Daniel Wills analysis: Why Rob Lucas learned to love being in debt

Debt used to be a four-letter word for Rob Lucas — but now the Treasurer is plunging our state into the red for years to come. State Political Editor Daniel Wills explains what’s changed.

• Spending big on infrastructure but SA is racking up record debt
• Five-minute guide
• What’s coming for your suburb

These aren’t your old Liberals. Having spent his first stint as Treasurer digging SA back out of a debt crater caused by the State Bank collapse, Rob Lucas 2.0 has just announced public borrowings will explode to a new record level.

In a different time and with much darker hair, Mr Lucas was a key player in the governments of former Liberal premiers Dean Brown and John Olsen as they worked under the weight of crippling debt and eventually took the tough decision to sell ETSA. It still colours Mr Lucas’s legacy.

In today’s Budget papers, handed to Parliament almost two decades later, Mr Lucas plans to spike SA’s debt from $13.5 billion to $21.3 billion.

In a Budget sell that could easily be coming from a Labor treasurer, Mr Lucas says that now is the time for government to step in and inject stimulus to the economy and intervene to underpin jobs.

For those who have been watching closely, this transformation in the SA Liberal Party has been coming for some time. While the pivot was subtle, the Liberals’ pre-election manifesto showed they were surprisingly open to owing.

It asserted that spending less than you earn is essential, but having a big bill to the bank to be paid back over the long haul can be easily lived with.

In household terms, the SA Liberals think it’s fine to borrow for a new backyard extension as long as you can still afford to eat at the end of the week. Maybe, given Mr Lucas’ warning about trade wars and economic fragility, borrowing for a backyard bomb shelter is a better analogy.

Asked during the Budget lockup how it was that modern Liberals had become such doves on debt, Mr Lucas said they’d changed as the world around them also shifted.

“Many business people, and to a lesser extent households, were saying ‘hey, we’ve got mortgages of three, four, five or six hundred thousand dollars. It’s a fact of life in terms of running our household budget, that we’re running debt in addition to trying to balance our yearly budget’,” Mr Lucas said.

Like Paddington Bear, Treasurer Rob Lucas is prepared for anything. Picture: Simon Cross

“They are used to … low levels of interest rates.”

Mr Lucas said the government was now able to borrow as cheaply as 1.66 per cent, and “the mindset has changed”.

By digging in on an infrastructure agenda, funded on a buy-now-pay later plan, Mr Lucas is also seeking to fight Labor on its own turf.

Former Labor premiers Mike Rann and Jay Weatherill made great virtue of their record in building hospitals, stadiums, roads and rail. This Budget attempts to rapidly close that point of difference and, at the next poll, Premier Steven Marshall will have ribbons to cut and significant new roadworks underway. It’s also hard for Labor, not known as great fiscal managers, to make a cogent and compelling case about the need to cut debt.

It’s a brave new world.