Analysis: Stephen Mullighan unveils ‘manageable’ $2.453bn interest bill in third SA State Budget Surplus | Paul Starick

For an election budget, this is a deliberately lacklustre document, writes Paul Starick.

South Australia Treasurer Stephen Mullighan handing down the 2025-26 SA State Budget at the Adelaide Convention Centre on Thursday. Picture: NewsWire / Dean Martin

South Australians are living through a high-stakes gamble on the future as government debt escalates to eye-watering levels of $6.7m per day in interest costs.

Treasurer Stephen Mullighan is putting his chips on keeping the state budget in the black, forecasting surpluses across the forward estimates, despite state debt surging to $48.495bn by 2028-29.

This leaves taxpayers with an annual interest bill of $2.453bn – or $6.72m per day.

For those old enough to remember the multi-generational economic setback of the 1991 State Bank financial disaster, these figures are chilling.

Public spending underpins a vast slice of the state economy. Public servant numbers top 100,000 full-time equivalents for the first time in this budget, reaching 102,387 by 2029.

Immediately after the budget, influential ratings agency S&P Global fired a warning shot, saying big new spending ahead of next March’s state election could trigger a credit rating downgrade.

Mr Mullighan argues “our debt projections remain manageable” and cites respected ratings agency measurements showing SA has the nation’s second-best credit rating of AA+ (stable), behind only Western Australia’s AAA assessment.

S&P Global’s post-budget assessment says “SA’s public debt burden is rising but will remain average” compared to other states.

Yet the household economy is a different story, as Mr Mullighan acknowledges when delivering cost-of-living measures headlined by a $10, 28-day public transport pass for school students.

“Most economists are now predicting there will be more (interest rate) cuts before the end of this year,” the Treasurer said in his budget speech.

“But it does not mean the financial pain felt by many over the last three years has disappeared.

We know that many families, many businesses, are still trying to recove.,”

Winning over these families at next March’s state election is the framework for this budget, which positions law and order as the headline item.

Mr Mullighan, who was appointed Police Minister in January, has plastered images of police officers over his budget documents.

This highlights funding for an extra 326 sworn police officers by 2030/31, taking the force total to 5000 – part of a $395.1m law and order package.

Crime waves in Queensland last October turfed Labor out of government as LNP leader David Crisafulli blasted a tough line on law and order in the suburbs and regions.

In SA, the Malinauskas government aims to reassure voters in Labor heartland that police are on the beat and restraining crime in their suburbs.

For an election budget, this is a deliberately lacklustre document.

Forecast surpluses in the hundreds of millions – $458m in 2027-28 – leave some wriggle room for spending promises during the election campaign early next year.

The government has a reasonable economic story to sell: record low unemployment, comparatively low taxes, the nation’s strongest economic growth according to national accounts figures on Wednesday, and a strong credit rating.

But forecast jobs growth is a threadbare one per cent and there are rising warnings across the globe about the risks of excessive debt.

JPMorgan Chase CEO Jamie Dimon on Monday said United States government debt was “a big deal” and “a real problem”, warning the debt “bond markets are going to have a tough time” at some point.

Mr Mullighan repeatedly has declared debt will peak in the year or so before the first drivers travel through the $15.4bn South Rd tunnels in 2031 and the first patients enter the $3.2bn Women’s and Children’s Hospital in the same year. But there remains no real repayment plan.

Young South Australians, and future generations, can only hope his gamble turns out for the best.

Originally published as Analysis: Stephen Mullighan unveils ‘manageable’ $2.453bn interest bill in third SA State Budget Surplus | Paul Starick