NT economic growth

Approaches to calculating gross state product

Gross state product is calculated using three different methods: expenditure approach, income approach, and production approach. In the expenditure approach the key components are consumption, investment and interstate and overseas trade. In the income approach gross state product is calculated using the compensation of employees (wages and salaries), gross operating surplus (return to capital and entrepreneurship). In the production approach gross state product is calculated by using industry sector gross value added (gross value added equals output minus intermediate use of inputs). All three approaches should give the same figure for gross state product each year.

Gross state product is calculated using three different methods: expenditure approach, income approach, and production approach.

  • Expenditure: the key components are consumption, investment and interstate and overseas trade.
  • Income: gross state product is calculated using the compensation of employees (wages and salaries), gross operating surplus (return to capital and entrepreneurship).
  • Production: gross state product is calculated by using industry sector gross value added (gross value added equals output minus intermediate use of inputs).

All three approaches should give the same figure for gross state product each year.

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In 2019-20, the Northern Territory (NT) economy increased by 5.3% to $26.2 billion, compared to a decline of 1.3% for 2018-19, as measured by gross state product (GSP) (inflation adjusted). The Territory reported the highest growth rate of the jurisdictions, ahead of the Australian Capital Territory (2.4%), Western Australia (1.4%), and Tasmania (0.3%). The Territory’s 10‑year average growth in GSP is 2.5%. In 2019-20, the national economy declined by 0.3% from $1.952 trillion to $1.947 trillion.

The increase in Territory GSP was largely driven by a significant increase in LNG exports and a modest increase in government consumption expenditure.

Economic growth is forecast to fall by 0.1% in 2020-21, before increasing by 1.5% in 2021-22, reflecting the Ichthys LNG plant reaching full production as well as public investment in the Darwin ship lift and marine industry project, City Deals project, and significant defence and transport-related infrastructure expenditure.

Northern Territory GSP, chain volume, inflation adjusted - see above for detailed description of graph
Source: Australian Bureau of Statistics catalogue number 5220.0; Department of Treasury and Finance

Source: Australian Bureau of Statistics catalogue number 5220.0

State final demand

In 2019-20, the Territory’s state final demand (SFD), which measures total domestic expenditure within the local economy, fell by 4.9% to $23.5 billion from $24.7 billion in the previous year. The fall in SFD reflects a decline in private business investment, driven by the completion of the construction phase of the INPEX LNG project, uncertainty weighing on business investment decisions, and COVID-19 restrictions in the second half of 2019-20 affecting household consumption.

This marks the third successive year of declining SFD, attributed to the completion of works on the Ichthys LNG project and corresponding decline in investment. Current SFD levels are around the same levels as at 2010-11 and below the 10‑year average of $27.9 billion.

SFD growth is expected to be flat in 2020-21, before rising to 0.5% in 2021-22.

Northern Territory SFD value and YoY growth rates, inflation adjusted - see above for detailed description of graph.
Source: Australian Bureau of Statistics catalogue number 5220.0; Department of Treasury and Finance

Northern Territory state final demand components growth - see above for detailed description of graph.
Source: Australian Bureau of Statistics catalogue number 5220.0; Department of Treasury and Finance

Source: Australian Bureau of Statistics catalogue number 5220.0

Consumption

In 2019-20, consumption expenditure (public and private) comprised 81% of SFD. Total consumption expenditure fell by 0.5% to $18.9 billion from $19.0 billion in 2018-19, driven by a 3.6% decline in household consumption to $10.5 billion, partially offset by a 3.7% increase in public consumption to $8.5 billion.

The main categories that contributed to the decline in household consumption were:

  • hotels, cafes and restaurants (down by 13.3% to $1.2 billion)
  • transport (down by 14.1% to $832 million)
  • alcoholic beverages and tobacco (down 6.4% to $410 million).

Partially offset by increases in:

  • furnishings and equipment (up by 3.9% to $506 million)
  • communications (up by 5.1% to $187 million)
  • food (up by 0.6% to $1.0 billion).

Commonwealth consumption expenditure in the NT, which increased by 7.6% to $3.5 billion, was the main contributor to the rise in total government consumption.

Growth in household consumption is expected to remain subdued over the medium term, reflecting uncertainty in the employment outlook as a result of COVID-19, despite the relative resilience thus far, supported by JobSeeker and JobKeeper, as well as the one-off impact of the early access to superannuation and the bringing forward of scheduled income tax cuts.

Source: Australian Bureau of Statistics catalogue number 5220.0

Investment

In 2019-20, total investment was $4.5 billion, of which $3.2 billion was private sector investment (70%) and $1.4 billion was public sector investment (30%). Total investment decreased by 19.7%, primarily due to a 20.2% fall in private investment. Public investment decreased by 18.5%.

Private business investment is the largest component of private investment and the value of business investment was $2.5 billion, 78% of total private investment and 54% of total investment.

Private business investment is forecast to decline over the next two years, as the NT economy transitions from the completion of the INPEX project construction phase. Over the medium term, the level of private investment will be influenced by global demand for Territory resources, the Territory’s cost competitiveness in producing resources and the risk appetite of investors.

Northern Territory investment, inflation adjusted - see above for detailed description of graph.
Source: Australian Bureau of Statistics catalogue number 5220.0; Department of Treasury and Finance

Source: Australian Bureau of Statistics catalogue number 5220.0

International and interstate trade

International trade

In 2019-20, net exports of goods and services increased by 54.3% to $11.3 billion, from $7.3 billion in 2018-19. This was primarily driven by an increase in merchandise exports of 37.0% from $10.1 billion to $13.8 billion, and a decline in merchandise imports of 5.2% from $2.9 billion to $2.7 billion. Services exports decreased by 9.5% from $756 million to $684 million, while services imports decreased by 27.1% from $632 million to $461 million.

International exports are set to decline in 2020-21, mainly due to COVID-19 restrictions affecting international borders, impacting tourism and defence-related services exports, as well as goods exports stabilising as LNG production plateaus, and live cattle exports moderate.

Northern Territory international trade, inflation adjusted - see above for detailed description of chart..
Source: Australian Bureau of Statistics catalogue number 5220.0; Department of Treasury and Finance

Source: Australian Bureau of Statistics catalogue number 5220.0

Interstate trade

The Territory has a large trade deficit with other Australian jurisdictions. The net interstate trade data is part of the ‘balancing item’ in the Australian Bureau of Statistics (ABS) national accounts. It is estimated that over 90% of the balancing item is attributable to interstate trade. In the 2019-20 national accounts publication, the balancing item was substantially revised for the time series. For example, in 2018-19 the ABS estimated the balancing item to be -$1.9 billion, but in 2019-20 it was substantially revised to -$7.9 billion. In 2019‑20, the balancing item was -$8.5 billion.

Source: Australian Bureau of Statistics catalogue number 5220.0

Gross value added

In 2019-20, the gross value added of all industries was $25.0 billion, an increase of 6.1% from the previous year.

The largest sectors in 2019-20 were:

  • mining ($7.5 billion)
  • public administration and safety ($3.1 billion)
  • health care and social assistance ($1.9 billion)
  • construction ($1.5 billion)
  • education and training ($1.2 billion).

The sectors that reported growth in 2019-20 were:

  • mining (39.7%)
  • health care and social assistance (3.5%)
  • public administration and safety (3.0%)
  • financial and insurance services (1.0%)
  • electricity, gas and water services (0.9%).

All other sectors reported declines in the year, with the largest declines in:

  • wholesale trade (-19.9%)
  • construction (-15.7%)
  • transport, postal, and warehousing (-11.0%)
  • professional, scientific and technical services (-10.3%)
  • accommodation and food services (-8.1%).

In 2019-20, the major contributors to GSP growth were:

  • mining (8.6 percentage points)
  • public administration and safety (0.4 percentage points)
  • health care and social assistance (0.3 percentage points).

Total factor income

In 2019-20, total factor income, in current prices, was $25.1 billion, an increase of 7.0% compared to 2018-19. The gross operating surplus and gross mixed income (GOS / GMI) was $13.3 billion, 53% of the total factor income. The compensation of employees was $11.8 billion. Compensation of employees (COE) decreased by 0.4% and GOS / GMI increased by 14.5% for all industries.

Compensation of employees

In 2019-20, compensation of employees (wages / salaries and employer’s social contribution) decreased by 0.4% to $11.8 billion. The industry sectors with higher compensation of employees included:

  • public administration and safety ($2.6 billion)
  • health care and social assistance ($1.8 billion)
  • mining ($1.2 billion)
  • construction ($1.2 billion)
  • education ($1.1 billion).

In 2019-20, industry sectors where compensation of employees reported the largest decreases were:

  • wholesale trade (down 13.9%)
  • construction (down 10.7%)
  • financial and insurance services (down 9.1%).
  • information, media and telecommunication services (down 5.6%)
  • arts and recreation services (down 4.8%)
  • accommodation and food services (down 4.0%).

Partially offset by increases in:

  • agriculture, forestry and fishing (up 5.6%)
  • health care and social assistance (up 4.9%)
  • public administration and safety (up 3.2%).

Gross operating surplus and gross mixed income

In 2019-20, GOS / GMI increased by 14.5% to $13.3 billion. The industry sectors with higher GOS / GMI included:

  • mining ($6.0 billion)
  • ownership of dwellings ($2.2 billion)
  • manufacturing ($707 million)
  • agriculture, forestry and fishing ($538 million)
  • financial and insurance services ($451 million)
  • public administration and safety ($388 million)
  • construction ($386 million).

In 2019-20, the sectors where GOS / GMI grew most were:

  • mining (up 41.6%)
  • administrative and support services (up 30.0%)
  • retail trade (27.2%)
  • health care and social assistance (up 13.2%)
  • information, media and telecommunication services (up 9.0%).

The sectors where GOS / GMI declined the most were:

  • rental, hiring and real estate services (down 21.5%)
  • transport (down 8.2%)
  • wholesale trade (down 7.2%)
  • agriculture, forestry and fishing (down 6.1%).

Source: Australian Bureau of Statistics catalogue number 5220.0

GSP per capita

Northern Territory (NT) gross state product (GSP) per capita increased by 5.7% to $106,851 in 2019-20, and had the second highest GSP per capita of all jurisdictions behind Western Australia (GSP per capita of $110,752). Nationally, GSP per capita was $76,305. The NT and Western Australia were the only jurisdictions to have a GSP per capita over $100,000. NT GSP per capita is influenced by the relatively high paying occupations in the mining industry.

Source: Australian Bureau of Statistics catalogue number 5220.0

Gross household income per capita

GSP per capita does not provide a complete measure of income received by NT residents. Some income generated in the production process may be transferred out of the NT, or income may be received from outside the NT. As a result, gross household income per capita is the preferred measure of households’ economic wellbeing.

In 2019-20, the NT’s gross household income per capita (in current prices) increased by 2.1% to $67,704, the second highest of the jurisdictions behind the Australian Capital Territory ($92,810). Nationally, gross household income per capita increased by 3.9% to $51,394.

The definitions are sourced mainly from the Australian Bureau of Statistics publications.

Gross domestic product (GDP) - total market value of goods and services produced in Australia in a given period after deducting the cost of goods and services used in the production process but before deducting for depreciation.

Gross state product (GSP) - GSP is conceptually equivalent to GDP but refers to production within a state or territory rather than to the nation as a whole.

State final demand (SFD) - the value of total expenditure on goods and services within a state or territory ie total demand for goods and services within a state or territory. It excludes sales as inputs to a production activity, export sales and inventories. It is derived by adding up private and public consumption expenditure, and public and private gross fixed capital formation. It is conceptually equivalent to domestic final demand at the national level.

Final consumption expenditure - bet expenditure on goods and services by persons (households) and general government.

Gross fixed capital formation - expenditure on fixed assets and net expenditure on second-hand fixed assets by the private sector (private gross fixed capital formation) and general government (public gross fixed capital formation).

Compensation of employees - total payment (remuneration), in cash or kind, paid to an employee in return for work done by the employee during the accounting period.

Gross operating surplus - the excess of gross output over costs incurred in producing that output of all financial and non-financial corporate trading enterprises. It is essentially property income and includes corporate profits, interest and rents.

Gross mixed income - return accruing to unincorporated enterprises (family-owned business, owner operators etc) and includes both compensation of employees (returns on labour input) and operating surplus (returns on capital inputs).

Gross value added - the value of goods and services produced in a sector / industry (output) minus the value of consumption of intermediate inputs (output used as inputs for production of goods and services).

Private business investment - it is part of private gross fixed capital formation and includes non-dwelling construction, machinery and equipment, cultivated biological resources (assets such as orchard growth and livestock) and intellectual property products.

Balancing item - implicitly comprises changes in inventories, total net interstate trade, balancing item discrepancy and balance of payments adjustments.

Total factor income - that part of the cost of producing the gross domestic product which consists of gross payments to factors of production (labour and capital). It represents the value added by these factors in the process of production and is equivalent to gross domestic product less taxes plus subsidies on production and imports.


Last updated: 11 January 2021

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