SA state budget 2023: First-home buyers big winners in Labor’s health, housing and cost-of-living budget

First-home buyers were the big winners in the Labor government’s second budget, as the state is plunged billions of dollars further into debt.

Stamp duty will be abolished for first home buyers – but the state will be plunged billions of dollars further into debt – in a budget focused on housing, health and cost-of-living relief.

Targeting young South Australians for whom “homeownership never felt further out of reach”, Treasurer Stephen Mullighan declared “we still believe the dream of home ownership should be achievable”.

In his second budget, state debt has ballooned by more than $11bn on the back of the $15.4bn Torrens to Darlington project and $3.2bn new Women’s and Children’s Hospital.

The projects will be effectively paid for on the government credit card, with net debt to grow from an estimated $26.04bn at the end of the current financial year to an estimated $37.56bn by the end of 2026-27.

But the government continues to rule out introduction of a toll on South Rd.

Opposition Leader David Speirs accused Mr Mullighan of delivering a budget that offered no relief for average South Australian households.

Effective immediately, stamp duty will be abolished for first home buyers who build or buy a new home valued at up to $650,000 or buy vacant land of up to $400,000 in value – a measure expected to benefit 3800 buyers each year.

Eligibility for the $15,000 First Home Owners grant will be expanded to include those buying homes valued at up to $650,000 instead of the previous $575,000 cap.

The two measures combined will save first home buyers nearly $45,000 on the purchase of a new home valued at $650,000.

Loans under the government-backed HomeStart scheme will be available to buyers with as little as 2 per cent deposit.

Master Builders SA chief executive Will Frogley welcomed the package.

“This budget means more South Australians will be able to build their own home, more work for builders, tradies, apprentices and suppliers, and more jobs and economic activity across the state,” he said.

Premier Peter Malinauskas and Treasurer Stephen Mullighan ahead of the state budget. Picture: NCA NewsWire/Emma Brasier.

Health, cost of living in focus

The government revealed it will pump an extra $2.3bn over five years into the health system to tackle increased demand on hospitals, Covid-related expenses and to deliver on its promise to fix ramping.

In his budget speech, Mr Mullighan said the budget delivered on the government’s key priorities of health and housing, while providing “substantial cost-of-living support”.

“This places the budget in a strong position for the government to be able to respond to further unexpected events and capitalise on the economic opportunity to further diversify and strengthen our economy through government investment,” he said.

Mr Mullighan maintained the budget would return to surplus from the 2023-24 year, after this year recording a deficit of $249m.

He said the increase in debt was managed “responsibly”, and the budget did not include any new taxes or increases to existing taxes.

Mr Mullighan also revealed:

– A $98m road safety package will include 15 new mobile speed cameras and 10 more mobile phone detection cameras

– Rail services will be returned to public hands at a cost of $29m in operating expenditure over four years and $10m for “the staged transition of rail services back to government”, including to purchase intellectual property and physical assets owned by the private operators

– A new facility will be purpose-built for Forensic Science SA and the SAPOL Forensic Services branch at a cost of $349m

– Nearly $24m will be spent on upgrade works at the SA Aquatic and Leisure Centre at Oaklands Park

– Councils will share in a $20m fund to upgrade ageing jetties across the state

– The state First Nations Voice to Parliament will be established, and the first two elections conducted, at a cost of $10.3m

– Provisional funding has been allocated to fund the introduction of universal three-year-old preschool, but the amount will not be revealed until after the final recommendations of the Royal Commission are delivered

– No new funding for the Tarrkarri indigenous art gallery, but an existing $200m provision remains

The budget does not impose cuts to frontline services, but instead includes a further reduction of at least 50 full-time executive positions across government agencies.

Mr Mullighan said the government has allocated more than $470m in “the single largest cost-of-living assistance package ever deployed in our state”.

A housing package will deliver more social and affordable housing, including some in the city. Picture: Knight Frank

The centrepiece is the $254m Energy Bill Relief Plan, revealed in May’s federal budget, which provides 420,000 households with a $500 rebate on their electricity bills.

“We have targeted these measures to ensure we are supporting the community without adding to inflation: there is no point giving with one hand, only for the Reserve Bank to take with the other,” he said.

Other measures include indexation of government concessions to make sure they are keeping up with inflation, such as the existing energy concession, at a cost of $44m over the forward estimates.

In addition to help for first home buyers, a $474.7m package will deliver more social and affordable homes, including 700 that will be built in a partnership between Renewal SA and community housing providers.

Declaring “since the last election, our state has got its mojo back”, Mr Mullighan said the Major Events fund will receive a $20.8m boost to secure new events and grow existing ones.

Mr Speirs argued the budget offered no new support for a typical South Australian family on an average salary with an average mortgage.

The Liberals also attacked the government over its failure to deliver the 2022-23 surplus that was forecast in last year’s budget.

“Before the election, Peter Malinauskas promised to ‘fix ramping’ and keep the budget in surplus,” Mr Speirs said.

“Since then, he’s delivered record ramping and completely blown the budget.

Reaction: SA ‘riding out Covid fiscal wave’

S&P Global Ratings’ headline was “South Australia is riding out Covid fiscal wave”, declaring revenue growth was improving as the economy rebounded from the pandemic, supporting a AA+ long-term rating.

“Increases in the share of the goods and services tax, as well as property-related, payroll, and gambling taxes, are supporting the recovery. Growing revenue streams should cover cost pressures over the next few years,” S&P Global Ratings analyst Rebecca Hrvatin said.

“...South Australia benefits from a strong economy and financial management. This allows the state to absorb some stresses on creditworthiness. Debt levels compare well with those of domestic and international peers with similar ratings,” Ms Hrvatin said.

Ratings agency Moody’s says the state budget’s rising health costs and flood relief measures will weaken its operating position, while “rising debt will constrain fiscal capacity”.

Retaining the state’s AA1 stable rating, Moody’s said it expected the state to return to surplus in the 2023/24 financial year, as forecast.

“Recognising the state’s recent track record of resilient revenue generation and solid expenditure control, we expect South Australia will achieve its target of a net operating surplus by fiscal 2024, notwithstanding downside risks on the back of expenditure pressures from persistent high inflation, an uncertain monetary policy outlook and a softer global economic outlook,” Moody’s comment says.

Debt-funded infrastructure spending of $21bn over four years remained a key economic policy and would drive the state’s debt burden higher, which Moody’s labelled “a credit negative”.

But it notes the $37.6bn debt forecast at the end of the four-year forward estimates is less than what was projected in last year’s budget, reflecting delays in infrastructure spending partly caused by shortages of material and workers.

Debt affordability is considered solid and Moody’s says its “central scenario” is that the state “will likely underspend its budgeted level of capital spending”, likely reducing borrowing requirements and interest expense burden.