SA defends big slide into debt in budget

Tim Dornin
·2-min read

The South Australian premier has defended the state's big plunge into the red and its ballooning debt in coming years, arguing that to do other than borrow and spend would have been "catastrophic" for the local economy.

The government's spending initiatives in Tuesday's budget will push the deficit for 2020/21 to $2.6 billion.

Total state debt will also soar from about $17.4 billion this year to $33 billion by 2023/24.

Steven Marshall said the government had heeded the advice from the Reserve Bank to put concerns about debt and deficits to one side to ensure jobs and businesses could be saved during the coronavirus pandemic.

"So what we now are doing is leaning into that opportunity, bringing forward projects, getting them underway so the people of South Australian can have that benefit earlier," he said on Wednesday.

The premier also pointed to the current low cost of capital.

The government has borrowed $6.65 billion over the past 10 months, but the annual interest it pays on all its loans will fall by $113 million this financial year and by $200 million next year.

But Mr Marshall has been unable to outline a time frame for when SA might be in a position to start paying down its debt, saying the government was only looking at the period covered by the forward estimates at this time.

"We're dealing with a global pandemic and if we look at the alternatives of not supporting employment, not supporting your economy at this point in time, it would be catastrophic," he said.

"That's why we have taken the advice. We've made it clear that we will be investing.

"This will incur an increase in debt but we'll spend that money wisely on projects which are important to the people of South Australia."

As part of its response to COVID-19 the budget has allocated $4 billion to help protect businesses and jobs.

The budget also poured money into road and other infrastructure projects and into health, education and sporting facilities.

The spending initiatives have been largely applauded, with the Property Council describing it as a plan to put "hard hats and steel caps on workers now and into the future".

"Schools, hospitals, housing, cultural and tourism facilities, community and sporting infrastructure are core features, providing a significant pipeline of work for tradies," executive director Daniel Gannon said.

But the South Australian Council of Social Service said the budget might not help those most impacted by COVID-19 job losses - women, the young, migrants, refugees and older workers.

"Despite these useful infrastructure investments, there is no clear employment strategy that focuses on the groups most impacted by the COVID-19 crisis," council chief executive Ross Womersley said.

"We are worried that the government has overlooked these people, including ways to reconnect them to the workforce during our economic recovery."