Treasure Rob Lucas warns of tighter spending after $400m hit to state’s GST revenue

A dramatic collapse in SA’s share of the GST pie threatens to wipe out the State Government’s planned surpluses, sparking new warnings from Treasurer Rob Lucas that a tough savings agenda must be delivered and public-sector wages controlled.

• Feds cut SA’s GST payments by $577m over next four years

A dramatic collapse in SA’s share of the GST pie threatens to wipe out the State Government’s planned surpluses, sparking new warnings from Treasurer Rob Lucas that a tough savings agenda must be delivered and public-sector wages controlled.

The Canberra-based Commonwealth Grants Commission, which manages the GST, late yesterday released an update to the complex formula which divides cash between the states.

It shows a hit to SA of $72 million in the current Budget year, plus a whopping $329 million in 2019-20, since Mr Lucas last delivered a major update in December.

Without further action, that revenue downgrade would result in a State Budget deficit of $32 million in 2018-19, blowing out to $234 million in 2019-20.

Mr Lucas last night told The Advertiser he was still confident of achieving a balance this year, but future Budgets would now be “challenging”.

A dramatic collapse in SA’s share of the GST pie threatens to wipe out the State Government’s planned surpluses, sparking new warnings from Treasurer Rob Lucas that a tough savings agenda must be delivered and public-sector wages controlled.

“We still believe, on the basis of the advice that we have got that, even with this writedown in the GST, that we are going to be able to deliver a balanced Budget in our first year,” Mr Lucas said.

“In a $20 billion Budget, our goal has been and will continue to be, to balance it.

“This makes the challenge harder, and we’ll have to consider how we balance all the things that we’ve promised to do with our commitment to balance the Budget.”

The Government is already coming under increasing political pressure over unpopular savings measures announced in last year’s Budget, including the closure of Service SA centres and cuts to bus routes.

It also is banking on huge savings from the health sector, as private auditors KordaMentha are given a say in the running of major hospitals.

Mr Lucas said the new Budget conditions left even less room to give lavish wage rises.

“There is just not the capacity in this financial environment to afford outrageous claims from union bosses,” he said. “That includes both the salary, and added conditions.”

Mr Lucas said he was anticipating a further update to GST figures in the April Federal Budget, and new savings at the state level would be considered over the coming months.

“We’ll leave all our options on the table,” he said. “(But) we’re not going to do anything which is going to grind the economy into the ground.

“If we’re going to capitalise on defence and space and these kinds of industries, we are going to need a skilled workforce.”

He said trainee and apprenticeship programs and education funding were key areas.

“There’s some areas that we just can’t compromise on.”

The CGC report explains that the cut to SA’s GST share is due to a recent increase in other federal funds and “a lower infrastructure” need.

It has not updated the expected payments to SA in any years beyond 2020.

Opposition treasury spokesman Stephen Mullighan said the result was a “disaster” for the Government.

“They have left themselves no room in their budget as the economy slows,” he said.

“Ministers are struggling to deliver last year’s Budget of cuts, closures and privatisations. Rob Lucas now needs to tell South Australians how much more pain he will cause them by taking his hands off the wheel and relying on GST grants to prop up the budget.”