SA Budget Mid Year review: Tax revenue down $79m, but on track for $40m surplus

Growing concerns over a fragile real estate market have wiped $107 million in taxes off the State Budget’s bottom line.

Growing concerns over a fragile real estate market have wiped $107 million in taxes off the State Budget’s bottom line.

Treasurer Rob Lucas on Thursday delivered a Mid Year Budget review that forecasts surpluses across the next four years, and a modest debt rise.

However, it includes new cash bailouts for the health and child protection sectors as the new State Government struggles to rein in spending.

Predictions for SA’s economic growth in the coming year have also been significantly cut, due to weak crop yields and drought conditions.

The biggest hit to state taxes came from a predicted downturn in stamp duties, which Mr Lucas said was due to both a modest level of property price increases, and fewer overall sales than tipped.

Amid a debt explosion in the eastern states, watchdogs have recently tightened regulations around bank lending and possible changes loom to laws around negative gearing.

Mr Lucas said the conveyance writedown was “modest”.

South Australian Treasurer Rob Lucas. Picture: AAP / Kelly Barnes

“But it’s obviously something that we are going to need to monitor,” he said.

“The softening there (in the eastern states) is much more significant in terms of the price of the property market, in Sydney and Melbourne in particular, than it is in Adelaide.

“Adelaide has not had the peaks and troughs. Adelaide has been a more modulated adjustment in terms of both increases and reductions.”

Recent property surveys have found that Adelaide is bucking national trends by recording modest price rises as other cities suffer big losses.

Mr Lucas announced $34.3 million in new spending over four years to deal with a large number of children under state care. The health budget has been boosted by $102 million over two years, a cost that includes the enlistment of private auditors KordaMentha in a bid to reverse chronic overspending in the Central Adelaide Local Health Network, which oversees the new Royal Adelaide Hospital and others.

Mr Lucas said he believed confidence was flowing back into SA, which would help lift modest jobs growth forecasts written into the Budget.

He said the announcement that SA would host the nation’s new space agency was “a symbolic decision” that along with others gives “optimistic pointers to the future”.

Opposition Leader Peter Malinauskas said Mr Lucas had failed to roll back “cruel cuts, closures and privatisations” unveiled in the new Government’s first Budget handed down in September.

He called for an immediate reversal to the closure of Service SA offices and TAFE campuses, plans to cut little-used bus routes and higher rents for some Housing Trust residents.

He said that could be funded by windfall GST returns.