SA state budget: Treasurer Stephen Mullighan reveals $64bn debt forecast

The Treasurer has revealed SA’s state debt is forecast to rise by more than $30bn without cutting back on spending – vowing an end to “mega-projects”.

State debt forecast to skyrocket to more than $64bn has forced Treasurer Stephen Mullighan to vow to slash government spending and declare an end to an infrastructure funding surge.

Revealing Treasury estimates showing debt soaring from a budgeted $32bn in 2024-25 to $64.846bn in 2035-36 if unchecked annual spending growth of 4 per cent continued, Mr Mullighan said this would be squashed by locking in lower long-term expenditure.

In an interview with The Advertiser ahead of his first state budget on Thursday, Mr Mullighan declared spending would be significantly tightened after the necessary completion of twin “mega-projects” – the $9.9bn North-South Corridor’s final stage by 2031 and the $2bn-plus new Women’s and Children’s Hospital by 2027.

Rising interest rates have added more than $150m annually to state debt repayments, now beyond $1bn annually.

Mr Mullighan said government agencies, which were already garnering more than $670m in cuts over four years with a 1.7 per cent efficiency dividend, would be required to find savings to meet future spending demands.

“If they can’t find a saving … then the government is going to have to look, generally speaking, at how can we save money, because it’s only by doing something like that that you can limit your growth in ongoing expenditure,” he said.

“There’s no bottomless pit or money tree to continue coughing up more capacity.”

Treasurer Stephen Mullighan in his city office ahead of Thursday's state budget. Picture: Keryn Stevens

It is understood $50,000 separation packages for public servants will be extended until the end of the year to help oust 50 executive staff paid an average $200,000, that Labor vowed to axe in an election promise saving $41.5m over four years.

Confirming he would deliver a budget surplus on Thursday, Mr Mullighan said Treasury’s advice was to “dial back” spending “across government” to stave off the debt surge, with exceptions only for frontline services.

Mr Mullighan said Labor’s policy taken to the March 19 election involved “pumping the biggest-ever injection of funding and resources into the health system that there’s ever been in a budget”.

“But if there are further pressures on the health system – another pandemic or something else that comes our way – then we’ve got to have the capacity to provide for it,” he said.

Mr Mullighan rejected speculation parts of the new WCH would be built at Flinders Medical Centre and the Lyell McEwin Hospital, rather than next to the Royal Adelaide Hospital.

He said funding would be provided for Labor’s $593m hydrogen power plant slated for Whyalla, the $400m FMC expansion promised during the federal election campaign and the $200m city indigenous art gallery, conceived by the former Liberal government.