Living within its means as debt soars
This afternoon, South Australian Treasurer Tom Koutsantonis handed down the 2026-27 State Budget. This is the first budget the Treasurer has delivered in close to a decade after recently returning to the role following the March State Election. The Treasurer described the State Budget as “disciplined”, framing it around “relief for families and stability for business”, whilst also reiterating that the State is open for investment.
Unlike its eastern counterparts, this is not a pre-election Budget and spending is largely confined to the commitments the Malinauskas Labor Government took to the March election.
With debt expected to rise above $50 billion for the first time in the State’s history, the Treasurer stated that productivity and fiscal discipline were central themes for the State Budget. In an effort to boost productivity, the Government will invest $50 million to establish a Research and Development Productivity Fund, with a focus on future industries and new opportunities for the State’s economy.
Central to the productivity push is a partial freeze on the recruitment of non-frontline positions across all government agencies for the next 12 months, noting one in every two vacancies can be recruited. The measure is expected to result in 1,000 fewer full-time roles, saving roughly $120 million each year, without forced redundancies.
In line with the Premier’s focus on housing, the Government has established a $2.5 billion housing package, which will aim to build 13,500 new homes each year. This includes $50 million for the construction of 400 homes in what will become the nation’s first neighbourhood exclusively accessible to first-home buyers. Additionally, after promising to abolish stamp duty for people aged over 60 who purchase a new home valued at up to $2 million, the Government has also decided to extend this commitment to victims of domestic, family, and sexual violence.
On education, the Budget includes $174 million over four years to make public education completely free in government schools from 2027. It will allocate $210 million over six years to the school infrastructure program, which will be used to redevelop and upgrade 37 public schools, including Fraser Park Primary School, Mount Barker High School, and Kapunda High School.
Following a 4.9 per cent increase in utilisation of the public health system and a higher cost for service delivery, the Government has allocated $1.7 billion over five years for the health system. Additionally, with increasing pressures on aged care services, $250 million has been committed to a no-interest aged care loan scheme. This will be used to grow the number of aged care beds by 650, including a minimum requirement for dementia support beds.
In a pitch to older constituents, the Government has also expanded access to the Seniors Card to all South Australians aged 60 and over, regardless of working hours. The measure is expected to benefit an additional 80,000 seniors and provide discounts on fuel, transport, and groceries.
The forecast operating balance surplus of $80 million in the mid-year budget update has improved to $189 million following the receipt of additional GST and state tax revenues. In 2026–27, the Government is projected to achieve an operating surplus of $223 million, with further surpluses expected through to 2029–30. State debt is projected to reach $53.7 billion by 2029–30, up from $34.7 billion in 2025–26. Additionally, net debt as a percentage of GSP is projected to increase from 20.9 per cent in 2025–26 to 27.1 per cent in 2029–30.
Independent Measures of Note
Housing: $1.3 billion over eight years for the Rent to Own program, which aims to build 2,000 affordable homes and is funded in partnership with the Federal Government. The Government will work to secure and sell land, including the Warradale Barracks, for housing developments.
Whyalla Steelworks: $319 million over two years from 2025–26 to fund operations during the sale of the steelworks. This is in partnership with the Federal Government.
Education: $174 million over four years for free public education in government schools from the 2027 school year.
Keeping Kids off Screens: $76 million over four years to promote active and healthy lifestyles for children, including free school camps, extended sports vouchers and one free term of before or after-school activities in public schools.
Arts and Culture: $48.9 million in 2029–30 for the development of a new Arts and Media Hub in partnership with the Australian Broadcasting Corporation.
Fuel Security: $40 million to secure a strategic reserve of up to 20 million litres of diesel, noting the recent commercial agreement reached with IOR to utilise capacity at its storage facility at Port Bonython in the Upper Spencer Gulf.
Outside School Hours Care: $45.5 million over four years to establish OSHC services at 68 government primary schools, creating an additional 2,300 places across the State.
AUKUS Planning: $15 million over two years to establish a business case, planning and design for transport infrastructure solutions to support the increased workforce required at the Osborne Naval Defence Precinct. This is in partnership with the Federal Government.
