State budget 2021: Big-spending budget with focus on health, infrastructure that goes $33bn into debt
The Treasurer’s big-spending budget focuses on fixing the state’s health woes, with the new Women’s and Children’s Hospital at its centre – but puts SA $33bn into debt.
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A $1.95bn, 500-space Women’s and Children’s Hospital opening in 2027 and a $50m early-learning strategy have been revealed in a pre-election state budget bankrolled by record debt.
In a bid to catapult South Australia out of the Covid-19 economic and health emergency, Treasurer Rob Lucas also unveiled a $200m jobs and economic growth fund, plus $163.5m for mental health services designed to ease pressure on hospitals.
Debt balloons to more than $33bn in 2024/25 to underpin a big build including the WCH, $662m Riverbank Arena, $9.9bn North-South Corridor and the promised $200m North Tce Aboriginal Art and Cultures Centre.
Mr Lucas also moved to stymie a biting Labor campaign on hospital overcrowding and ambulance ramping by deploying a four-point plan aimed at increasing capacity, reducing demand, stopping “bed block” and increasing paramedics’ resources.
Unleashing the final phase of a two-year, $4bn economic stimulus ahead of next March’s election, Mr Lucas said the budget launched the next stage of the post-Covid economic recovery plan.
“This budget is our blueprint for a stronger South Australia – a positive plan that charts our course out of the pandemic by creating jobs, building what matters and delivering better services to further secure our growing global reputation as one of the safest and most attractive places in the world to live, work and raise a family,” he said, in his budget speech.
“ … Our priorities in this budget are clear – jobs, health, especially mental health, and education, especially the early years of education.
“As we manage our way out of the financial and economic destruction caused by Covid-19, South Australia is at the dawn of an exciting future.”
As revealed on Tuesday by The Advertiser, Mr Lucas unveiled a slim surplus forecast of $48m a year earlier than expected, putting SA back in the black ahead of other states that have unveiled budgets this year.
Debt forecasts also are slightly less than had been forecast last November, thanks to a $1.14bn GST and stamp duty windfall, but the $33.623bn expected in 2024/25 is $452m more than had been predicted.
The new WCH, between the Royal Adelaide Hospital and southern railway line, will include 500 treatment spaces, more operating theatres, a bigger emergency department and an overall 13 per cent, or 59-space, increased capacity beyond the existing North Adelaide site.
The estimated $1.95bn cost is subject to review by Infrastructure SA but construction is expected to finish in 2026, enabling the hospital to open for patients from 2027.
The Early Learning Strategy will expand Child and Family Health Services (CaFHS) checks to help identify developmentally vulnerable children and enable early intervention and support.
New parents now are handed a well-known blue book and offered a home visit soon after babies’ birth, with milestone checks offered at six-to-nine months, 18-24 months and at preschool.
This will expand to include checks at 12 months and three years, aiming to reduce undiagnosed developmental delays in children entering school.
Support and intervention for children identified through the program will be funded through existing resources.
“Around a quarter of South Australian children start school developmentally vulnerable in one or more of the following domains: physical health and wellbeing, social competence, emotional maturity, language and cognitive skills, communication skills and general knowledge,” Mr Lucas said.
“Many of these children do not catch up to their peers at school.”
A tunnel will be built under Morphett St to link the Adelaide Convention Centre with the Riverbank Arena, part of a $78.9 initial funding package to finalise planning and early site works.
A $200 million Jobs and Economic Growth Fund is being pitched as a potential extra source for private sector projects, coupled with federal funding, such as a hydrogen hub at Port Bonython, near Whyalla.
Mr Lucas said the fund would not “pick winners” but also was considering “a range of initiatives” in sectors including space, defence and plant protein.
The unpopular Hove level crossing project has been abandoned despite a $17.9bn infrastructure spend in favour of yet-to-be-announced traffic calming measures along Brighton Rd, after the cost blew out from $170m to $290m.
Then residents favoured a $450 million option deemed too costly by Mr Lucas in the face of federal funding rejection.
The mental health plan includes $20.4m to build a new 16-bed crisis stabilisation facility in the northern suburbs, which would operate 24 hours a day, and $48 million for a new 20-bed older people’s acute mental health unit at Modbury Hospital.
S&P Global Ratings analyst Rebecca Hrvatin said SA’s debt levels compared well with similarly rated domestic and international peers, while the budget showed an improving economic outlook that supported a gradual return to operating surpluses.
“South Australia benefits from a strong economy and financial management, which allow it to absorb some stresses on creditworthiness,” she said
“The state, so far, has suppressed the spread of the virus, allowing its economy to open and budget to recover quickly.
“Its early success in containing outbreaks has supported a stronger economic recovery than otherwise would have been the case”
Labor attacks Libs over ramping, health cuts
Opposition Leader Peter Malinauskas has accused his Liberal rival of worsening the state’s ambulance ramping crisis by slashing health funding and hospital jobs in the state budget.
Sheeting home blame directly to Premier Steven Marshall, Labor argues his government will cut the health budget by $274m during an unprecedented health crisis.
This will be compounded, Labor argues, by cutting 371 jobs in hospitals and spending more money by 2024-25 on the Riverbank arena – or “basketball stadium” – than on a mental health package.
“All South Australians wanted Steven Marshall to use his last budget before the election to seriously address his ambulance ramping crisis,” Mr Malinauskas said.
“Not only has Steven Marshall failed to address the ambulance ramping crisis, he’s
making it worse.
“When ramping is worse than ever before and our emergency departments are the worst performing in the nation, why would the government cut health funding and cut hospital jobs?”
Labor has consistently attacked Mr Marshall in the lead-up to the budget, rather than Treasurer Rob Lucas, who handed down his final budget of an almost 39-year political career.
Mr Malinauskas attacked the Liberals for breaching a promise to complete the new Women’s and Children’s Hospital by 2024, saying it had been delayed again, this time until 2027.
Pointing out debt was expected to hit a record $33.6bn, Mr Malinauskas also noted the abandonment of the Hove level crossing removal.
This was ditched because the cost blew out from $170m to $290m, then a $450 million option was spurned for federal funding.
Mr Malinauskas said the government had locked in the $662 million “basketball stadium” and was no longer waiting until the new WCH was built.
He highlighted that funding for the arena started in 2022-23, significant construction work would start in 2025-26 and the project was set to be finished by 2027-28.
Labor treasury spokesman Stephen Mullighan said the budget was supposed to be about South Australians and their future.
“Rob Lucas has failed to address the problems of today and he’s failed to provide for the promises of tomorrow,” he said.
“This is a budget which racks up record debt, confirms a record deficit and leaves South Australians wondering what they’ve got to show for it.”
New $200m support fund to boost employment
– Gabriel Polychronis
A further $200m will be thrown at creating jobs in South Australia’s burgeoning industries, as the state government outlines its plan to slash the country’s highest unemployment rate.
A new Jobs and Economic Growth Fund was revealed in the 2021-2022 state budget papers on Tuesday.
It will include $200m over four years to support new initiatives in key sectors, such as defence, space, mining, wine and health technology.
Projects to already receive money from the fund include a new $8m experimental mine to be established at Oz Minerals’ Prominent Hill Mine.
The Arkani Ngura National Test Mine and Innovation Centre will explore the potential to store hydrogen underground and test prototype mining and defence equipment.
The new money is in addition to the $244m already allocated to a range of sectors under the old Economic and Business Growth Fund.
Budget papers show total employment was expected to grow 1 per cent this financial year, before rising by 2 per cent in 2021-22.
Employment growth is then forecast to settle at 1.25 per cent between 2022-23 and 2024-25.
It was revealed last week that SA once again had the worst unemployment rate in the nation – at 5.8 per cent.
The state briefly shed its unwanted status last month, when the jobless rate was 5.7 per cent, but has now been overtaken by the Tasmania and Queensland.
Treasurer Rob Lucas said 60,000 jobs had been created in SA since May last year, but conceded “more work” needed to be done to fix the unemployment rate.
“The fundamentals, we believe, are right, with the employment growth numbers doubling next year compared to this year,” Mr Lucas told reporters.
“We’re heading in the right direction in terms of employment growth and impacts on unemployment.”
A huge pipeline of infrastructure projects worth $17.9bn over the next four years is the centrepiece of the budget’s plan to tackle the unemployment rate.
Projects include the final stage of the North-South Corridor, Truro Bypass and a suite of road safety upgrades.
A 12-month extension of payroll tax exemptions for wages paid to certain trainees and apprentices was also included in the budget to help drive employment and skilling.
The government revealed in the budget a new “public sector workforce rejuvenation” scheme it hopes will get more young people into a job – but it will trim higher-paid experienced workers.
Until December 31, termination payments of $50,000 will be offered to public sector employees with 10 years or more of service, and $25,00 to workers with less than 10 years’ service. This will then open up possibilities for trainees and apprentices to join the public workforce.
The number of government employees is forecast to drop from 86,133 this year to 85,901 in 2024. It is then expected to increase again to 86,264 in 2025.
In another job-creating measure, an additional $22.8m will be pumped into the local film industry.
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Originally published as State budget 2021: Big-spending budget with focus on health, infrastructure that goes $33bn into debt
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