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SA Labor sounds budget alarm over subs but GST is OK

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South Australia’s new Labor Treasurer says the “alarm bells are now ringing” for the state’s naval shipbuilding industry after the federal budget made major defence commitments interstate, but he has welcomed a substantial increase in SA’s GST funding.

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Federal Treasurer Josh Frydenberg handed down the 2022 budget last night, highlighted by a temporary halving of fuel excise and an increase in the low-and-middle-income tax offset to ease cost of living pressures.

But the budget has come in for criticism in South Australia after the state missed out on a $7.1 billion regional infrastructure fund which will flow to the Northern Territory, Western Australia, Queensland and New South Wales.

Overall, SA received $2.8 billion of the $17.9 billion national infrastructure funding pool.

South Australia’s new Labor Treasurer Stephen Mullighan, in keeping with his Labor treasury counterparts in Victoria and Queensland, used his budget response this morning to attack the Morrison Government, accusing it of being “squarely focused on shoring up marginal seats in other states”.

“We’re very disappointed once again to miss out on key funding streams, particularly with regard to infrastructure,” he told reporters today.

“The vast bulk of the alleged $2.8 billion of additional funding that the Commonwealth has said is for South Australia, the majority of that is beyond the next four years and largely relates to subsequent years of North-South Corridor funding.”

Mullighan used his address to heighten concerns that South Australia’s role in building nuclear-powered submarines in the AUKUS deal could be under threat, proclaiming “the alarm bells are now ringing in South Australia for the defence industry”.

“We’re really worried to see that this year’s federal budget commits billions of dollars for additional investments in defence facilities around the country with no new money for South Australia,” he said.

Mullighan played down a pre-budget pledge from the Morrison Government to triple the size of the Osborne Shipyards to accommodate the new subs build, saying that funding would come from “existing Defence Department resources”.

“Which makes us question to what extent and in what capacity the Defence Department is going to be attracted to actually providing significant amounts of money for that endeavour,” he said.

“By contrast, we see Western Australia being allocated $4.3 billion for a new naval shipbuilding facility over there.”

Asked if he was suggesting South Australia submarine build was under threat, Mullighan said: “Absolutely.”

“We don’t know what submarine is going to be built for Australia’s defence needs, we don’t know when it’s going to be built, and we certainly don’t know where it’s going to be built,” he said.

But Mullighan – who has repeatedly raised concerns about South Australia losing its guarantee of GST funding in 2026 – said he welcomed an extra $200 million in GST set to flow to SA next year off the back of a 9.1 per cent growth in the national pool.

“Certainly, I’m not going to be coy about this, having additional GST funding coming into the state is welcome,” he said.

However, he emphasised that “all states and territories are going to be better off according to their proportionate share” and the “overall concern” remains the end of the guaranteed GST agreement in 2026.

He claimed if the guarantee ended this year South Australia would be $280 million worse off.

“So any benefit we get from the change in the pool last night will be more than wiped out by the changes to the overall GST,” he said.

Mullighan will announce within the next fortnight when he will hand down his first state budget.

Finance Minister and SA senator Simon Birmingham defended the decision to leave SA out of the $7.1 billion regional infrastructure spending spree, describing the program as “just one program out of many, many different programs in the budget”.

“South Australia, elsewhere I’ve read in other states, has been criticised for doing disproportionately well out of the amount of infrastructure spending that we’ve secured,” he said, noting the ongoing funding for the North-South Corridor and a $55m investment to upgrade to the Horrocks Highway in the Clare Valley region.

The federal government also revealed on Monday a $200 million intersection fix for Marion Road and Cross Road, along with a tram overpass.

Meanwhile, Business SA CEO Martin Haese this morning delivered a sharp criticism of the budget’s investment on skills.

“The skills shortage is a massive issue across Australia. This has been consistently raised by our members and the broader business community,” he said in a statement.

“This budget certainly lacks depth for the number one issue facing business right now.”

He also said South Australia was “effectively MIA” on regional infrastructure investments.

“Most states were specifically listed as ‘primed for growth’, but this does not include South Australia,” Haese said.

“The investment in infrastructure is welcomed here in South Australia. But when you unpick the figures, we get a $2.8b share of the $17.9b total national investment, and of that $2.26b is already committed to completing the North-South Corridor.

“We have been disappointed with a lack of game-changing infrastructure spending in SA in the past, and we were hoping for funding for big projects like the efficient and safe passage of west-bound freight vehicles around metropolitan Adelaide as Portrush Road is at capacity.”

The South Australian Civil Contractors Federation was more upbeat about the state’s $2.8b share of the infrastructure pool.

“Local and regional civil construction businesses, including: road constructors, earth movers, traffic management personnel, and many industry suppliers, will all benefit from the ongoing commitments to improve, maintain and build new road infrastructure projects across our State,” CCF SA CEO Rebecca Pickering said.

The RAA was similarly positive about the overall infrastructure spend, although said it didn’t support the fuel excise cut given its potential impact on road funding.

“We’re disappointed there is no commitment to progress the duplication of the Augusta, Dukes and Sturt highways, which would support economic recovery and greatly improve road safety in regional areas,” said Charles Mountain, RAA’s senior manager of safety and infrastructure.

“With more lives lost on our roads last year than the year prior, and more people travelling as COVID restrictions ease, now is the time to be investing more in our roads and road infrastructure – not cutting billions of dollars of potentially life-saving funding.”

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