Territory declined

Last week, the NT  Chief Minister was unrecognisably pleased to announce agreement for a NAIF loan to build ship-lift infrastructure in Darwin. The Chief's mood has been dragged by a recent police shooting; announcement of a strong opponent for his seat in next year's election; spectacular failure of the Alice Springs power grid to juggle solar input on a cloudy day; and an equally spectacular dumping by outgoing former colleague Ken Vowles.

But none of these challenges match that of a weak, under-performing economy, punctuated by rising unemployment, business closures and a depressed housing market. This visualisation, from the NT Department of Treasury and Finance website, says a lot: at the time when the massive Inpex LNG project is celebrating their export volumes, the rest of us are doing worse than we were a year ago - and investment for the future is way down.

Attempts to up-sell the economic potential of on-shore gas exploitation have had to be moderated with real-talk acknowledging long latency, demands for exploration stimulus and uncertain viability. At the other end of the energy industry spectrum, the SunCable solar project is welcome activity, but one that has advanced (so far) independently of government. Little else on the economic horizon seems more likely, and every announce of spending, no matter how welcome, has invited closer scrutiny of growing debt.

So it's quite understandable to see the Chief grinning at finally securing federal support for a ship lift facility in Darwin.

Beyond the welcome busy-work of construction, the ship lift represents valuable infrastructure that offers new capabilities for diverse economic activities, spanning existing operations such as defence, LNG, fishing and pearling, while offering new jobs and opportunities in ship building and repair. Billed as the largest such facility in Australia, Mr Gunner rightly describes it as "a strategic investment which will open up the investment potential of the region"

Depending who's asking, there may also be some work for the facility by visiting foreign forces, although the USA's Merchant Marine Act 1920, commonly referred to as the Jones Act, muddies the waters there: requiring American workers for American ships. Just like their Independence, this one looks like a good idea that we should try here in Australia.

It sure looks like good economic news: some jobs and activity in the short term that will open up further opportunities once operational. And that's a welcome story, given the state of the Territory economy.

territory in decline

A useful appreciation of the state of the economy is commonly obscured by the political blame game. Opponents of the labor government will lazily put it all at the feet of Michael Gunner, while the Chief (equally disingenuous) blames the mess left by his predecessors.

Neither simple explanation feels quite right: our current woes can't all be pinned on one questionable grandstand build, or a squandered port sale. But just how far back in history do we need to look to understand how we got here? Standard procedure when you find yourself in a crazy situation is to look back to the last sane moment you remember, and for the NT, that'd have to be before Inpex came to town.

The Territory 'won' the Inpex LNG plant with promises of less red tape than the initial target of WA - weasel words for a lower standard of regulation. The win was announced in 2008, but approvals took another 2 years, and it wasn't until 2012 that a final investment decision was made. The project threatened to be a 'game-changer', the biggest single project Darwin would ever see, growing the economy 5% each year over the construction period. The newspaper talked of a $50b bonanza, which in a matter of weeks had calmed down to $33b - what's a few billions between friends:  if the predictions weren't precisely accurate, they captured the vibe. This was boomtime.

Anyone could've predicted the bust.

In fact many did. Local unionists and Traditional Owners joined forces to try to ensure that, if nothing else, some young locals would get apprenticeships and solid employment experience during the construction phase. If any of our politicians had tried half as hard to prepare for the inevitable post-boom decline, we'd undoubtedly be in a much better position today.

So just what is that position? and how does it compare to the pre-boom economy?

disclaimer: I'm just a simple conspiracy theorist. I'm not afraid of numbers but I'm not trained in finance, so claim no expertise:  just quoting treasury

Growth is a tricky one. Many of us would have had that conversation by now; we can see that there's been a lot of economic activity (construction) in and around our town; but we sure as hoop didn't get a piece of it. The NT economy is of course larger now than it ever has been. So why do some of us feel worse off?

Let's start by looking at growth per-capita.

That was a huge peak during construction, but it's well and truly history: GSP per capita is almost back where it was before NT Gov and Inpex started courting.

If we look at wages, the problem becomes clearer:

after the significant peak in wages growth at the start of the Inpex construction period, wage growth has steadily slowed, until this past financial year, where wages have fallen (almost -2%). Most of us know a mate who made bad financial decisions based on what they were earning 7 years ago. I saw a few new boats begrudgingly offloaded around the 2016 mark. When individuals suffer bad personal financial decisions like that, its unfortunate for them and their families; when governments do it, its a dereliction of responsibility.

New boats aside, for most of us, the real point of wages is to meet the costs of living. And that's where the story's worst. On this measure, the benefits of the boom were moderated, while the impact of the decline is pronounced.

and I think this describes the failure that is Inpex. They've had their way with our living harbour, which drove a lot of other construction activity, while diminishing the capacity of local workers to meet our costs of living.

There's a couple of other basic measurements to call out. I won't do housing, because I think it's confusing. It was infuriating to see real locals priced out of town by high rents and unaffordable property prices. And I guess it must be frustrating if you need to leave now but can't afford to sell at current prices. But I'm not going to discuss the housing market pre and post Inpex, cos I'm not confident about interpreting the information correctly.

But this, I can read:

That big dip in employment does correspond with population decline, which moderates it somewhat - and the NT unemployment rate is about the national average. But NT is not a great place to be unemployed (or young, or old, or sick, etc) and this one graph represents real pain for Territorians. I know a few blokes recently out of work, and having a real tough time at it. Where the wage price index shows that workers need to economise to get through each month, that growing proportion of unemployed have the impossible mission of meeting rising costs with subsistency welfare that remains pegged well below the poverty line.

sharing the blame

Clearly, the Territory's current predicament comes from an arc that extends from the Inpex agreement, ten years ago. While Gunner's mob haven't covered themselves in glory, failing to conform to their own budget or maintain staffing caps, its ridiculous to hold them entirely accountable. But its just as wrong-headed to pin it all on the disgraced Giles government. Some have blamed the CLP for allowing the budget to go into deficit, and debt to grow, at a time when they might have been safeguarding the economy. But Giles was just one among the past five Chiefs have held the gate open to the Inpex project without any discernable plan to prepare us for this, the inevitable post-construction decline.

If I had to pick a scape goat, it'd be Paul Henderson. He was Chief when the deal was formalised, making him best placed to plan for the present. Maybe someone should give him a medal. As economics Professor Rolf Gerritsen from CDU's Northern Institute described in this article:

"nobody said, 'well how is this project going to distort the economy?'  
and then start a conversation with the public in the NT about … what's  going to happen"

sharing the solutions

comment below :)