• South Australian State Budget 2016-17 – Job creation the cornerstone

With Australia’s highest rate of unemployment, it’s no surprise South Australian Treasurer, Tom Koutsantonis, emphasised job creation as the cornerstone of his budget, handed down on 7 July 2016.

Despite a budget back in black to the tune of $258 million and the addition of 6,000 jobs last year following extensive tax reform, the government faces ongoing challenges, among which is the soon-to-close Holden factory in Elizabeth.

The substantial infrastructure spend, plus grants to business for new hires and a payroll tax rebate available to employers with payrolls up to $1.2 million means the budget is likely to be well-received by business.

With the Job Accelerator and Industry & Innovation grants providing a welcome stimulus, the government has recognised the importance of the mid-size business sector in driving economic growth and recovery in South Australia.

Headline budget items

  • A forecasted net operating surplus of 254 million in 2016-17 and $415 million in 2017-18.
  • Expected economic growth of 2.5 per cent for 2016-17, growing to 3 per cent from 2017-18.
  • A reduction in unemployment from 7.7 per cent to 6.9 per cent.

Major announcements

Jobs

  • $109 million to businesses that employ additional workers, including:
  • $10,000 grant for each additional worker employed by a business with a payroll of less than $5 million
  • $4,000 grant for each additional worker employed by a small business or start-up business
  • $135 million to attract and create new industries while fostering an innovative culture, including:
  • $50 million to partner with private sector financiers
  • $35 million to encourage visitors and major events to the State

 

Infrastructure

The government’s $12.1 billion infrastructure investment over four years will include the following:

$3.2 billion for health facilities (including the new Royal Adelaide Hospital)
$2 billion on road projects, including:

  • $985 million for the Northern Connector
  • $896 million for the Torrens Road to River Torrens South Road upgrade
  • $620 million for the North-South Corridor Darlington upgrade
  • $160 million for the O-Bahn extension to the city

$783 million on public transport:

  • An additional $248 million for the Goodwood and Torrens Rail Junction upgrade
  • $153 million for the Adelaide to Salisbury rail line electrification.

$442 million on education facilities

$222 million for the Adelaide Festival Centre Precinct and Her Majesty’s Theatre

$588 million on residential housing, including 1000 houses in 1000 days

Education

  • $250 million to refurbish and redevelop contemporary science, technology, engineering and mathematics facilities in 139 public schools
  • $250 million for a private school loan facility that will allow these schools to borrow at government borrowing rates to fund infrastructure that improves school learning facilities

Health

The health system will be supported with an additional $527 million.

Other announcements

  • $169 million extra resources for police, the justice sector and emergency services
  • $144 million to support community wellbeing
  • $142 million to improve and encourage use of the public transport network
  • Over $98 million to protect, sustain and enhance the environment
  • $90.7 million in additional disability funding to support the transition to the NDIS and provide additional disability services support

State taxes

Wagering tax

A wagering tax of 15 per cent on net wagering revenue received from persons located in South Australia by all Australian-based wagering operators will apply from 1 July 2017 (however, only once the tax-free threshold of $150 000 net wagering revenue per year is exceeded). The wagering tax will apply to bets on horse, harness and greyhound racing, bets on sports, as well as other contingencies. South Australia is the first Australian jurisdiction to introduce a wagering tax based on the place of consumption.

Payroll tax

The small business payroll tax rebate available to employers with taxable payrolls less than or equal to $1.2 million will be extended for an additional four years (to 2019-20). The rebate ensures that once paid, eligible employers with taxable payrolls of up to $1 million will have effectively paid payroll tax at the rate of 2.50 per cent (instead of the statutory 4.95 per cent). However, the rebate will phase out for employers with taxable payrolls between $1 million and $1.2 million.

Stamp duty

The current stamp duty concession of up to $15,500 for purchases of off-the-plan apartments has been extended to apply for one additional year (2016-17). The eligibility area will also be expanded from the inner-metropolitan area to the whole of the state for eligible contracts entered into between 20 June 2016 and 30 June 2017.

Land tax

  • The principal place of residence land tax exemption will be extended from 2016-17 to ensure that the exemption can be claimed for up to two years if a residence is  unoccupied while substantial renovations are undertaken. Currently, there are circumstances where land tax may be triggered.
  • The land tax exemption for sporting and racing associations will be expanded to include all non-residential and non-vacant land owned by an association. Currently, clubrooms or other association facilities (including commercial premises) owned by such associations are not eligible for an exemption. The exemption will apply to land held from 30 June 2016 and ex-gratia relief for land tax paid will also be available.