2021-22 SA State Budget Update

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Treasurer Lucas unveils infrastructure splurge with eye to next years’s state election

The South Australian Government’s budget for 2021 is one of big-ticket announcements in health, education and infrastructure as the Government heads into an election year. At the top of the list is funding for a $1.9 billion new Women’s and Children’s Hospital, $10 billion for the North-South Corridor and $660 million for a new sports and entertainment centre and new schools. 

It builds on last year’s budget that was the largest ever economic stimulus package in South Australia’s history designed to drive the economic recovery coming out of COVID-19. 

Significantly, this budget is designed to address political pressure points emerging in the areas of health and employment, through leveraging low interest rates to build strategic infrastructure projects. With a state election in March 2022, some key marginal seats receive attention with major decisions on transport infrastructure and more funding for hospital upgrades. 

In his final budget address ahead of his retirement, Treasurer Rob Lucas’ speech repeated the Liberal Government’s political mantra of more jobs, better services and lower costs of living. The aim is long-term sustainable economic growth based on improving business competitiveness through payroll tax and land tax reductions, savings on electricity and water bills, and a reduction in levies. 

The economy is bouncing back 

South Australia will be back in the black a year earlier than expected. Treasurer Rob Lucas will forecast a slim surplus of $48 million in 2022-23, followed by forecast surpluses of $498 million and $379 million, respectively, in the next two financial years. A $1.397 billion deficit is forecast for 2021-22 and $33.171 billion debt forecast across the four-year forward estimates.

The Treasurer has ruled out tax increases or new imposts, beyond an already announced 1.9% rise in fees and charges. The State Budget 2021-22 continues to fund key commitments of the abolition of payroll tax for small businesses ($44 million per year indexed) and huge land tax savings (more than $210 million over 3 years) for investors.

This Budget now estimates economic growth in 2021-22 to be a healthy 3.5% compared to the Commonwealth estimate of national economic growth of 4.25%.

This is supported by capital spending by business in South Australia. In the last 12 months this increased by a massive 21 per cent — the highest increase of all states in the nation. With more people coming to live and work in South Australia, the economic indicators are forecast to strengthen. International ratings agency S&P Global commented in their response to the budget that it “…showed an improving economic outlook …South Australia benefits from a strong economy and financial management.” 

A huge boost for health and vaccine funding to fight COVID19

Premier Steven Marshall said giving every South Australian access to the vaccine was a key priority for the Government with more than $86 million to fast track the rollout of the COVID-19 vaccine and a $23.6 million investment in SA Police increasing frontline capacity in the fight against COVID-19. 

The centrepiece of the State Budget 2021-22 is a record $7.4 billion in health spending next year, with a plan to fix ramping, ease pressure on hospital emergency departments and boost resources for important health services.

Standing out is $1.9 billion for the new Women’s and Children’s Hospital and a $163.5 million Mental Health Package. There is also $110 million across the State emergency departments, $20 million to fast-track elective surgeries and $45.1 million over four years to fund additional staff for the SA Ambulance Service. 

Transport and infrastructure spend underpins growth 

Treasurer Rob Lucas said a consistent pipeline of major infrastructure projects was critical to ensuring the state’s ongoing economic growth. A record $17.9 billion will be pumped into infrastructure over the next 4 years with the bulk of it allocated to the $9.9 billion North-South Corridor with new design options and three lanes in tunnels each way and the new $700m Riverbank centre for entertainment and sports. 

Other major announcements include a $111 million commitment to makeover fifteen railway stations across metropolitan Adelaide and $48.5 million for a new Park ‘n’ Ride facility at Tea Tree Plaza in the marginal seat of Newland. 

The Government will introduce in the coming weeks its promised Bill for a road user charge for electric vehicles. This is consistent with the commitment in last year’s budget and that legislation has since been passed in Victoria and proposed in NSW. 

Bolstering the jobs market in the regions 

The Marshall Government’s investment in the jobs market is seeking to drive a wave of employment across metropolitan and regional South Australia. A total of $3 billion will be invested across more than 1,000 projects in the regions to create local jobs. The big announcement is a new $200 million fund to support industries such as defence, space and the wine industry. There is $69 million for the state’s jobs training system and $29.4 million in targeted new investment in the screen industry through additional production support. 

Education supports local and attracts international

A record $1.3 billion will be invested into public education infrastructure to provide students and staff with state-of-the art teaching and learning facilities. $665 million will be invested in education infrastructure over 4 years, including $50 million in the Early Learning Strategy to expand the reach, frequency and number of child development checks and $84 million over 3 years for the new Rostrevor High School. South Australia is the first state to have its international student’s arrival plan supported by the Federal Government. A Flight Training Adelaide site has been approved to house 160 students who will complete their 14 days quarantine and undertake daily COVID-19 testing.

Social infrastructure gets a shot in the arm 

Key announcements in social infrastructure include $8 million to preserve and activate historical sites, $4 million to upgrade the Department for Correctional Services’ offender tracking program and $1.5 million to develop a full business case for a new rehabilitation prison. 

What’s next?  

After a 39-year political career, this is Treasurer Lucas’ last budget and legacy. South Australia’s economic future is underpinned by massive Commonwealth spending on defence shipbuilding as well as the consistent strength of the resources, energy and agriculture sectors. A burgeoning space and hi-tech industries centred around Lot 14, with international companies like Accenture and Amazon setting up major operations in South Australia, adds much-needed diversity to the industry mix and growth potential. 

With 9 months before the next state election, this budget sets the scene for the campaign with a focus on health, jobs and infrastructure. 

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