Treasurer Tom Koutsantonis has pulled off a Christmas surprise, announcing an improvement in the state’s Budget position this year and no new cuts.

However, surpluses in the forward estimates have been shaved, with revenue set to decline.

In today’s mid-year budget review (MYBR), Koutsantonis said the state was meeting its fiscal targets and the net operating balance for this year would improve by almost $300 million.

Despite dire warnings on the impact of federal Budget cuts on the state’s finances, the Treasurer was able to announce that the net operating deficit had been revised to $185 million, compared to $479 million in the 2014-15 state Budget.

He also predicted an improvement of $521 million in net debt in 2014-15, down from $4.51 billion in the 2014-15 Budget to $3.99 billion.

However, he has reduced the size of the forecast surpluses in the forward estimates, with the 2015-16 surplus shaved from $406 million to $265 million.

Koutsantonis said the improvements in the MYBR were driven by the expected return of funds from the Motor Accident Commission and the delay to the expected start of financial obligations associated with the new Royal Adelaide Hospital.

The improved financial position comes despite Koutsantonis’s June Budget warning about an unaccounted for $332 million shortfall in federal funds, new commitments of nearly $300 million in the past few days for new RAH transition costs and new prison beds, and a predicted long-term fall in revenue.

He said the delay in the start date of the new RAH, announced by Health Minister Jack Snelling yesterday, was a “happy coincidence”.

There would be no increased taxes or new cuts needed to meet the Government’s targets.

However, there were savings measure of more than $1 billion built into the forward estimates.

“The State Government remains committed to the delivery of these savings and revenue measures,” he said.

The MYBR shows a surplus of $265 million in 2015-16, increasing to $699 million in 2016-16 and $872 million in 2017-18. The June Budget put the surpluses at $406 in 2015-16, increasing to $776 million and $883 million in subsequent years.

Koutsantonis said there had been a “structural change” in the Budget, with the MYBR forecasting a real-term decline in expenditure of 5 per cent by 2017-18, compared to 2011-12.

“I’d prefer to be in surplus this year obviously but what you’re seeing is all the numbers heading in the right direction,” he said.

However, he warned that revenue was set to fall across the forward estimates by a total of $442.5 million by 2017-18.

He said continued expenditure restraint was needed to ensure the Government met its fiscal targets.

“Continued expenditure restraint means that new spending in the MYBR has been largely offset over the forward estimates, including by lower interest costs,” he said.

Full-time equivalent staff position in the general government sector were estimated to decrease by 2585 between 30 June 2014 and 30 June 2018. This compared to 4080 positions targeted in the 2014-15 State Budget.

Koutsantonis said this change reflects a decision to increase staffing in the Department for Education and Child Development, both in schools and in Families SA.