Tax increases for South Australian home owners and motorists and a major privatisation are key planks in Treasurer Tom Koutsantonis’s first budget, handed down today.
In a highly unusual move, the Government has factored in a $332 million cut in health funding from the Commonwealth – but won’t say where the cuts will be made.
Premier Jay Weatherill said the Government would first attempt to force the Federal Government to restore the funding – if it didn’t, then his Government would consult with the community about where the cuts should be made.
Koutsantonis said the community would decide whether, for example, a hospital would be closed, or an entire government department shut down.
“What is it we do? Rather than what Canberra has done … we’re going to talk to South Australians about what they want from their government and how we can provide these services,” he said.
South Australian home owners will be stung an average of $150 a year, following the Government’s decision to remove an Emergency Services Levy remission for most property owners, netting the state an extra $80 million in annual revenue.
The removal of levy remissions for cars, larger motorcycles and historic vehicles will add an $8 increase to the standard motor vehicle registration, netting $9 million per annum.
The remissions are essentially hidden discounts that have been paid out until now.
Koutsantonis said the extra money from the levy would be put into the health system, but he emphasised that pensioners and concession-card holders would be exempt from the increase.
However, 175,000 pensioners and self-funded retirees will be hit by the removal of council rate concessions from 2015-16: for pensioners, that’s an extra $190 a year and an extra $100 for self-funded retirees.
Event-goers will also be stung, with a $2 levy per ticket to fund public transport, netting the Government an extra $4 million a year. The Government hasn’t released a full list, but it will affect tickets to “special events” such as large music festivals.
The Government will end the Motor Accident Commission’s monopoly on offering compulsory third-party insurance, effectively privatising that part of the commission’s business. Private operators will be allowed into the market – and MAC will withdraw – from June 30, 2016.
The MAC’s surplus net assets are anticipated to be more than $1 billion – half of that money will be returned to the Highways Fund.
Koutsantonis denied this was a breach of Labor’s election promise on privatisation, which he said was restricted to essential service providers.
“Writing third-party insurance policies is not an essential service that should be delivered by government,” he said.
MAC’s role will essentially be reduced to that of a road safety promotions body.
Koutsantonis confirmed that hospital upgrades promised for Noarlunga, the Queen Elizabeth, Modbury Hospital and Flinders Medical Centre had been “suspended”.
The money for the upgrades would be put aside in a “Health Capital Reconfiguration Fund” for these projects.
“This is not a cut – this is a suspension,” he said, insisting that all Labor election promises were being funded.
Other savings measures include annual cuts to government agency budgets (known as “efficiency dividends”), an increase in mining royalties, and a $1 million-a-year cut to NRM Board funding.
Setting up a potential conflict with the public-sector unions, the budget flags a limit to public-sector wage growth at 2.5 per cent, with any increases above that to be funded by “productivity improvements or further savings”.
Most big-ticket transport projects will go ahead, including the O-Bahn tunnel, new park and ride facilities, the South Road upgrade and the second freeway interchange at Mt Barker. The electrification of the Gawler rail line from the city to Salisbury has been pushed back again to 2017-18.
Promised money for the neonatal unit at Flinders Medical Centre will also go ahead.
Payroll tax concessions for small businesses remain in place.
Koutsantonis said the budget was a prudent document, with the state’s finances predicted to return to a surplus of $406 million in 2015-16, and increasing in the following two years.
The ratio of net debt to revenue would be reduced from 50 per cent to 35 per cent, thanks mostly to a technical accounting measure which will change SA Water’s gearing.
Economic growth is predicted to be 2.25 per cent in 2014-15, lifting to 2.5 per cent the following year, and 2.25 per cent for the following two years.
Employment growth is forecast to pick up, growing at 1 per cent next financial year after an estimated drop of 1.25 per cent in 2013-14.
Koutsantonis said the size of the surpluses was designed as a cushion against further Federal Government budget cuts, while the reduction in debt to revenue ratios was designed to send a signal to ratings agencies that the government is serious about fiscal responsibility.