Their government leaders have signed a memorandum of understanding (MOU) to foster a closer working relationship on major cross-border infrastructure projects.
They have agreed to develop a joint investment framework that considers the priorities of each government to determine how best to invest in the Townsville to Darwin rail corridor.
"The 600 kilometre railway between Mount Isa and Tennant Creek could provide enormous economic opportunities, potentially opening up new mining projects and boosting development in our regional and remote areas," said Northern Territory chief minister Adam Giles.
"This piece of enabling infrastructure would join to, and benefit from the existing railways between Adelaide and Darwin and from Mount Isa to Townsville, providing an efficient route to market for potential new projects in the region and a new logistics option for those who currently use both these lines."
Inadequate economic infrastructure is a significant barrier to the development of Northern Australia so it was vital a project like this was given every consideration, he said. "It is why my Government has initiated key projects such as the gas pipeline connecting the Northern Territory to the eastern gas markets, the lease of the Port of Darwin, a high end hotel development and the Marine Industry Park.