SA Budget 2018-19

South Australian Treasurer Rob Lucas handed down the 2018-19 South Australian Budget this afternoon – the first of the new Liberal Marshall Government – outlining an ambitious infrastructure spending program offset by cuts to dozens of government programs and the public service.

Delivering his last State Budget 17 years ago during his previous stint as Treasurer, Mr Lucas has sought to frame the first Liberal State Budget since 2001 as a responsible and strong plan that will “clean up Labor’s financial mess” and lay the foundation for the State’s future growth.

The Budget Papers reveal a larger than expected deficit of $397 million in 2017-18, despite the $12 million surplus forecast in the December mid-year budget review by the previous Government. Mr Lucas blamed the deterioration on Labor’s mismanagement and inability to achieve savings targets. The Treasurer has previously dismissed the Opposition’s claims that the Marshall Government had brought expenditure forward to fund their election promises and damage Labor’s financial credentials.

The Budget shows surpluses are projected across the forward estimates, from $48 million in 2018-19, growing to $211 million by 2022. Net debt for the Non-Financial Public Sector is expected to be $14.2 billion in 2018-19, an increase of $305 million on Labor’s last budget estimate. Net debt is forecast to reach almost $17 billion by 2021-22.

The Budget confirms a significant investment in infrastructure of $11.3 billion over four years, with a focus on roads, education, water and public transport. Major funding commitments include $688 million for school upgrades, $578 million for the Gawler Rail Electrification project, $315 million for the Regional Roads and Infrastructure Fund and $272 million for the Queen Elizabeth Hospital redevelopment.

As foreshadowed in media reports, the Budget confirms the Government will aim to achieve a reduction of around 4000 public service jobs by mid-2022, as part of savings measures worth $715 million per year by 2021–22. A range of projects, programs, units and agencies have also been discontinued or defunded, including the Economic Development Board, Small Business Development Fund, Renewable Technology Fund, the Independent Gambling Authority and Investment Attraction Advisory Board. The Budget also includes the closure of some TAFE campuses and underutilised bus services.

Delivering on the Government’s election commitments to reduce taxes, the Budget will provide payroll tax relief for businesses with payrolls of up to $1.5 million from 1 January 2019, by lifting the tax-exempt threshold from $600,000. Investors will also benefit from land tax cuts from 1 July 2020 with the tax-free threshold increased up to $450,000 and the marginal tax rate for the current top land tax threshold being reduced to 2.9 per cent. Delivering another election commitment, the Government has confirmed reductions to the Emergency Services Levy, at a cost of $360 million over four years.

The Budget shows an extra $800 million will be spent over five years in the Health portfolio. New initiatives include $56 million as part of a $140 million 10-year plan to improve country health facilities and $40 million to cut elective surgery waiting times. The education portfolio receives an additional $515 million in the Budget, with major infrastructure projects to include $361 million for two new schools in the metropolitan area – to be delivered via public-private partnerships – and a high school in Whyalla.

The SA economy is expected to grow by 2.25 per cent from 2017-18, with employment growth expected to sit at 2.1 per cent in 2017-18, before falling to 1.5 per the following year and 1 per cent in the years after. The State’s population is expected to increase slightly to 1.78 million by 2022.

Other key budget measures include: