Federal Budget 2019: Billions of dollars to improve roads but SA cops a major GST revenue blow

Regional road upgrades including the duplication of Victor Harbor Rd headline the Federal Budget for South Australia — but our slice of the GST pie is taking another huge hit. However, SA Treasurer Rob Lucas says he still expects to deliver a Budget surplus despite the revenue blow. FULL LIST OF ROAD UPGRADES

• Interactive calculator: How the Federal Budget will affect you
• Main wrap: Big tax cuts and a return to surplus
• Analysis: Giveaways galore but can it avert electoral oblivion?

A regional roads package headlined by cash to kickstart the duplication of Victor Harbor Rd has come as a further election sweetener for South Australia, despite the state’s expected slice of the GST pie taking another huge hit.

With Prime Minister Scott Morrison seeking to take back the Adelaide Hills and Fleurieu Peninsula seat of Mayo and hold the inner-southern electorate of Boothby at an election expected next month, the Federal Budget has promised to spend big on new projects to “bust congestion, improve safety and better connect towns and regions” in SA.

Federal Treasurer Josh Frydenberg’s new $2.6 billion SA roads splurge includes $73.6 million for Victor Harbor Rd to be duplicated between Main South Rd and McLaren Vale, and $44 million for the Horrocks Hwy Corridor. It also features a further $40 million for local regional roads.

In addition to $2.7 billion already pledged for South Rd, as planning for possible tunnels continues, other key city bottlenecks — including a pair of notorious level crossings — have secured big spending pledges.

The stretch of Victor Harbor Rd from South Rd to McLaren Vale will now be duplicated.

It is unclear how much of the South Rd funding has been earmarked in the Budget’s four-year forward estimates, but officials have confirmed that $1.9 billion in total federal infrastructure funds would come to SA between now and 2023.

In the city, the Ovingham level crossing at Torrens Rd is earmarked for an upgrade, as is the Hove rail intersection with Brighton Rd. The projects have been promised $116 million and $85.5 million respectively.

In total, $244 million has been allocated to Adelaide intersection upgrades, including two Main North Rd fixes and one on Grand Junction Rd.

The Princes Hwy has been promised $200 million. Key routes between Cockburn and Burra as well as Renmark and Gawler are also set for significant support.

The projects are expected to require matching funds from state taxpayers to go ahead.

However, The Advertiser’s analysis of the Budget papers finds a further $286 million blow to SA’s expected share of GST revenue in the next two years. That would deliver a dent to Premier Steven Marshall’s plans for a State Budget surplus.

SA Treasurer Rob Lucas in February warned that further belt tightening was needed and public sector unions would have to abandon “excessive” pay rise bids after SA’s GST share was cut under a complex calculation by an independent agency.

The Federal Budget papers appear to show a further whack to SA of $99 million this financial year and $187 million in 2019-20.

When Mr Lucas handed down his post-state election Budget in September, he expected a total $7.3 billion of GST money in 2019-20. That is now predicted to be just $6.8 billion.

Speaking to The Advertiser immediately after the Federal Budget was released last night, Mr Lucas said he still expects to deliver a surplus in his first Budget since the election last year, despite the huge GST blow.

Mr Lucas welcomed pledges for big new infrastructure spending for SA. However, he conceded a loss of half a billion dollars in expected GST revenue meant achieving a balance next year was increasingly difficult.

He said $2.6 billion in building projects was a good thing for SA, and above the state’s expected population share.

Mr Lucas said extra small business support would also have a particular benefit for SA’s economy.

“All of those things, we think are going to stimulate economic and jobs growth in the state,” he said.

“The GST is obviously going to make it a real challenge to deliver a balanced Budget for 2019-20.

“Even though there is a writedown for 2019-20, the first Marshall Liberal Government will still deliver a balanced Budget.”

SA Treasury estimates a loss of $171 million in GST for 2018-19 since September last year, which would deliver a deficit without further Budget repair.

There has been a further half a billion dollar hit in 2019-20, when compared to a State Budget update in December, that plunges the prospects of a second surplus in that year into serious peril.

The Government is currently seeking savings from health reform, Service SA office closures and the axing of bus routes.

Mr Lucas said there was now “a real challenge” to achieve State Budget balance in 2019-20.

“We’ll consider what our response is,” he said. “There’s no doubting it will make it more difficult.”

Mr Lucas stressed that GST estimates fluctuated “wildly”, and were the result of an independent formula rather than Federal Government policy decisions.

He said the State Government would not break any promises or “drive the economy into the ground” just to achieve surpluses.

Mr Lucas said the GST hit would be factored into considerations as ministers readied for a State Budget in June.

“We’ve made promises and are not going to be breaking those,” he said. “We’ll see what we can do.

“It is what it is.”

SA’s GST share has been hit by a combination of a smaller national pie and declining slice of that for the state.

Mr Lucas said he was prepared to match federal funding for infrastructure where necessary to get job-creating projects moving.

“We’ve been negotiating a whole series of projects to fill in the time between now and when we can make up for Labor’s incompetence on the South Rd project,” he said.

“Those projects … we either have good business cases for or they are significantly progressed towards being ready to go,” he said.

Labor has accused the State Government of having spent previous GST boons and now being caught short by a drop off.

The Budget also confirmed the Federal Government’s commitment to Adelaide’s City Deal, which helped fund the Lot Fourteen innovation precinct on North Tce.

An artist’s impression of Gawler Railway Station with an electrified train.

SA TRANSPORT SPENDING

Major projects underway

North-South Road Corridor, $3 billion

Gawler Rail Line electrification, $220 million

Joy Baluch Bridge, $160 million

SA Regional Roads Package — $260 million, including:

Victor Harbor Rd duplication, $73.6 million

Horrocks Highway Corridor, $44 million

SA Supplementary Local Roads Funding, $40 million

SA Metro Intersection Upgrade Program — $244 million, including:

Torrens Rd (Ovingham) level crossing upgrade, $116 million

Brighton Rd (Hove) level crossing upgrade, $85.5 million

Main North Rd/Nottage Tce upgrade, $9.5 million

Main North Rd/McIntyre Rd/Kings Rd upgrade, $6.5 million

Grand Junction Rd/Hampstead Rd, $9.5 million

Glen Osmond Rd/Fullarton Rd upgrade, $17.5 million

$97 million for various projects, including:

Cross Rd Fullarton Rd intersection, $30.5 million

Goodwood, Springbank and Daws roads intersection, $17.5 million

Portrush and Magill roads intersection, $49 million

Roads of Strategic Importance Program

North-South Corridor: Future priorities, additional $1.5 billion

Princes Highway: $200 million

Renmark to Gawler: $70 million

Port Augusta to Perth: $100 million

Cockburn to Burra: $50 million

KEY POLICIES: COALITION VS LABOR

INCOME TAX

COALITION: Added another $158 billion to its already legislated long-term $144 billion income tax cut plan, of which one stage has already been implemented. Says low and middle income earners will benefit almost immediately by $1080 a year for singles and $2160 for couples.

LABOR: Will roll back stages two and three of the government’s original tax plan to give bigger income tax cuts to workers earning less than $125,000 a year.

ENERGY

COALITION: $285 million cash for pensioners and low-income earners to help pay energy bills, with a one-off payment of $75 for singles and $125 for couples. New $50.4 million fund to support exploratory work for up to 50 projects in regional and remote communities, with feasibility studies into whether a micro-grid is cost-effective and whether off-grid capabilities can be upgraded.

LABOR: Extra $10 billion for the Clean Energy Finance Corporation to focus on renewable energy sources. Aiming for half of Australia’s electricity generation to come from renewable sources by 2030.

INFRASTRUCTURE

COALITION: Allocated $2.7 billion to finish South Rd and create a non-stop 78km route between Gawler and Old Noarlunga. $220 million for regional SA roads including on the Eyre Peninsula, the Goyder Highway and from Cockburn to Burra. Spending $116 million on Ovingham level crossing and $73.6 million on duplicating Victor Harbor Rd.

LABOR: Promised $1.2 billion for the final stage of Adelaide’s north-south road corridor. Nationally, Bill Shorten has promised $500 million for up to 3000km of roads and up to 300 “wider, stronger bridges”.

HEALTH

COALITION: Will create a $1.25 billion Community Health and Hospitals Program in which it will partner with communities, states and territories, health and hospital services and research institutions. $331 million on new and amended PBS listings.

LABOR: Will increase Commonwealth funding to hospitals by $2.8 billion over six years to 2025, which equates to around $800 million over the forward estimates. Will also end the remaining freeze on Medicare rebate indexation by July if it wins the coming election, at a cost of $213 million.

ADELAIDE

COALITION: $551 million for a City Deal that will help attract business and jobs to Lot 14 on the old RAH site. Money set aside for the Mission Control Centre at the Australian Space Agency and an Aboriginal Art Gallery. $21 million to football in SA, with $15 million to the Adelaide Crows to help move to the city centre.

LABOR: The Australian Space Agency will remain in Adelaide, as will the pandas after Labor said it would pay $1.3 million a year to keep them at the Adelaide Zoo.

ENVIRONMENT

COALITION: $2 billion fund aimed at reducing carbon emissions. The fund will support transport, energy efficiency and vegetation management, with the end goal of reducing carbon emissions by up to 28 per cent by 2030.

LABOR: Will start a $300 million fund to help industry meet pollution targets as part of national plans to reduce emissions by 45 per cent from 2005 levels by 2030.

SMALL BUSINESS

COALITION: Will extend instant asset write-off program threshold to $30,000 and extend it to businesses with a turnover of less than $50 million.

LABOR: Will spend $3.5 billion expanding the government’s existing small business asset write-off scheme to cover purchases above $20,000 as long as the company meets local investment criteria.

FAMILY

COALITION: $300 million in funding to combat family violence.

LABOR: $60 million package aimed at helping victims of domestic and family violence build a new life.

EDUCATION

COALITION: Allocated $30.2 million to a Local School Community Fund to upgrade classrooms and play equipment. $3.4 million program to encourage more women into science, technology and maths.

LABOR: Focus on early childhood education, which it would extend to three-year-olds as part of a guarantee of 15 hours of subsidised preschool at a cost of $9.8 billion over 10 years. Also a long-term, $14 billion commitment to more public school funding worth close to $3 billion over the first four years.

SECURITY

COALITION: Committed an extra $570 million in counter-terrorism funding, a further $294 million to improve security at airports.

LABOR: Criticised what it said were previous cuts to the AFP.