SA Treasurer Rob Lucas shares priorities and changed ideas ahead of his final budget
His first budget was branded a lethal weapon, hitting every South Australian. Treasurer Rob Lucas speaks out about his final one next week – and how much has changed.
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A plan to tackle hospital overcrowding by improving mental health services and extra education spending to boost teacher numbers will be unveiled as centrepieces of Tuesday’s state budget.
In an exclusive interview with The Advertiser, Treasurer Rob Lucas has revealed job creation, health and education will be the three major planks of the Liberals’ pre-election budget.
It is also understood further detail will be revealed about plans for the new Women’s and Children’s Hospital, next to the Royal Adelaide Hospital.
Mr Lucas has vowed to deploy significant cash to address what Labor and paramedics have branded a health crisis, but did not detail programs to address mental health challenges that have grown during Covid-19.
“There’ll be a big focus on a plan to tackle mental health issues, which will obviously have flow-on benefits for both ramping and overcrowding within our hospitals,” he said.
Psychiatrists have warned South Australia’s mental health system is on the verge of collapse, contributing to swamped metropolitan public hospitals operating above capacity and ambulances being ramped outside emergency departments.
The budget is the last in Mr Lucas’s 39-year political career and is designed to position the Liberals for their bid for a second term in office at next March’s state election.
On the education front, Mr Lucas said the budget would detail an extra 1500-1800 teachers and school support officers in public schools by 2024-25, compared to the 2021-22 financial year.
He conceded there had been cutbacks in administration staff, particularly in back offices and project officers.
“But it’s been more than swamped by the increased number of teachers, in particular, that’s the big number,” Mr Lucas said.
Opposition treasury spokesman Stephen Mullighan said the budget presented an opportunity for addressing the Liberals’ sorry record on unemployment and tragic health cuts.
“(Premier) Steven Marshall and Rob Lucas have delivered three budgets – and SA now has the worst unemployment rate in Australia, the worst-performing emergency departments of any state and ambulance ramping is worse than ever before,” he said.
Mr Mullighan challenged Mr Lucas to “finally deliver real stimulus for jobs”, so SA no longer had the nation’s highest unemployment.
In a pre-budget release, the government announced it would invest $69m in a jobs-training system and $4m for apprentice and trainee payroll tax exemptions, which Mr Marshall said would “ensure we have the skills needed to drive accelerate economic and jobs growth”.
Debt-buster to borrower in 23 years
In the aftermath of the state’s biggest financial disaster and a deep recession, debutant Treasurer Rob Lucas delivered a horror budget.
Back in May 1998, South Australia was struggling to overcome the $3.15bn State Bank collapse seven years earlier. One of the few bright spots was the Adelaide Crows heading for back-to-back premierships.
In stepped Mr Lucas, hitting every South Australian with tax and fee increases in the toughest budget in two decades.
Even worse, he warned of more financial pain if the controversial sale of the state-owed electricity utility ETSA did not proceed, threatening a mini-budget that October to raise a further $150m.
The Advertiser’s respected political editor, the late Greg Kelton, declared the Lucas blueprint was a “lethal weapon” and “a budget the state did not need to have”, blaming the Liberals for squibbing tough decisions in 1994 that would have eased pain.
Just as Mr Lucas’s first budget charted the path out of a recession, so will his last, on Tuesday, attempt to steer a job-creating course out of the Covid-induced downturn – the nation’s first recession in almost 30 years.
A chameleon-like Mr Lucas has turned from debt-buster to embracing low-rate borrowings for productive infrastructure to jump-start the economy after the pandemic.
In last November’s budget, he deployed a record $4bn, two-year, economic stimulus package, fuelled by a borrowing binge that meant state debt would almost double to $33.17bn by 2023-24.
The State Bank collapse pales into insignificance, even if the comparison is indirect because of the-then double-digit interest rates versus today’s historic lows.
“I think the state psyche was fairly traumatised and damaged in the 1990s because of the State Bank. … from SA’s viewpoint, that was momentous. That was the climate of the 1990s,” he told The Advertiser this week.
“The reality is the whole attitude towards debt has changed.”
On the eve of his final budget, Mr Lucas is both defending his legacy, attacking Labor and – perhaps the secret of remaining in the state’s upper house for almost 39 years – focusing firmly on the future with a calm, often jocular demeanour.
He is vowing to stay in office until the March 19 election and campaign fervently for the Liberals’ re-election.
Arguably the most controversial decision of his Treasury career, the 1999 ETSA sale, was blamed, 17 years later, for soaring power prices by 51 per cent of respondents to a 2016 Advertiser poll.
Mr Lucas seizes on closure of coal-fired power stations around the country to argue the state sold these legacy assets at the market peak, achieving a high price while wiping debt.
“The sale of electricity assets was an essential policy response to that particular time, to address the debt issue coming out of 17 and 22 per cent interest rates and an environment where no one actually supported governments borrowing more,” he said.
“Our argument at the time was we were overspending by $300m a year on a $6bn budget. Now we’re a $23bn budget. We’re anxious to bring our budget back into balance, or surplus, as soon as possible.”
The most significant issue from the state’s financial viewpoint, Mr Lucas declares, is a GST distribution deal cut with Western Australia in 2018 that risks SA losing out in the long-term, when compensation expires after 2026-27.
“The battle for a re-elected government, or a new government, is going to be to convince the commonwealth government of the day, whoever it is, to renegotiate the deal,” he said.
The perils of any GST revenue loss are illustrated by the $926m windfall detailed in May’s federal budget.
Another measure to increase prosperity, Mr Lucas argues, would be taking a greater share of international migrants when borders re-open after the pandemic.
“That’s an issue that is critical for economic growth. You talk to the housing construction sector – it builds demand, it also provides constant supply of skilled labour coming in, as long as you’re oriented towards skilled labour,” he said.
“We should take a bigger share and that will help grow our economy.”
The man who wants his job after March, Labor’s Stephen Mullighan, declares Mr Lucas’s three budgets since 2018 have left a bad legacy.
“SA now has the worst unemployment rate in Australia, the worst-performing emergency departments of any state, and ambulance ramping is worse than ever before,” he said.
“Before Covid, in his first two budgets, the state finances deteriorated significantly and there was a rapid increase in debt.
“Before the pandemic hit, we had the slowest economy in the nation and the highest unemployment in the nation.”
Mr Mullighan highlights the land tax imbroglio of 2019, when the top rate was reduced from 3.7 to 2.4 per cent after months of wrangling. But Mr Lucas argues property investors are flocking to SA from Victoria, keen to avoid increased stamp duty and “windfall gains tax” imposed in that state’s May budget.
Crucially, he challenges Labor to declare its alternative policy options ahead of the election and whether it would outspend the Liberals.
“With nine months to go to the election, the rubber’s going to hit the road. Basically, their line for three years has been ‘You need to spend more on everything that moves’,” he said.
“At the same time, they say we’re (the Liberals) going to massively increase debt. So, what are they actually going to do?”
The battle lines are drawn for the veteran’s final fight.
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