The Northern Territory will see $2.5 billion in funding from the Federal Labor Government in the upcoming budget, that will include the already promised $1.5 billion for the Middle Arm industrial precinct that the Federal Government now says they want a cut of if proven successful.

Another $1 billion for infrastructure projects including $440 million to develop “regional logistics hubs” including in Katherine, as well as hundreds of millions in standard road upgrade pledges without firm timeframes will fill out the Albanese Government’s 2022-23 Federal Budget’s commitment to the Territory.

Federal Infrastructure, Transport and Regional Development Minister Catherine King made the announcement on Sunday ahead of the October 25 budget.

She said on ABC that while the funding commitment to the Middle Arm industrial area – now dubbed the “Middle Arm Sustainable Development Precinct” – was previously committed to by the Coalition, Labor would be funding it not as a potential Defence project but rather with the potential to “get hydrogen and other goods in”.

“It’s actually not a port in and of itself it’s enabling infrastructure to allow goods and services in and out and it’s not a container port or anything like that and it’s definitely not a defence facility,” Ms King said.

“It’s the same money [the Coalition committed to], but there’s two things we’re doing slightly differently. We want to equity fund this so we want the Commonwealth to have a stake.

“This is a really substantial build within Darwin. It’s a big economic boost for Darwin.

“It may be for hydrogen – it is one of the things that has been talked about as a possibility for the project.”

The Territory Government is still in the process of a PR blitz on the project which aims to develop the precinct into a globally competitive, sustainable development zone for “low-emission” petrochemicals, renewable hydrogen, carbon capture storage, and minerals processing.

The government is currently in the public feedback phase of development and both levels of government said they would be with the local community and remote First Nations communities in developing a workable growth strategy for Middle Arm.

The precinct itself is already home to the Santos Darwin LNG and the INPEX Ichthys Onshore LNG processing facilities, the government said, while suggesting it also has an extensive product corridor network for the efficient transmission of utilities, gas, feedstock and products, and is near Darwin International Airport, Darwin Port, the Darwin to Adelaide railway and freight terminal, and the road network.

Other projects funded under the Federal Budget for the Northern Territory include:

– $440 million to boost the development of regional logistic hubs;

-$350 million of extra funding to seal the Tanami Road and upgrade Central Arnhem Road; and

-$332 million to be used for the NT Strategic Roads Package.

The Commonwealth said the funding will create job opportunities, provide reliable access to basic health and education services, and will bring opportunities for business growth.

Strategic upgrades to the Tanami Road and Central Arnhem Road will boost Indigenous and remote communities’ businesses, and bolster flood prevention and road reliability, the government said.

“Remote Australia is dependent on good, safe roads for accessing essential services, getting to work, or welcoming tourists. Sadly, remote roads still have a death toll 11 times higher than those in major cities,” Prime Minister Anthony Albanese said.

Chief Minister Natasha Fyles welcomed the funding pledge to the NT, saying it would create “enabling infrastructure” and that the $1.5 billion for Middle Arm was not a loan.

“It’s not a loan, it doesn’t need to be repaid but if there was profit made from this infrastructure that the Commonwealth would like a share back,” she said.

“This is enabling infrastructure. This is key to developing the north, but we’ll continue to work with the Commonwealth around that equity request.”

A preliminary report found that plans to further industrialise Middle Arm could cause “significant” negative impacts on threatened species and health effects for Palmerston residents, which environmental advocates labelled as “incredibly concerning”.