Turnbull warns gov’t of using debt to pay debt

Second District Representative Melvin “Mitch” Turnbull has raised concerns in the House of Assembly, warning during the 2026 budget debate that the government may be entering risky financial territory by borrowing to meet current obligations.

Turnbull questioned what he described as a growing comfort within the government with financing deficits through loans and the use of savings rather than generating sustainable revenue. He argued that this approach runs counter to sound financial management principles and could pose long-term risks to the territory’s financial stability.

“I beg to ask and question the basic fundamentals of financial management, to understand how is it that we are now seemingly comfortable using debt to pay debt, and then recording it in our revenues,” Turnbull told the House.

“If you use debt to pay debt without adequate revenues to balance it off and be able to pay your debt you’re going to find yourself in a state of dismay… you’ll find yourself or your business or entity in a state of bankruptcy,” he stated. 

He pointed to the headline figures in the 2026 estimates, noting that total projected revenues of $447.7 million were outweighed by recurrent expenditure of $454.5 million, leaving a deficit of more than $14 million. Turnbull said this gap was being covered by drawing on loan proceeds and reserves, a practice he likened to poor household budgeting. 

“We are using loan funding, and we are pulling monies from different areas of revenue that should be held for further and future development to balance this budget,” he said. Turnbull added that there was no solid or documented “area of revenue generation to be able to continue for us to afford what we’re doing.” 

“Current expenditure is getting out of hand”

Turnbull also raised concern about rising debt-servicing costs, telling members that annual debt servicing had increased sharply in the revised budget figures. He said debt financing had jumped from $24 million to $35 million, an increase of more than $10 million, while overall public debt had climbed to more than $117 million. 

He cautioned that this trajectory limited the territory’s future borrowing capacity and narrowed its fiscal space. “Unless we make some drastic changes, we’re going down a very slippery slope. Our current expenditure is getting out of hand… our debt service ratios are out of whack,” Turnbull said. 

Turnbull argued that borrowed funds must deliver clear value and economic returns, stressing that debt should support growth rather than merely sustain operations. “We have to ensure that the monies, when we do borrow monies, that we get value for those monies that we borrow,” he told the House.