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More than $250 million in untied funding will be delivered to the Northern Territory, but the Federal Government has rebuked claims it is a "reward" for approving fracking.
Federal Treasurer Scott Morrison has announced the Commonwealth will grant $136 million to the Territory, to cover the shortfall of the recent GST redistribution, plus an additional $123 million.
Both Mr Morrison and Prime Minister Malcolm Turnbull have repeatedly urged the Gunner Government to lift the moratorium on fracking.
But the Commonwealth has rejected claims the funding windfall was a "reward" for the Territory Government's decision to green-light the industry last week.
"Those two issues were not related … we didn't want to enter into any announcement that preceded that because we didn't want to sway it one way or another," Mr Morrison said.
"They had to make their decision on its merits … I wish other governments around the country were showing the direction that the Northern Territory has on this critical issue."
Mr Morrison said he had been concerned about the impact of a reduction in GST on essential services.
"A difference of this scale, in a budget of the Northern Territory's size, means something very different to if this happened in a bigger state," he said.
"If we'd gone forward and just left things to their own devices, the Northern Territory would have actually had a $130 million and more reduction in GST distribution for next year.
"Now they'll have that as an increase."
Though welcoming the announcement, Chief Minister Michael Gunner said the Territory was still under significant budget pressure.
The Government has announced a reduction in wages growth for public servants as well as job cuts in a bid to find $800 million in savings to offset cuts to the Territory's share of the GST.
"It's excellent, but it's only a third of what we were losing out on," he said.
In a separate cash splash, the Commonwealth will contribute more than $500 million to Indigenous remote housing in the Northern Territory.
The Territory Government has long lobbied its federal counterparts to match a $1.1 billion housing program over ten years.
Mr Gunner said the Federal Government had now agreed to match the funding over half that time.
"We've always known what Northern Territory is doing … but we now have $550 million over five years from the Australian Government towards remote housing as well," he told Mix 104.9 FM.
"Overcrowding in remote communities, and dysfunction in remote communities, contributes a lot to our nomadic population and those pressures we get in our towns.
"So having the Australian Government signing up to that five-year deal … is just a huge result for the Territory."
Topics: business-economics-and-finance, money-and-monetary-policy, government-and-politics, budget, industry, oil-and-gas, nt, alice-springs-0870, darwin-0800
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