SA Budget 2020-21

South Australian Budget 2020-21: A generational budget for unprecedented times

On 10 November 2020, South Australian Treasurer Rob Lucas handed down the delayed 2020-21 South Australian Budget, confirming a focus on large scale infrastructure projects and job creation and growth. Mr Lucas acknowledged the budget figures including debt were “eye-watering” but said the opportunities were “mouth-watering for businesses”. The Treasurer framed the budget as the “jump start” to the state’s economy after the substantial impact of the bushfires and COVID-19 pandemic.

In building the case for stimulus, the Treasurer revealed that real GSP is expected to contract by 1.75% and GST returns are forecasted to fall by as much as $3.8 billion due to COVID-19. The Treasurer also indicated that the budgetary approach is based on strong advice from the Reserve Bank of Australia and the discussions of the National Cabinet. The bulk of the stimulus is deliberately focused in the first two years to address anticipated economic slow-down as a result of the windback of Federal Government stimulus. The state’s big spend will be financed largely by borrowing, with state debt to reach $33.2 billion over the forward estimates. However, Mr Lucas has predicted a surplus of $406 million in 2023-24.

In recognition of the unprecedented impact of the COVID-19 Pandemic, the Budget features a record $16.7 billion investment in infrastructure, including $8.9 billion for the final stage of the North-South Corridor, which will be the largest job-creating infrastructure project in the state’s history, creating over 4,000 jobs. Other key infrastructure projects include a $204 million investment in the upgrade of sports and recreation facilities; and $50 million of additional funding for the Aboriginal Arts & Cultural Centre at Lot 14.

In order to support businesses through the COVID recovery, the Government has announced a $4 billion stimulus package with an additional $1 billion leveraged from the Federal Government to protect businesses and jobs. Business owners will also receive $233 million in payroll tax relief, as well as reduced electricity costs. The Treasurer also announced $76 million for the Housing Construction Stimulus Package which is intended to complement the Federal Government’s HomeBuilder initiative. The Budget features $58 million over the next two years for high priority road maintenance works and $52 million in upgrades to regional roads. The Government has described part of this spend as the Tradies Package noting the importance of the skilled trades in stimulating the economy. Significantly, the Tradies Package is largely based on upgrading existing Government buildings, for instance schools, childcare centres and some hospitals. The Budget also includes $100 million for the Local Government Infrastructure Partnership Program which will provide a 50% subsidy for the costs of infrastructure projects undertaken by local governments.

Echoing the Federal Government’s emphasis on small business, Treasurer Lucas has unveiled a second round of Small Business Grants, totalling $82 million over the next year. The hard-hit Tourism and Hospitality sectors have been allocated a $12 million support package to secure new leisure events and conventions and there is $120 million for tourism marketing over the next four years, with a focus on encouraging domestic tourism to South Australia. The Government also continues to promote the local defence industry with $1 million to stimulate jobs in defence as part of a campaign in partnership with defence companies. The Budget provides $1.5 million in support for small business programs, including a small business hub on Kangaroo Island.

The state’s ongoing health response to the pandemic will be aided by a $658 million investment in building a new Women’s and Children’s Hospital at the Royal Adelaide Hospital. There is also a further $42.8 million in upgrades to health facilities over the next two years and a $5 million investment in mental health services over the same period. Following SA Police’s function as lead agency for the state’s pandemic response, the Budget features an additional $21.2 million to meet the cost of managing COVID-19 in South Australia.

The Black Summer bushfires continue to leave their mark on the state’s finances. As part of the bushfire response and recovery fund, which includes some previously announced business and recovery grants, the Budget will spend $52.8 million over the coming two years on the Local Economic Recovery Plan. The Budget also allocates $45 million over four years in bushfire recovery support for state government-owned assets on Kangaroo Island. The Budget provides $28 million over four years for hazard reduction works in the Mount Lofty Ranges and Kangaroo Island.

Record funding has been announced on the education sector and in training and skills development. The Treasurer has proposed a $87.9 million Skills and JobTrainer package, to support workers in reskilling and upskilling. The Budget also features a $13.8 million support package for international students, providing $500 grants and $200 grants to tertiary students and homestay families respectively.

FURTHER READING

For more information on the State Budget, or to enquire about our public affairs and government relations services in South Australia, please contact our Adelaide office on +61 8 7202 1300 or adelaide@gracosway.com.au.

 

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