Health the focus as SA budget delivers on election promises

The budget, brought down by Treasurer Stephen Mullighan, contains $2.4 billion in new spending on health over the next five years and also includes education initiatives and cost of living concessions, but comes with a warning that budget repair will need to be addressed.

The top line figures show the state recorded a bigger than forecast $1.73 billion deficit in the last financial year, but this is expected to rebound to a $233 million surplus this year with surpluses increasing each year before reaching $643 million by 2025-26.

Helping the bottom line is the state’s share of GST revenues and a $1.65 billion contribution from stamp duty as a result of the buoyant property market.

At the same time, however, South Australia’s debt will increase from $19 billion this financial year to $25 billion by 2025-26, and the net debt to revenue ratio will go from 109 per cent to 122 per cent over the same period.

Treasurer Mullighan says the budget “delivers our election commitments, returns the budget to surplus, and contains no new taxes.”

Gavan Ord, CPA Australia’s Senior Manager Business and Investment Policy, welcomes the prudent approach to fiscal management by the new government, noting that it creates opportunity for future tax reform.

“The forecast of budget surpluses in each of the next four financial years gives SA the opportunity to pursue tax reform in the near future. It’s something the state must do to remain competitive, and it’s better to do it while finances are strong.”

Labor focused on ambulance ramping as a key issue during the state election, and health spending is unsurprisingly front and centre with funding for 350 more paramedics, 101 more doctors in the public system along with 300 nurses and 326 more public hospital beds.

In terms of health infrastructure, the government is committed to a new Women’s and Children’s Hospital, with $100 million earmarked.

The budget includes measures to address the impacts of spiralling inflation, with a doubling in concessions for around 185,000 lower income South Australians.

The new government has continued the previous Marshall Government’s three per cent deposit loan scheme for first home buyers, while homelessness is addressed with a pledge to build another 400 homes under social housing programs.

This will cost $177 million over four years, while homelessness services will receive an additional $10 million. 

Ord says “The commitment to build 400 new homes under the social housing program is a good initiative, however programs that support first home buyers often inadvertently make housing less affordable by stoking demand, without necessarily increasing supply.”

The government also allocated funds to develop a hydrogen industry in Whyalla, home to the Arrium steelworks, with $593 million over four years for a facility that will use renewable energy to produce hydrogen, some of which will be exported with some used for energy generation.

As announced before the budget, this spending on the renewables industry is offset by the axing of solar and battery subsidy programs for households.

The government also supports Adelaide as a tourist and festivals destination, with the tourism budget boosted by $45 million over four years, and a $40 million major events fund to drive new events and grow existing ones, while$3.3 million is allocated to live music grants, and the Adelaide Film Festival receives $2 million funding over four years as it moves to an annual event.

Alongside the arts, the budget seeks to support motor sport, with the government allocating $5.7 million over four years to bring back the Motorsport Festival for the first time since 2019, when funding was cut.

The annual supercar Adelaide 500 race will receive $18 million for the December 2022 event.

The issue of university mergers has re-emerged on the government agenda, despite the failure of the merger between UniSA and the University of Adelaide. There is $1 million in the budget for a University Merger Commission.

The government also commits to the implementation of the Uluru Statement of the Heart, with $2.1 million allocated over four years for its implementation. 

Roads and infrastructure spending is a comparative loser, with construction of tunnels on the North South Corridor set for a delay, and the scrapping of a Riverbank Arena project championed by the previous Marshall Government.

The budget does, however, find $400 million for a major upgrade of inner suburban Anzac Highway and Marion Road, and $82.4 million over four years to take ownership of and rebuild the Adelaide Aquatic Centre.

The budget also focuses on savings from the government sector, with “efficiency targets” for several departments such as energy and mining, trade and the Department of Premier and Cabinet.

Public servants have also been warned to recalibrate their pay demands, while the Government opens up pay negotiations with the health professionals and teachers. The budget also saves $15.5 million over three years through scrapping an earlier traineeship program for the public sector.

Ord notes that like the Victorian, WA, Tasmanian and NT budgets, the South Australian budget has few measures of direct relevance to business and CPA Australia members.

“This is not surprising given the support the state government extended to South Australian businesses over the course of the pandemic,” says Ord.

“However, to assist small businesses manage through a range of growing challenges, especially inflation, supply disruption and severe labour shortages, we were hoping the SA Government would follow the lead of Tasmania and Victoria and provide incentives to businesses to seek advice from their adviser of choice.”

“CPA Australia research shows that as businesses fall into difficulty they become less likely to seek advice, right at the very point they need it. If the government can assist small business meet some of the costs associated with getting the right advice, this would help overcome this hurdle.”

Ord also adds: “It’s pleasing to see the South Australian Government’s $4 million commitment to establish programs to support women in small business. The economic benefits of such support could be amplified if a similar commitment was made to attracting young South Australians to start or buy a small business.

"Our research shows that younger small business owners have a greater focus on digital technologies, exporting, innovation, jobs creation and growth, however there just aren’t enough of them in Australia.”