SA Budget 2019-20

19 June 2019

South Australian Treasurer Rob Lucas handed down the 2019-20 South Australian Budget yesterday, outlining ambitious infrastructure and regional roads spending, as well as $550 million to start building a new Women’s and Children’s Hospital. The Budget features a small surplus of $94 million in 2019-20, growing to $251 million by 2022-23, despite reductions in GST payments and stamp duty revenue.

The Government will increase debt levels to finance its infrastructure program, which includes $252 for planning and early works for the final stage of the North-South Corridor; $400 million to remove two level railway crossings in Adelaide; and $51 million to bust congestion in the northern suburbs. Focused on ‘building South Australia’s future’, the Budget features significant funding to enhance road safety and address congestion, including upgrades to major regional roads and several busy metropolitan intersections.

The Budget also features a $104.5 million housing package to support home buyers, builders and other housing market trades, including interest free deposit gap loans of up to $10,000 to help buyers break into the property market and $21.4 million for a housing construction program to build around 90 homes. The Government’s infrastructure spending will total $11.9 billion over the forward estimates, with more than $3 billion going to roads infrastructure. In his speech to the Parliament, the Treasurer confirmed the Government will “continue to invest in infrastructure while putting in place responsible budget measures to ensure the budget remains sustainable”.

In key figures, non-financial public sector net debt is expected to total $13.5 billion in 2018-19, rising to $16.7 billion in 2019-20 and reaching $21.3 billion in 2022-23. The Budget estimates that the South Australian economy will grow by 2.5 per cent in 2019-20, up from 2 per cent estimated economic growth for 2018-19. Employment growth for 2019-20 is estimated to be 1 per cent.

In Health, the Government has allocated $264 million for the third stage of the Queen Elizabeth Hospital redevelopment and $97 million for upgrades to Modbury Hospital. The Budget also confirms $550 million for the new Women’s and Children’s Hospital, which will be located next to the Royal Adelaide Hospital (RAH), with the total cost of the project to be confirmed in 2019-20. The Government has committed $69 million over four years to reactivate the Repat, which includes $30 million in Federal Government funding. The Government has not taken any steps to privatise either SA Pathology or SA Radiology, despite concerns raised by the Opposition.

The Government will invest $1.4 billion in school and VET infrastructure over four years, including upgrades to regional high schools and capital upgrades to facilitate the transition of Year 7 students into high school. The Budget also provides for an extra 1,375 teachers and school support staff by 2023 to respond to an expected increase in enrolments. In addition, TAFE SA will receive an additional $27 million over four years to reform its operations and become more competitive.

The Government will spend $150 million on developing an Aboriginal Art and Culture Gallery at Lot Fourteen, with plans to make the gallery a “world class tourist attraction with a unique offering housed in an iconic building”. A further $588,000 has been earmarked to provide temporary office space at Lot Fourteen for international defence companies looking to establish a presence in SA.

A range of other initiatives will be funded via the Economic and Business Growth Fund, including $7.5 million for a red meat and wool industry program to boost farm productivity, $6 million for the SA Film Corporation’s Screen Production Investment Fund, and $10 million for an Accelerated Discovery Fund to support industry co-funded exploration activities in the mining sector.

As foreshadowed in media reports, the Budget confirms most fees and charges will be increased above the Consumer Price Index. Speeding fines and public transport fares will rise, along with car parking at public hospitals and liquor licence fees. As expected, the Government will introduce a police rent tax for major events and has increased annual exploration licence fees for mining companies around the Gawler Craton and Olympic Dam. A range of projects and programs have also been discontinued or defunded, including Brand SA, the Adelaide Fashion Festival and the Motorsport Festival. The Government will increase the solid waste levy to $110 per tonne from 1 July, rising to $140 per tonne from 1 January 2020. The Treasurer has also confirmed a further 1,588 public service positions in back office and corporate functions will be cut.

Meanwhile, the Government will deliver land tax relief of $16.9 million through a phased reduction in the top land tax rate from 1 July 2020, while also imposing a crackdown on property owners who use complicated legal structures to avoid paying land tax.

Indications in the lead up to the Budget were to expect an understated document, however the Treasurer has exceeded expectations with his economic blueprint. By relying on significantly increasing net debt over the forward estimates, Mr Lucas has been able to announce investment in “productive infrastructure”, while keeping the budget in surplus. The Treasurer has specifically tied this investment to buttressing the state against further economic downturn.

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