Covid spending leaves state with $1.6bn deficit, but Treasurer hopes to be in the black by

South Australia’s deficit has blown out to $1.6bn which the Treasurer blames on Covid spending – but last year’s budget result was better than expected.

The Covid pandemic has delivered another blow to the state government’s bottom line, with a budget review reporting an increase to the operating deficit.

But Treasurer Rob Lucas said the budget was on track to return to surplus from next financial year, when Covid spending is expected to dwindle.

Mr Lucas, who on Monday released the Mid Year Budget Review, said the government had been “turbocharging” the economy throughout the pandemic with a $4bn economic stimulus.

But, he said, the state’s finances would bounce back when the stimulus period ended.

“We’re being true to that plan and the spending is limited to that particular two-year period,” he said.

Treasurer Rob Lucas said the government had been “turbocharging” the economy during the Covid pandemic. Picture: Kelly Barnes/Getty Images

Mr Lucas said such pandemic expenses were the reason for a $200m increase to the 2021-22 operating deficit, which has grown from $1.4bn to $1.6bn.

“We continue to provide whatever additional health funding that’s required for vaccinations, testing regimes, Covid-related expenses,” he said.

However, the extent of health spending that will be required over the coming years is still dependent on the Covid situation.

The review also revealed the final 2020-21 budget outcome was significantly better than expected.

The deficit fell from an original forecast of $1.8bn to a final net operating deficit of $562m.

The job growth forecast for 2021-22 was revised from 2 per cent up to 2.5 per cent.