Federal Government cuts SA’s GST payments by $577m over next four years

SA will take a $577 million hit over the next four years due to dropping GST revenue, with the Treasurer warning unions and industry groups that there is “no flexibility” in the next year’s Budget for additional spending measures

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• Below: Education union says threats have no place

A $577 million GST writedown over the next four years will plunge South Australia’s forecast surpluses into the red.

Mr Lucas said the writedown, rolled out in the Federal Government’s Mid-Year Economic and Fiscal Outlook this week, made his mission of budget repair “more difficult” and meant departments had no option but to meet hundreds of millions of savings targets.

It means forecast surpluses of $420 million over the forward estimates would instead become a $157 million deficit unless Mr Lucas introduced further measures to repair the Budget.

He issued a warning to unions and industry groups that there was “no flexibility” in the Budget for additional spending measures, highlighting an industrial dispute with the Australian Education Union as an example.

“The first thing we’ve got to do is departments have to deliver on the savings targets set out on September 4 (in the State Budget),’ he said.

“And it’s a warning sign to the AEU and other union bosses that there’s no room in the Budget for extravagant employment claims.

SA Treasurer Rob Lucas releasing the Mid Year Budget Review last week. Picture: Sam Wundke/AAP

If those sorts of numbers or anything like them are confirmed then union bosses and others are going to have to take notice.”

But Mr Lucas said it was too early to work out if he’d have to cull spending measures because forecast GST revenues “tend to jump around”.

He pointed to last year’s Federal Budget update also writing down national GST estimates by $575 million in 2017-18, before actually increasing it by $1 billion.

Mr Lucas said SA treasury officers would work with their federal counterparts to analyse the reduced estimates.

He said the Government would take “corrective action” if the flagged writedown eventuated, but is yet to pinpoint what that entails.

He said the writedown is caused by a slight reduction in consumption revenue and setbacks like it were “the reality of being a treasurer”.

“We haven’t been deliberately done over or anything, it’s just what the sausage machine used to churn out the estimates of GST has guesstimated,” he said.

The revenue is $72 million less than forecasted in 2018-19, $164 million in 2019-20, $181 million in 2020-21 and $160 million less in 2021-22.

Labor treasury spokesman Stephen Mullighan said Mr Lucas was going “back to the future”.

“Last time he was treasurer he delivered cuts, privatisations and budget deficits,” he said.

Mr Mullighan said Mr Lucas had tried to “hide” the deficit by holding his Mid Year Budget Review before the Federal Government’s budget update for the first time in 16 years.

Mr Lucas divulged the forecast $577 million writedown after The Advertiser revealed a $72 million reduction in GST payments in 2018-19.

“Did they know the Federal Government was about to announce SA’s GST take was down and try to sneak in a claimed Budget surplus, when they knew it wasn’t real?” Mr Mullighan said.

“With less money from the GST (Mr Lucas’ pursuit of a surplus) means he’s either going to have to make more cuts, or he’s going to introduce new taxes to increase revenue.

Business SA acting chief executive Anthony Penney said the Government needed to improve its debt position and grow the state’s economy and population to insulate the Budget from future shocks.

Teachers won’t cop Treasurer’s ‘threats’

A furious state education union says threats have no place at the negotiation table after Treasurer Rob Lucas used a GST writedown to warn there was no flexibility in the Budget.

Mr Lucas put the Australian Education Union on notice that he would not grant “extravagant employment conditions” after he confirmed GST payments would be $557 million less than expected over the next four years.

But AEU president Howard Spreadbury said he was concerned about the “threatening tone of Mr Lucas’ warnings” when the two parties were in active negotiation.

One in five schools around the state closed for half a day last month as part of the AEU’s fight for a range of conditions.

They include an interim 3.5 per cent pay rise, which Mr Lucas said would cost the Budget $80 million a year, and establishing an extra hour of weekly non-teaching time, costed at $59 million.

“Warnings and threats do not have a place at any negotiation table,” Mr Spreadbury said.

“We are working in good faith to reach an agreement that will provide appropriate conditions for all South Australian educators, respects the profession and benefits public education in the state.”

Mr Spreadbury said the union would meet with government negotiators again today in an attempt to progress its proposals.

Mr Lucas has warred with the union since it ramped up its industrial action. He celebrated last month when one in five schools closed because of the strike – a huge fall from a decade ago when close to half of schools and preschools closed during strike action.