Today’s South Australian (SA) budget provides the second act to last year’s COVID stimulus, while keeping the government’s economic powder dry ahead of the election, according to Australia’s leading professional accounting body, CPA Australia.
CPA Australia General Manager External Affairs, Dr Jane Rennie said, “This is the last budget before the SA election in March 2022. It’s also Treasurer Rob Lucas’ last budget before he retires.
“Last year’s budget included $4 billion of economic stimulus over two years. The government is clearly comfortable with its economic street cred and doesn’t feel the need for major new stimulus measures now.
“On the other hand, the government isn’t seeking to recoup the state’s pandemic debt yet through new taxes and other revenue raising measures.
“The government has more money in its back pocket due to better than expected economic conditions. There’s a sense it’s keeping its economic powder dry, so it can make new spending announcements in the lead up to the election.
“Ideally, we’d prefer to see further support for economically vulnerable sectors, such as small businesses and international tourism and education operators given ongoing COVID impacts and uncertainty.”
The 2021-22 budget includes a smaller than expected deficit of $1.4 billion and general government net debt of $18.2 billion. The government is forecasting a return to surplus in 2022-23, a year earlier than expected. “Given the cost of borrowing at present, we don’t consider the size of SA’s debt concerning.
“A recent rise in the state’s unemployment rate is a temporary set-back given otherwise strong economic indicators. But it does underscore the importance of population growth, migration and addressing the state’s skills shortage.”
State taxes are up $257 million overall. The major contributor is a bonus $215 million in stamp duty receipts due to rising property prices. GST revenues were better than expected, although they’re still forecast to be $937 million lower than pre-pandemic estimates over the next three years.
The budget doesn’t include any stamp duty relief for property purchasers. There is an additional $10.7 million in land tax relief and a 50 per cent land tax discount for new build to rent housing projects.
The big-ticket item in this budget is infrastructure spending. $17.9 billion over four years (consisting of new and previously announced funding) will go towards roads and public transport, health, education and schools, and other critical infrastructure.
Infrastructure spending highlights the need for SA to address its skills shortages. The budget includes $69 million for training places to support skills for in-demand jobs. An additional $4 million will provide wage subsidies and payroll tax exemptions for new apprenticeships and traineeships.
Although international education is SA’s biggest export and one of the state’s biggest employers, it doesn’t feature in the budget. “Given its economic significance to the state, this sector is surprisingly underdone in the budget.
“Last week SA became the first state or territory to have an international students arrival plan approved by the Commonwealth. The cost of flights and quarantine will be borne by education providers and students, so it doesn’t add anything to the budget’s bottom line.”
The budget includes $20.6 million over three years to improve the government’s cyber security, but only $2.6 million over four years to help small businesses improve their cyber resilience.
“It’s good the government recognises the growing threat posed by cyber-attacks and is taking steps to protect its digital assets. They also need to provide meaningful funding to help small businesses do the same.”
SA exporters will benefit from $1.8 million over four years to develop a Europe-focussed trade and investment office. “Europe is a key market for South Australian exports. This initiative will open trade opportunities for SA exporters and help them diversify their markets.”