2018-19 Mid-Year Budget Review confirms return to surplus as operation to stem CALHN’s budget bleeding continues

The Marshall Government’s 2018-19 State Budget is on track to deliver a return to surplus and maintain projected surpluses across each year of the forward estimates, according to the Mid-Year Budget Review (MYBR), released today.

Treasurer Rob Lucas said the MYBR records a net operating surplus of $40.1 million in 2018-19 (revised down from $48.2 million); and reports a limited number of new decisions totalling $172.1 million over four years.

The MYBR confirms the Government’s disciplined approach towards responsible financial management which led Standard and Poor’s to upgrade our state’s credit rating from AA to AA+.

The new spending, for schools, hospitals and to address the needs of children in state care, continues to build a strong foundation for South Australia’s future while cleaning up the enormous financial mess left by 16 years of Labor.

“The Mid-Year Budget Review reaffirms our commitment to return the budget to real surpluses,” said Treasurer Lucas.

“We can no longer conceal the real situation by using ‘one-off sugar hits’ from the privatisation of the Motor Accident Commission.

‘It also invests in a sound recovery program to stem the significant budget blowout in the Central Adelaide Local Health Network (CALHN), which has been haemorrhaging $300 million a year under Labor’s watch.”

New budget decisions include;

  • $48.2 million from 2020-21 for government schools under the National School Reform Agreement with the Federal Government;
  • $34.3 million over four years to meet additional costs for children in state care;
  • $101.9 million over two years for SA Health, including $18.9 million over 12 months for estimated engagement costs for KordaMentha in its role as implementation partner for the Central Adelaide Local Health Network Organisational and Financial Recovery Plan;
  • The Department for Education will be undertaking a project from within existing budgets to deliver high-speed fibre optic Internet connectivity to 98.8% of South Australian government schools by mid-2020.

The Mid-Year Budget Review also reports higher-than-expected payroll tax revenues, while conveyance duty revenues are lower. Overall tax estimates across the forward estimates are $79 million lower.

“GST revenue has been revised up by $41 million in 2021-22 following the Federal Government’s commitment to ensure no state will be worse off under the new GST distribution arrangements,’’ said Mr Lucas.

“Economic forecasts remain unchanged except for Gross State Product growth, which is half a percentage point lower in 2018-19, and a half a percentage point higher in 2019-20, reflecting the impact of dry weather conditions significantly reducing winter crop production levels this financial year.”

Investing expenditure will be $8.3 billion in the general government sector over four years. Changes across the forward estimates reflect updated estimates of timing of a range of projects.

$37 million in funding for the tram right-hand turn project will be held centrally, pending consideration of its utilisation as part of the 2019-20 State Budget.

Net debt remains within affordable limits, increasing by $247 million in 2021-22. This increase largely reflects the new budget decisions.

The Final Budget Outcome for 2017-18 has also been released today showing a $313 million deficit for the last financial year of the former Labor government.

The former Labor government in its 2017-18 MYBR had actually forecast a surplus of $12 million for 2017-18.

Labor’s deficit for 2017-18 is lower than that estimated in September due to a number of factors, including a different accounting treatment for the proceeds of the privatisation of the Lands Titles Office.

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