former WA Under-Treasurer John Langoulant, to deliver a clear plan to fix the Territory budget.
The plan (announced in April) will see the a reduction in Government expenditure through measures including freezing pay for politicians and public service executive, and a 10 per cent reduction in executive positions.
Government will also cut red tape to attract private investment to create local jobs and grow our economy.
Government is also already implementing more immediate saving measures through the root and branch review into departments and programs.
Rental subsidies amounting to $500,000 for Katherine teachers are also under review.
Treasurer Nicole Manison said: "When we came to government we inherited an $876 million deficit from the CLP and a declining economy as INPEX construction wound down.
"Then the Federal Government cut $500 million per annum from our GST.
"Today in their rating determination, Moody's has again highlighted the devastating impact the Federal Government GST cuts have had on the Territory budget.
"Our plan to fix the budget is already underway and will see the budget return to surplus in 2027/28.
The Government also announced Territory politicians and public sector executives have now received formal notification of their immediate three-year pay freeze.
The freeze will save $25 million over three years.
It's one of more than 70 measures being implemented by the Government as part of April's plan to fix the budget and return to surplus in 2027/28.
"While tough decisions like the pay freeze have been made, the plan protects front-line workers like teachers, nurses and police and will include important reforms to maximise private investment and create local jobs," the government said.
Treasurer Nicole Manison said: "We have a plan to fix the budget so we can keep investing in local jobs. We are doing what we said we would do.
"We had to take action after being left with an $876 million deficit by the former CLP Government, inheriting a declining economy post the INPEX construction phase, and having over $500million cut from our GST by the Federal Government."
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