The South Australian (SA) State Government handed down its Budget on 19 June 2014.

A range of unprecedented pressures faced by the SA budget have arisen due to announcements made in the 2014-15 Commonwealth Budget.

The headline items for the State Budget include:

  • a $479 million net operating deficit for 2014-15, with net operating surplus expected going forward from 2015-16
  • additional efficiency dividends on agencies of 1% of the net cost of services in 2015-16 (approx. $61.4m) and a further 1% p.a. from 2017-18 (approx. $65.2m)
  • a pay freeze in 2014–15 for parliamentarians, executives and ministerial advisors
  • public transport cost recovery for major events
  • the government will limit future wage growth to 2.5% p.a.
  • operating expenditure growth will be limited to trend growth in household income once surplus is achieved
  • a maximum ratio of net debt to revenue of 35% is expected
  • new operating and investing savings initiatives in the 2014–15 Budget total $1.5 billion over the next four years
  • Government restructuring of its balance sheet in 2014–15 will result in a transfer of debt to the public non-financial corporation (PNFC) sector (SA Water) from the general government sector. This transfer will allow for SA Water to have a capital structure comparable to other government-owned water entities interstate.

Major announcements
Major announcements from the State Budget included:

  • investment of $54.0 million over four years (in addition to $6.1 million in 2013–14) for a range of measures to revitalise and rebuild the state economy following the decision by GM Holden Ltd to close its vehicle manufacturing operations in Australia by 2017. This includes a $12million contribution to the Commonwealth Government’s Growth Fund, which was announced in response to the planned closures of the three vehicle manufacturers; Ford Motor Company of Australian Ltd, GM Holden Ltd and Toyota Motor Corporation. 
  • investment of $52.0 million over two years (in addition to $11.0 million in 2013–14) for additional resources towards the Skills for All initiative. This initiative will provide 20,000 additional student places to ensure industry training needs are met while supporting the State's economic priorities.
  • investment of $70.0 million over four years for the establishment of a Jobs Accelerator Fund. This will support job creation in regional areas and increase the funding available to the Regional Development Fund (to $15.0 million per annum) and to Regional Development Australia (to $3.0 million per annum).
  • the mining sector has been a key priority area for the Government of South Australia. As part of the its commitment to ensure the benefits from the mining boom are realised by all South Australians, the State Government has introduced a number of initiatives, including:

    $32.2 million in spending, over three years from 2013–14 for a new State Drill Core Reference Library at the Tonsley Redevelopment, partially funded from the sale of current facilities and re-allocation of funds from the Brukunga Mine project

    $1.0 million per annum for the expansion of the Plan for Accelerating Exploration (PACE) program to bring forward new mineral and energy discoveries

    an additional $1.0 million per annum for the Mining and Petroleum Services Centre of Excellence to bring together resource companies, research institutions and services businesses to coordinate innovation and research initiatives and develop supplier capabilities and capacity to service the resources sector

    the Government has also established a future fund, which will receive a share of royalties as contributions, to deliver the benefits of the natural resources to the State
  • an increase to the extractive minerals royalty rate

State taxes
Announcements in relation to State taxes included:

  • state taxation revenue (before policy measures) has been revised down by $313 million over the forward estimates driven by lower payroll tax, conveyance duty and gambling tax revenue forecasts - this is offset by increases in GST receipts of $355 million
  • in 2014-15, the small business payroll tax concession for eligible employers up to $9,800 will continue to be provided
  • stamp duty concession on eligible off-the-plan apartments in the inner metropolitan region will continue to be provided and a Seniors Housing Grant of up to $8500 will be introduced for people over 60 years of age who want to right-size their principal place of residence and purchase a new home to live in
  • in 2014-15, property taxes are expected to grow in real terms by 14.2%