Federal Budget update leaves half a billion-dollar black hole for South Australia
South Australia has been left in the lurch by a Federal Budget update that has pulled about half a billion dollars of revenue from the state.
SA News
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Treasurer Rob Lucas’s bid for a State Budget surplus this year has been dealt a blow after his federal counterpart revealed another half-a-billion-dollar reduction in Commonwealth funding to South Australia this financial year.
The reduction has again prompted calls from Mr Lucas that public sector pay rises will be difficult to achieve and other revenue streams may need to be expanded to keep the Budget in the black.
Federal Treasurer Josh Frydenberg’s Budget update, released on Monday morning, estimates SA will get $136 million less in GST payments and a further decline of $338 million in other Commonwealth grants tied to areas including health, education and infrastructure.
It comes on top of an earlier $500m GST write-down in April.
Treasurer Rob Lucas said Federal Treasury appeared to have a more pessimistic view of the national economy in terms of future GST payments.
But he could not explain the proposed reduction in other Commonwealth payments.
Mr Lucas estimated last week the 2019-20 financial year would deliver a $91 million surplus as he announced the State Budget had delivered a surplus of $298 million last financial year.
On Monday, he told The Advertiser the State Government was still intent on balancing the Budget.
“We will have to be nimble and agile and flexible,” he said.
“If the predictions are as pessimistic as the Commonwealth Treasury believes some other (state) revenue lines will have to go up.”
“It places a greater imperative on delivering enterprise bargaining results (with public sector workers).”
Mr Lucas said deals had been struck with police, and almost negotiated with teachers.
But the Government could not “afford 3.5 per cent salary demands from the nurses’ federation and others that may be looking at salary increases”.
“We can afford reasonable salary increases … but we can’t afford extravagant salary increase,” he said.
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Opposition Treasury spokesman Stephen Mullighan said the figures most likely put the State Budget into deficit.
“Rob Lucas has no one to blame but himself for the State Budget to be back in the red,” he said.
“Rob Lucas has had record windfall revenues since he became Treasurer and unfortunately he has chosen to spend all off that money.
“So now that we see a modest reduction in GST revenues we find ourself in deficit.
“What is also really concerning about the figures is that it appears a range of other payments from the Commonwealth have in total been revised down by hundreds of millions of dollars.
“If that is the case it is bad news for South Australians.”
Mr Frydenberg said he was confident his Government will be able to keep its election promise of surpluses over the next four years, despite marked downgrades to the outlook in his last budget update.
The update showed the Federal surplus forecast for 2019/20 has been cut to $5 billion from the $7.1 billion at the time of the pre-election budget in April.
The surplus for 2020/21 is now seen at $6.1 billion instead of $11 billion as previously estimated.