In his final Mid-Year Budget Review as Treasurer before his retirement from politics at the March election, Rob Lucas said the state would return to “a modest operating surplus” next year, despite a current deficit for 2021-22 of $1.59 billion – up from $1.397 billion in June.
However, he said the final budget outcome for the previous 2020-21 year had landed around $1.2 billion better off than the expected $1.8 billion deficit – setting the groundwork for a faster recovery.
That was aided, he said, by buoyant payroll taxes, reflecting SA’s “stronger than predicted” economic bounceback from the 2020 COVID shutdown.
However, he conceded reining in soaring debt levels – from $18 billion in the current year to $23 billion by 2025 – would be a budget fix beyond even the next Treasurer after he bows out.
“There is no way any [immediate] successor of any persuasion is going to be able to turn around this level of debt in a four year period,” he said, noting the endeavour would take ongoing “fiscal discipline” with successive surpluses, as budgeted, to pay down debt.
But he insisted credit rating agencies had determined the state was carrying a “manageable level of debt”.
Lucas reiterated his intention to serve out his term as Treasurer until his polling day retirement, saying his collaborative approach to budget decisions with cabinet’s budget committee meant “clearly there are at least a handful of people well versed in the decisions that we’ve taken” who could then step into the role, if the Government is returned.
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