Higher tax returns to bolster SA budget

SA Treasurer Stephen Mullighan
SA Treasurer Stephen Mullighan says the state's finances will be back in the black in 2022/23. -AAP Image

The South Australian budget will return to surplus on schedule thanks to a big jump in GST returns, the strong property market and higher gambling taxes.

Treasurer Stephen Mullighan says SA will get an extra $419 million in GST during the current financial year and an estimated $1.7 billion more across the forward estimates.

He says state taxation measures, including stamp duties on property sales, will bring in $192m more in 2022/23, and a further $337m over the next three years.

That will combine to put the budget back in the black in 2022/23 and maintain surpluses across the forward estimates, despite rising costs and extra spending.

"The mid-year budget review continues the government's efforts to strengthen the state's finances after COVID, with a return to surplus, lower debt and improved budget metrics forecast," Mr Mullighan said on Friday.

"Additional revenue forecasts since the State Budget have allowed the government to meet the challenge of rising interest costs, higher inflation, and the need to continue investing in frontline services."

The budget review has revealed a $244m increase in interest charges on the state's borrowings this year, with rising rates likely to add an extra $801m by 2026.

That will cut the forecast surpluses in coming years.

The government is now expecting a $206m surplus in 2022/23, down from the $233m forecast in June with the surplus rising to $649m by 2025/26, down from the previous projection of $643m.

The state's net debt will also continue to rise to hit $24.6 billion by 2025/26.

Mr Mullighan said the government was confident the budget could cope with allocating extra funds to key areas and the increased cost of major projects, including Adelaide's north-south road corridor and construction of a new Women's and Children's Hospital.

Extra spending included in Friday's budget review included the previously announced $51.6m assistance package for those impacted by flooding along the Murray River, $85m to the health sector, $125m to upgrade freight routes, $26.7m for child protection services and $52.8m to tourism.

Overall, the SA economy was forecast to grow by 5.1 per cent in 2021/22 with growth trimmed to 2.25 per cent for the current financial year.

Employment growth is set to remain flat at around one per cent across the next four years.

The budget will return a deficit of $829m for 2021/22, but that is down from the previous forecast of $1.7b.