South Australia budget: state charts swift, ambitious path to surplus

In a highly political budget speech, retiring treasurer Rob Lucas pledged South Australia would return to surplus by 2022-2023.

Treasurer Rob Lucas at the Crowne Plaza Hotel on Tuesday. Picture: Tricia Watkinson

South Australia is charting a swift and ambitious path back to surplus in a pre-election budget that lets the Marshall Liberal government campaign for a second term next year on the basis of strong economic management.

It also seeks to neutralise Labor’s tactical edge on health by earmarking $1.1bn towards the construction of a new Adelaide Women’s and Children’s Hospital, and $963m in new money to ­unclog emergency wards and ­improve mental health care.

But it retains the politically contentious promise to build a new 15,000-seat Adelaide Entertainment Centre on the banks of the River Torrens, despite claims its $662m price tag is money that could be better spent elsewhere.

In a highly political budget speech that criticised the tax increases and open-ended deficits under Labor governments in Victoria and Queensland, retiring Treasurer Rob Lucas pledged the state would return to surplus by 2022-23 – a year earlier than he predicted last year.

And it would do so without increasing taxes but rather focusing on the economic fundamentals and capping Covid-fuelled stimulus spending at a total of $4bn over a strict two-year period.

Just six months after bringing down the Marshall government’s third budget in November last year – its release delayed by Covid – the document unveiled by Mr Lucas on Tuesday shows a rapid and unexpected turnaround in SA’s economic fortunes.

Last year’s budget predicted the economy would contract by 0.75 per cent, but it has instead grown by 2.25 per cent, while a surprise $926m GST windfall has also helped slash the 2020-21 deficit to $1.8bn, down from the $2.6bn estimated last year.

The deficit will drop to $1.4bn in 2021-22, with money set aside for any pandemic-related contingencies, but after that the stimulus spending ends and the budget returns to surplus in 2022-23.

The budget is the last by Mr Lucas, who entered politics in 1982 and also served as treasurer in the Liberal governments of Dean Brown, John Olsen and Rob Kerin in the 1990s and 2000s.

With the SA election scheduled for next March, Mr Lucas hailed his final budget as a proudly Liberal document framing the para­meters of the looming campaign.

“This budget continues our economic growth strategy and rejects the alternative approach to post-Covid recovery adopted by the Victorian Labor government, which has just announced massive increases in land tax and stamp duty, gambling tax and the im­position of a new business payroll tax to fund health expenditure,” Mr Lucas told parliament.

“This is very much the Labor way, as the former Labor government in this state introduced new betting and foreign investor taxes and tried to introduce new banking and carpark taxes.

“Last year’s (SA) budget made it clear the $4bn economic stimulus was strictly time-limited to a two-year period, and it was the government’s intention to return to a balanced budget as soon as possible,” he said.

“This early return to balanced budgets is in contrast to the Victorian and commonwealth budgets which don’t return to surplus over the forward estimates, and the Queensland budget which returns to surplus in 2024-25.”

Tuesday’s SA budget was delivered in the shadow of a protracted industrial battle with the state’s ambulance union, in which the government came under attack over hospital ramping – whereby patients are forced to wait in ambulances outside crowded emergency departments.

Labor and the public health unions have been campaigning hard on the issue, and Mr Lucas tried to bolster the government’s defences with an extra $800m over five years on public hospital spending, plus $163m in extra funding for new mental health services amid a walkout by senior mental health bureaucrats over a lack of funding.

The total health spend for the next financial year is $7.4bn, which Mr Lucas noted is almost $900m more than Labor spent in its last year in power before losing the 2018 election.

The biggest health outlay is the $1.1bn for the new Women’s and Children’s Hospital, allocated towards its expected cost of $1.95bn.

Mr Lucas also used his speech to rebuff opposition and union attacks on the government’s health record by saying there were 855 more doctors and nurses in the health system than when Labor was last in office.