Massive Weatherill government spend of more than $420m revealed in audit by current SA Government

A massive Weatherill government spend of more than $420m in loans and grants to companies has been revealed, as more businesses that received public funding collapse.

The Weatherill Labor government lavished more than $420m in loans and grants to companies involving 932 financial packages in the 12 months before the 2018 state election, according to an audit by the current State Government.

The figures were revealed as two more companies that received government loans and grants joined the now defunct Australian Fashion Labels on the business scrap heap.

Treasurer Rob Lucas said the other two companies were the US-based biotech firm Somark and A&C Introna Pty Ltd, which owned the Ellen Hotel in Port Pirie.

Somark, according to Mr Lucas, was given a $1m grant and a loan of $4m to establish a base at Tonsley Park in 2016 that was to employ up to 48 people. The owners of the Ellen Hotel received a $1.75m loan in 2017, of which $1.66m is still owed to taxpayers, according to a report by KPMG receiver and manager David Kidman. He said the Ellen Hotel would be put up for sale within the next fortnight.

Mr Lucas expected more companies to go under and many more not to achieve employment targets, which were set as part of loan agreements entered into by Jay Weatherill’s previous administration.

Jay Weatherill on election night. Picture Dean Martin

“These three will not be the end of the pre-election splurge by the former government,’’ Mr Lucas said. “There is no doubt there will be a number of others but I can’t put a figure on how many.’’

He said a decision would have to be made on whether loans would have to be recalled on the companies that were not able to meet the employment targets they had nominated when applying for the funds. “If a company was to deliver 100 jobs but only managed 50 and are viable, do you call in the loan?’’

Mr Lucas said the Weatherill government dispersed $259.3m in grants in 2017-18 and $162.6m in loans.

Labor’s Treasury spokesman Stephen Mullighan defended the process used to select companies as “robust’'.

Mr Mullighan said initiatives such as the Job Accelerator Grants program, which gave eligible companies $10,000 for each new employee, and the $200m Future Jobs Fund had been successful.

“The former government threw everything at the economic challenges of Holden and auto manufacturing leaving South Australia,’’ he said. “A lot of companies have been successful and grown their operations.’’ Mr Mullighan said in its last 12 months in office, Labor created 24,000 new jobs.

He also said South Australia’s gross state product had risen to 2.4 per cent and 2 per cent in the last two years of the Weatherill government before falling back to 1.4 per cent under the Liberals.