MELINDA JAMES, PRESENTER: With World financial systems spinning out of control many are wondering how the Territory's economy will fare. The resources sector makes up about a quarter of the Gross State Product and some are hopeful it will insulate the Territory during the lean times ahead. But the tourism and agriculture sectors may not be so lucky. Joining me now to discuss the outlook is Chris Young from the NT Chamber of Commerce and Industry. Chris Young welcome to the program.

CHRIS YOUNG, NT CHAMBER OF COMMERCE AND INDUSTRY: Evening Melinda.

MELINDA JAMES: Generally speaking, how well placed is the Territory economy to ride the global downturn?

CHRIS YOUNG: In an overall view, I think the Territory economy is probably particularly well placed to override the downturn that we're going to see right across the World and in fact what we're probably going to see right across the southern states of Australia as well.

MELINDA JAMES: Well let's go through industry by industry and start with the resources sector. Will the demand for our natural resources drop off as the Chinese economy slows?

CHRIS YOUNG: The Chinese economy is definitely going to slow but they're talking about going from about 12% per annum down to about 8 or 9% per annum. Thinking about it, with the fact that the Chinese economy is now about a trillion dollar or better economy. 9% of a trillion dollars is still a lot of expansion that is expected to go ahead there. They are still going to require a lot of resources to feed that economy. Not only that, but we've got India starting to come on line as well as the affluence grows in those areas. I think we're going to see quite a considerable amount of work still going on. The biggest issue is probably going to be in the fact that we might see some adjustment in the prices of those resources, they might come down slightly. And secondly, whereas they currently get long term contracts for the supply of those resources, those contracts will be for shorter terms. So whereas previously they might signa three year deal, maybe they'll now only sign a deal for 12 months at a time.

MELINDA JAMES: The Minerals Council of Australia has been talking up the prospects of the industry saying today that 58,000 more workers will be needed by 2020. What sort of share of those jobs do you expect the Territory might receive?

CHRIS YOUNG: Well that's going to very much depend on what projects go ahead and what projects don't go ahead over the next 5 to 10 years within the Territory. The biggest issue is really going to be in the start-up phase for the minerals sector or the resource sector.

MELINDA JAMES: Because of course we have seen a flurry of exploration activity in the last little while. What's the likelihood of these projects now getting up and running if they're finding it hard to get finance?

CHRIS YOUNG: Well that's going to be the biggest issue. A number of those projects will probably find if they were on the edge that they will not get finance. If they're successful or if they look as if they're going to be successful, they will get finance but the time lines are likely to get longer. Whereas a project that might have been planning to be up and running in 18 months time, they may now find that it's 3 years before they can get to that process.

MELINDA JAMES: Can you give us any examples of some projects that have been talked about that might now find it hard to get off the ground?

CHRIS YOUNG: Well the ones that I can think of is that there's some work going on in South Australia in the rare earths project, Arafura Resources.

MELINDA JAMES: In Central Australia?

CHRIS YOUNG: In Central Australia. Their Nolan's Bore mine. That's an area where there may be a delay now as a result of the fact that they may not be able to get the finance or because they wont have had it in place. They're still going through the feasibility stages.

MELINDA JAMES: Angela and Pamela has been quite a controversial project in Alice Springs. What about their prospects?

CHRIS YOUNG: Well Angela and Pamela is still only an exploration program at this point in time. I suspect that it's going to be a while before they're going to be in a position to say yes we're ready to go into the mining phase anyway. Having said that, it depends how long the recession, if there's going to be a recession, is going to last and most of the pundits are saying it's going to be a short, sharp thing, shouldn't last more than a couple of years.

MELINDA JAMES: Now obviously Inpex is the biggest project in the pipeline at the moment. Is there any risk it wont go ahead because of the crisis at the moment ?

CHRIS YOUNG: Our belief is that there is little risk of Inpex delaying their project. There are a number of reasons for that. One of course is that they do have a delivery cycle that they've already locked into. The second is quite simply is that resource is a strategic asset to the Japanese and particularly the Japanese Government and their economy. So we believe the size of the project, the effect it is likely to have on the Japanese economy, will mean that Inpex should be able to find the funding to go ahead and do that project.

MELINDA JAMES: Well let's move onto tourism which is the Territory's second largest industry and employs 11%, or a little over 11%, of Territorians. Will tourism operators feel the pinch? Will we see job losses in tourism?

CHRIS YOUNG: I think there's going to be a double whammy out of tourism. I don't know if we'll see local job losses. Our biggest issue might be the fact that tourism in the Territory relies also on a fairly large backpacker work force that comes through here and works for three months or so. We may see a drop off in that work force which may of course offset the fact that we may not have as many tourists coming to the Top End. Internationally tourism, I'm talking about at this stage rather than Australian tourism. Although as things get tougher down south people are less likely to leave home and go away on holidays because they'll stay at home and save money.

MELINDA JAMES: One of the consequences of this global economic down turn is maybe a drop in consumer spending which spells trouble for the Territory Government. What about threats to the Territory Government's coffers with a significant portion of the budget coming from GST revenue? If consumer spending does drop significantly, how will that effect the Government's bottom line?

CHRIS YOUNG: Well we've already been told that the Federal Government is seeing a considerable drop off in their revenues and this is only sort of 3 months into the so called crisis. The way it's going at the moment, a lot of the Territory growth in their budget has been fuelled by the windfall GST gains. Where the Chamber of Commerce has been for a number of years is concerned that a lot of that GST money is being spent on recurring expenditure. What we're going to see is that if that funding drops off, then the government is going to have to tighten their purse strings quite considerably.

MELINDA JAMES: On service provision rather than on infrastructure projects or savings?

CHRIS YOUNG: Well I think both to be quite honest with you. I think it's likely to have an effect on when some of the infrastructure projects may go ahead and I think it is also going to have an effect on how much of a service increase we see in certain areas.

MELINDA JAMES: Which infrastructure projects are you talking about?

CHRIS YOUNG: Well the ones that we're concerned about are the regional ones. The upgrading of a lot of the roads. I know that they've gone to Infrastructure Australia to try and get federal funding for those and that may be the saving grace. But again I suspect that maybe in the area of health, maybe in the area of education, some of the planned activities there may have to slow down. The 800 million odd dollars promised to Power and Water over the next 5 years, may be over 7 or 8 or maybe even over 10 years.

MELINDA JAMES: Well we'll see. Chris Young, we'll have to leave it there. But thank you very much for joining us.

CHRIS YOUNG: My pleasure Melinda.