SA State Budget 2016: Daniel Wills explains why Treasurer Tom Koutsantonis is playing the long game

THIS State Budget is an incredible contrast to the last — State Political Editor Daniel Wills explains why.

The Advertiser’s State Political Editor Daniel Wills.

• MAIN WRAP: Your overview of State Budget 2016
• NORTH, SOUTH, EAST, WEST: What it means for your area
• SNAPSHOT: A five-minute guide to the State Budget

HOLD on, there’s uncertain times ahead. Europe is falling apart, Holden is going under and a lot could change between now and the state election. Treasurer Tom Koutsantonis wants to be agile.

This State Budget is an incredible contrast to the last. More than 12 months ago today, Mr Koutsantonis announced a radical reform of the state’s tax system and put SA at the forefront of national debate by slashing transactional taxes and restructuring for the long term.

There is no similar big bang moment in this Budget. It is extremely cautious, and all geared towards keeping as many options open as possible by getting the state back in the black.

Mr Koutsantonis says this is driven by factors overseas and outside his control. Brexit has caused a collective meltdown in Europe, and globalisation is having a huge negative effect on jobs at home.

The firebrand Treasurer today labelled this chaos a “burning platform” beneath SA.

There are $1.5 billion in surpluses sitting on the state’s books over the next four years, which have largely been created by a $2 billion raid on the Motor Accident Commission assets, a lucky $100 million delay in the opening of the new Royal Adelaide Hospital and modest spending growth.

Debt has also been kept at a modest level at a time when interest rates are low.

All of this combines to give Mr Koutsantonis choices. When circumstances change, he can too.

But one can’t ignore the place we currently find ourselves in the state electoral cycle. Having the balance sheet headroom to be nimble in the face of global uncertainty also allows Mr Koutsantonis to respond quickly and directly when unpredictable polls start swinging around at home.

Treasurer Tom Koutsantonis unveils the State Budget. Picture: Roy VanDerVegt

The next state election is in just over a year and a half’s time, and the crystal ball is murky.

Independent Senator Nick Xenophon threatens to transfer his X-factor to the state election, where boundaries for the seats are yet to be determined and will not be known until Christmas.

Keeping a bit of money back in the kitty allows Labor to both respond to the real economic problems of Whyalla and Elizabeth as well as the political demands in marginal seats.

Expect next year’s election Budget to blow a lot of the planned surpluses between now and 2020 on major projects that will both deliver a sugar hit of jobs and appeal to the swinging voter.

The standout policy measure in today’s document is the $109 million taxpayer handout to businesses who add new workers. This will be easily derided by the Opposition as subsidy gone mad in a state which is now so desperate to create jobs that the Government will pay for them.

But Mr Koutsantonis is betting that it, combined with last year’s tax cuts, will unleash the animal spirits and capitalise on a slight turnaround in confidence triggered by shipbuilding contracts.

The theory is that a cheque in the mail will make business owners feel richer and inclined to employ.

Most concerning in the Budget is the Treasury department’s lack of confidence that the current environment in SA lends itself to job creation. It expects the economy to grow at below national trend for as far as the eye can see and jobs to expand at a paltry rate.

With 1 per cent the best we can expect each year between now and 2020, it is hard to see how SA will pick itself up off the mat and at least overcome Tasmania as the “unemployment state”.

But this is where politics and economics find an unusual and positive marriage.

Employment is the only political issue in SA. Everything else is daylight behind. A Government that fails to foster jobs will face harsh judgment from the voters. Labor, to save itself, must create jobs for the people it is meant to serve. It has 18 months, and a piggy bank, to find that solution.