SA to spend big to 'jumpstart' economy

Tim Dornin
·3-min read

The South Australian government will spend big and plunge the state deeply into the red to "jumpstart" the economy over the next two years as Australia emerges from the coronavirus pandemic.

With $4 billion allocated to protect businesses and jobs, extra spending on road and sporting infrastructure and SA hit by a $1.3 billion cut to GST returns, the 2020/21 budget deficit is forecast to rise to $2.6 billion.

Total state debt will also balloon in the coming years to peak at $33 billion by 2023/24.

Treasurer Rob Lucas said this budget "is like no other" in his 40 years in politics and comes amid the Reserve Bank's call to save as many jobs and businesses as possible.

Mr Lucas said the message to state governments was to "spend and spend more in the nation's interest", and not be concerned about debt and deficits.

"That's an unusual message to have heard, but it is what it is. That's the reality," the treasurer said on Tuesday.

"If we are going to respond to a global pandemic and its economic implications, that is what we're going to have to do.

"We want to provide a jolt, a two-year stimulus to the economy, while at the same time putting in place the basis for long-term sustainable jobs growth in our state."

The Business Council of Australia said the state government had "thrown its balance sheet" at creating jobs.

"This is a budget to give the people of South Australia confidence that the state can come back stronger from the pandemic, with more jobs, more opportunities and a brighter future," council chief executive Jennifer Westacott said.

But the state opposition said the government's own forecast was for zero employment growth this financial year, something it blamed on delays on key projects.

"This budget exposes the fact (Premier) Steven Marshall has wasted this term of parliament with delays and indecisiveness of major infrastructure projects and it means South Australia has missed out on jobs," he said.

Surprisingly, the government has charted a path to return the budget to surplus within the forward estimates, with Mr Lucas warning that higher levels of government spending were not sustainable over the longer term.

Although he admitted all its projections, like those at a national level, were based on the rollout of a population-wide COVID-19 vaccine by the end of 2021.

Its forecasts suggest deficits of $1.42 billion in 2021/22 and $435 million in 2022/23 before returning to a $406 million surplus the following year.

In line with those figures, the state economy is expected to contract by 0.75 per cent this financial year before bouncing back to grow by 4.25 per cent in 2021/22.

The government's $4 billion stimulus package includes about $850 million to fund a wide range of shovel-ready projects, to help employ as many tradies as possible.

The budget also allocates $1.6 billion over four years for work on the final $8.9 billion section of the South Road project.

Other big-ticket items in the budget include $44 million for stage two of the Memorial Drive Tennis Centre redevelopment to increase spectator capacity to 6000, and $45 million to bring the Hindmarsh soccer stadium up to elite standard, including a new pitch and new lighting.

Increases in taxes and charges have been largely limited to 1.9 per cent, but a push for more people to opt for electric vehicles comes with a move to slug owners a new road user charge.