Northern Territory Budget delivers approach to managing record net debt of $11.05b

The Budget for 2024-25 delivered an unprecedented net debt of $11.05b, due to expenditure on infrastructure, police, education, and other services.  

Lawler unveiled a record spending on education and a historic increase in funding for the police force.  She called the Budget a sensible and responsible one that lays the groundwork for a long-term future.  

Despite the projected growth of the economy by 2.3 per cent in 2024-25 and 7.1 per cent in 2025-26 – largely driven by the Barossa LNG project and other private investments in the resource sector – the Budget faces challenges from global commodity prices, inflationary pressures, and natural disasters.  

Revenue measures

Taxation and mining royalties are expected to remain stable over the forward estimate. Due to a combination of factors, including a decrease in key commodity prices and an increase in mining operation costs, the Territory's mining royalties forecast has been revised. The recent Budget update reflects these changes, resulting in a net reduction in the forecast over the budget cycle.

The Territory now expects to collect an average of $911 million per annum over the 2023-24 and 2024-25 periods in taxation and mining royalties, increasing to an average of $1 billion per annum over the forward estimates period.

Mineral Royalties Act 2024

Following the final report released in April 2023 and tabled by the Mineral Development Taskforce, a recommendation was made to reform the Territory’s mineral royalty arrangements and introduce an ad valorem royalty scheme. In response, legislation for the new Mineral Royalties Act 2024 has been drafted, and if passed, will be operational from 1 July 2024 and apply to all mines that commence operation from that date. The underlying intention of the Mineral Royalties Act 2024 is to provide a competitive and simplified scheme to incentivise new mines while providing a fair return to the Territory. 

The Mineral Royalties Act 2024 will include the following key features:

• Four categories of rates: 7.5 per cent, 5 per cent, 3.5 per cent and 2.5 per cent, assigned to a mineral depending on cost intensity/complexity/value add through processing in the Territory;
• simplified royalty calculation;
• deduction of transport costs to recognise high cost of transport in the Territory;
• list of commodities and applicable royalty rates (based on the four categories) to provide certainty and transparency;
• valuation determined on arm’s-length sales or published indexes;
• quarterly royalty payments and annual returns;
• recognition of value-add processing in the Territory; and
• application of the Taxation Administration Act 2007 for administrative functions of the scheme.

If you wish to discuss the Northern Territory announcements, please reach out to a Grant Thornton Partner today.

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