State Budget 2014: Emergency Services Levy increased, Motor Accident Commission sale and hospital upgrades sidelined

UPDATE: Treasurer Tom Koutsantonis has issued an invitation to business to pose “bold” and “creative” responses to his first Budget to create jobs and spark the economy.

TREASURER Tom Koutsantonis has issued an invitation to business to pose “bold” and “creative” responses to his first Budget to create jobs and spark the economy.

Making his pitch to industry leaders this morning at the Bank SA Advertiser Budget Brunch, Mr Koutsantonis also argued Labor could be the party for business and signalled he wanted to rebuild its relationship with Government.

“We miss you,” he told them a day after delivering the Budget.

“We want you back. I want to be pro-business.

“We want to hear your ideas ... (even) ideas that we may not like.”

The Budget has been well received by peak group Business SA for not increasing the tax burden on employers.

“It could have been a horror Budget for the business community,” Business SA chief Nigel McBride said following the brunch.

“It could easily have taken a free kick... and gone after increases and direct taxes.”

Mr McBride said interactions between business owners and the Government “got a bit chilly” in the lead-up to the election but employers wanted to rebuild the relationship.

“If we ignore Government we’re not going to have a voice into their policy,” he said.

Households will be stung with an average $158 per year cost of living increase and health services face the axe, as the State Government moves to fill a Budget black hole blamed on savage funding cuts from Canberra.

The Budget included a major increase in the Emergency Services Levy and sale of the Motor Accident Commission to raise new revenue.

Upgrades to four major suburban hospitals have been sidelined and the State Government says it plans to begin a discussion with voters and clinicians about where to find $332 million in health cuts.

An expected $1 billion deficit in the 2013-14 financial year is forecast to blow out to $1.2 billion and the state is expected to remain in the red with a $574 million deficit the following year.

A $406 million surplus is predicted in 2015-16, which grows to $776 million in 2016-17 and $883 million in 2017-18.

Mr Koutsantonis said this Budget was not the one he wanted to hand down, but one he was forced to hand down.

He said the Federal Budget had ripped $897 million from the state’s coffers over four years and meant “the health system is no longer viable in its current state”.

“These reckless decisions will have profound ramifications across the nation and unfortunately SA is not immune,” Mr Koutsantonis said.

“There is no way for us to quarantine our citizens from these brutal cuts.

“Bed cuts or hospital closures may be necessary, but we want to work with the health community to prevent this from happening.”

In a massive tax increase set to raise $357 million, the State Government will increase the Emergency Services Levy paid on property and cars.

The Government estimates that will cost the average household $150 per year and add $8 to the bills paid by car and motorcycle owners.

Pensioners and concession card holders will be exempt from the increases, which come into effect from July 1.

Households are expected to begin receiving their household ESL bills in November and will be required to pay the increase on cars registered from August.

The Motor Accident Commission will cease writing new compulsory third party premiums from July 2016.

The Government expects this will allow it to return $500 million in net assets to Budget which will be used for debt reduction.

Mr Koutsantonis warned a $5.5 billion hit to state health funding over the next decade would force a major rethink of how the system is structured.

Planned upgrades of the Queen Elizabeth and Modbury hospitals, Noarlunga Health Service and Flinders Medical Centre have been put on hold.

A review would determine if the spending was likely to be effective under a dramatically changed health system, he said.

The Budget also includes state funding for the Darlington Interchange upgrade, O-Bahn extension and electrification of the Gawler rail line to Salisbury, which come in addition to the Torrens to Torrens South Rd upgrade.

A new city high school will be built on the old Royal Adelaide Hospital site at a cost of $85 million.

Mr Koutsantonis’ Budget includes $63 million for the creation of new Skills for All training places over three years and a $4 million expansion of the PACE scheme aimed at helping miners find new deposits over four years.

The Government’s Holden jobs plan receives $60 million and a new scheme will offer seniors $8500 if they downsize from a large family home to a smaller dwelling.

A temporary payroll tax concession for small and medium business will expire in the middle of next year as expected and unconventional gas companies will be permitted to defer the payment of royalties for five years.

Major savings measures include further efficiency dividends requiring departments to cut 1 per cent of their budgets to recoup $65 million in 2015-16 and 2017-18.

The Government is also planning to cap wage growth in the public sector to 2.5 per cent per year and warns any agreement that increases salaries beyond that level will require cuts to government departments of productivity increases as an offset.

“The 2014-15 Budget has been framed around difficult challenges for South Australia,” Mr Koutsantonis said.

“The aim of this Budget is to help foster prosperity instead of delivering austerity. “Now is not the time to follow the Commonwealth and introduce measures that destroy confidence.

“We are not an island state. Commonwealth decisions have a big impact on South Australia and its people.

“Now is the time to fight these cuts.”