State Budget 2019: Rob the Builder invests in housing and infrastructure but South Australia is racking up record debt

There’s new spending on affordable housing and transport infrastructure in Treasurer Rob Lucas’s second State Budget — but behind the scenes, state debt is spiralling to record highs.

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Treasurer Rob Lucas has revealed SA’s debt will surge to a record $21.3 billion, as he digs for an infrastructure splurge to safeguard jobs against possible shocks in the wider economy.

Mr Lucas on Tuesday delivered the Liberal State Government’s second Budget since a drought-breaking election win last year, that is also headlined by a housing stimulus aimed at lower-income earners.

The Budget includes forecast surpluses across all years, meaning the government intends to spend less than it earns. However, debt will surge from $13.5 billion today to $21.3 billion by the middle of 2023.

Flagship building projects include a new Women’s and Children’s Hospital, the completion of a non-stop South Rd, removal of city level crossings and a regional roads package.

Despite a huge hit to GST revenue in the 2019-20 year, Mr Lucas still expects to manage what he calls a “small” $94 million surplus. That’s set to grow to $251 million by 2022-23. In total, the government says it is spending $11.9 billion on infrastructure over the coming years.

Key measures to balance the Budget include a crackdown on payroll and land taxes, amid claims they are being dodged through creative company structures, and increase to fees and charges.

After failing to implement council rate capping, the government has bought a new fight with councils as it moves to lift the solid waste levy from $110 per tonne to $140.

The charge is paid on the amount of rubbish dumped.

The Budget also features a $104.5 million housing stimulus package which aims to boost ownership, as well as activity in the trades industries.

An interest-free gap deposit loan of up to $10,000 will be released to eligible applicants to help them raise the money needed to get bank finance.

A $21.4 million housing construction program will kick in this year, aiming to build 90 new Housing Trust homes, as further cash is made available to upgrade other properties.

Over four years, $834 million will be spent on roads, including new overtaking lanes and resealing in the country that will allow higher speeds.

There is $550 million in the Budget for the new Women’s and Children’s Hospital, to be built adjacent to the Royal Adelaide Hospital. That is not likely to be enough to build the project, expected to be delivered in around 2025, meaning more will need to be tipped in once detailed designs are complete.

For South Rd, $3 billion has been pledged, and the government says a range of other “congestion-busting infrastructure” projects will be rolled out to fill the gap until the massive freeway kicks off in several years. Expected to cost more than $5.4 billion, it will be the single biggest public infrastructure project in SA history.

There is also $150 million set aside for an Aboriginal Art and Cultures Gallery on the old Royal Adelaide Hospital site, now known as Lot Fourteen.

The government believes it can be a major point of difference for SA, becoming the most impressive project of its kind in the world, and drive new tourism activity in a similar way to attractions like Tasmania’s modern art museum.

The government is also spruiking its education credentials, with annual spending on schools set to be $611 million per year higher than current levels by the end of the forward estimates period in 2022-23.

As previously announced, a sand pipeline between Semaphore and West Beach will be completed as part of a $48.4 million coasts package that aims to end disruptive carting.

Despite a range of fees and charges having been raised ahead of the Budget, including hospital carparking charges, the government insists it’s keeping its promise of lower costs for households.

Mr Lucas has pointed to a fall in compulsory third party insurance charges on car registration that equates to about $100 per vehicle. The drops are as part of a privatisation undertaken by the former Labor state government.

Mr Lucas has also held out the promise of future falls in water bills, as the government readies for the receipt of an independent report on how SA Water values its assets.

The health department has again blown its budget, but the government says efficiencies are being driven after the enlistment of private administration company KordaMentha.

Part of the plan will be to send off 10,000 invoices to the Federal Government for payment that had been ignored.

The government will make it harder for companies and individuals to avoid paying tax by splitting their properties between different structures.

The government will also take more of the profit from publicly-owned businesses including SA Water, SA Financing Authority and Renewal SA.

Treasurer Rob Lucas and Premier Steven Marshall with the 2019 State Budget papers. Picture: Kelly Barnes/AAP

A new savings task of $361.6 million will be imposed on the public sector, in addition to cuts already announced last year.

SA’s economy is predicted to grow at a slightly slower rate than the rest of the country in each of the next four years.

Jobs growth, which has been a modest 1.25 per cent over the last 12 months, is forecast to fall to just 1 per cent and stay there until 2022-23.

Mr Lucas told Parliament: “The national and international economic backdrop to this Budget presents a number of challenges with threats of global trade wars and the Reserve Bank Governor warning of a softening national economy”.

“Whilst the government has been faced with this considerable reduction in expected revenue, it had decided to continue to invest in productive economic infrastructure while putting in place responsible budget measures to ensure the budget remains sustainable,” Mr Lucas said.

“The government has chosen not to risk the prospects of adversely impacting economic growth and job growth by simply relying on further expenditure reductions to match completely the expected revenue reductions. The government has chosen a responsible balance.”