South Australian state budget 2025: Economists Saul Eslake and Susan Stone give their verdicts

A leading economist says SA’s record state debt isn’t heading for a State Bank-style disaster but that reassurance came with a warning.

South Australia Treasurer Stephen Mullighan and Premier Peter Malinauskas arriving for Thursday’s State Budget lockup. Picture: NewsWire / Dean Martin

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South Australia’s record $48.495bn state debt is not heading for a State Bank-style financial disaster but government cannot afford to pile on more, says a leading economist.

In an assessment of Thursday’s state budget, independent economist Saul Eslake said SA’s credit rating was better than other states, except Western Australia.

Influential ratings agency Moody’s backed this assessment in a post-budget report released on Friday, declaring SA’s “debt burden and debt affordability ratios remain broadly in line with the average” of other states and territories.

Moody’s Ratings said the government had flexibility to “manage emerging (debt) risks”, citing a demonstrated ability to set aside and reallocate funds, such as for the $2.4bn state/federal Whyalla rescue package.

This followed S & P Global Ratings’ warning shot after Thursday’s budget, saying big new spending ahead of next March’s state election could trigger a credit rating downgrade from AA+ (stable).

Economist Saul Eslake.

But Mr Eslake, one of the nation’s pre-eminent economists, said SA’s position on most budget metrics was “not too bad”.

“I would say, actually, that South Australia, along with Western Australia, is probably the only state that isn’t facing some risk of a credit downgrade,” Mr Eslake said.

Asked whether South Australians should be concerned about government debt, Mr Eslake said: “Not very worried. You wouldn’t want to be adding to it, but the government isn’t really adding to it in any serious way.”

Mr Eslake urged Treasurer Stephen Mullighan to make “a bit more effort to rein in” cash deficits but said this was “not dire” like in some other states.

Asked if South Australians should be worried about an economic collapse similar to the 1991 State Bank financial catastrophe, Mr Eslake said: “No, no, no.”

The author of a 1993 Victorian audit commission report for the Kennett government, Mr Eslake said this had included an interstate comparison.

“What was very clear from that was that the mess South Australia found itself in the early 90s was entirely due to the Sate Bank,” he said.

“Whereas the mess Victoria was in would have been a mess even if the State Bank had been (leading US bank) JP Morgan.”

Credit Union SA Chair of Economics Dr Susan Stone. Picture: UniSA

Credit Union SA Chair of Economics at UniSA Susan Stone said she was more concerned by revenue than debt, urging a long-term strategy for population and business growth.

“Businesses really need to grow, really need to attain scale. They need to be able to generate a lot of income for the state. That would be a much more sustainable, productive form of tax revenue for the state,” she said.

“The state boasts about being the best place to do business in the country. But I still think that more could be done in that space.”

Originally published as South Australian state budget 2025: Economists Saul Eslake and Susan Stone give their verdicts