Treasurer Stephen Mullighan this morning handed down the mid-year budget review revealing an increase in the state government’s forecast for the Adelaide Consumer Price Index (CPI).

Inflation is expected to be at 4.75 per cent in 2023/24 – one percentage point higher than forecast in the June state budget – before falling back to 3.5 per cent in 2024/25 and 3 per cent in 2025/26.

The budget papers attributed the higher inflation forecasts to “construction price pressures, the recent strong fuel price growth and the high prices for fruit and vegetables due to recent flooding events”.

But the state’s economic growth forecasts have also improved, with gross state product growth now tipped to reach 1.25 per cent in 2023/24 – up 0.25 points since June.

South Australia’s employment growth is also expected to tick along at 2.5 per cent – one and a half points stronger than intially forecast.

Mullighan said it was pleasing that inflation is forecast to come down but it’s “not as quickly as we would like”.

“That will not only continue pressure on households and small business budgets going forward but it continues pressure on government,” he said.

“The price of everything that we have to purchase – goods and services as well as investments in infrastructure – is commensurately higher.

“And that, unfortunately, has been a feature not only for households who might be doing work around their own home, but for governments around the country in delivering the infrastructure that the community needs.”

Treasurer Stephen Mullighan handing down the mid year budget review today. Photo: Tony Lewis/InDaily

But Mullighan insisted the $3.2 billion Women’s and Children’s Hospital and the $15.4 billion final stage of the North-South Corridor would remain on budget.

“We’ve got no reason to believe that those budgets for each of those projects have changed or will need to change,” he said, adding that the government was currently out to market for the Torrens to Darlington project.

“That’s been so far a good market process. We’ve got two shortlisted tenderers who are vying very very hard for that very very significant job.

“We think that’s going to deliver value for money and we don’t have any concerns there’ll be any pressure on that project budget and the same story goes for the Women’s and Children’s project.”

Mullighan also expressed confidence in the costings for the government’s $593 million hydrogen power plant in Whyalla, saying: “I haven’t seen anything which gives me reason to think that we need to increase funding in the state’s budget.”

The state government’s coffers are expected to be better off next year with taxation revenue forecast $229 million higher than first expected for 2023/24, primarily due to higher-than-expected conveyance duty and payroll tax revenue.

Over the forward estimates to 2026/27, tax revenue is expected to be $905 million higher than initially forecast.

But that’s set to be partially offset by lower-than-forecast GST revenue from the Commonwealth.

There has been a $206 million downward revision in the state’s GST revenue for 2023/24 and a $116 million decrease for 2024/25.

EV subsidy axed

Photo: Bension Siebert

The state government has also axed a $3000 subsidy for new electric vehicle purchases in South Australia.

The scheme, introduced by the former Marshall Government in October 2021, offered $3000 to purchasers of new battery electric and hydrogen fuel cell vehicles worth up to $68,750.

Mullighan said around 2500 of the available 7000 subsidies had been taken up by South Australian consumers.

He said cutting the scheme will save the government $12 million over two years, and other more lucrative incentives were available for EVs from the federal government.

“The subsidies for electric vehicles that have been offered by the states and territories have been completely and utterly subsumed by the new incentives which have been put in place by the new Albanese federal Labor government,” Mullighan said.

“We are talking Commonwealth incentives in the order of four times the level of the state government’s entered here in South Australia.

“Our contributions are no longer making a meaningful difference to people’s decision making when it comes to purchasing new cars.”

The scheme will end on January 1, 2024. Individuals who have purchased an EV before this date and are waiting for its delivery next year will still be eligible for the subsidy.

A three-year exemption on registration fees for EVs will also remain in place.

Flinders Medical Centre upgrade, Festival Centre costs rise

The Flinders Medical Centre. Photo: Tony Lewis/InDaily.

The cost of upgrading the Flinders Medical Centre has also increased from $400 million to $498 million.

Mullighan said the cost increase, which will be in part covered by the federal government, was due to a change in project scope and construction cost escalations.

He said the new upgrade would include a change in bed configuration and improvements to “different wards and facilities”.

“I think the Southern Adelaide Local Health Network wanted to improve some more facilities than what were originally anticipated,” he said.

“And there are also some additional costs in delivering that project.

“When you’re in a national environment where construction escalation is running somewhere between five and 10 per cent, depending on what sort of project it is, then it is natural that those costs are going to be a little bit higher.”

The Adelaide Festival Centre is also getting an additional $34.2 million in 2024/25 and 25/26 to ensure the centre complies with “modern fire safety standards”.

The fire safety money comes despite the centre and Festival Plaza recently undergoing a $90 million upgrade.

Asked why the fire safety work wasn’t done when the precinct was recently upgraded, Mullighan said: “That is exactly the question I asked.

“The previous government closed the Festival Centre to do the $90 million of improvements that was budgeted by the previous Weatherill Labor Government.

The Festival Centre/Plaza precint recently underwent a $90 million upgrade. Photo: Liam Jenkins/InDaily

“When the request was made by the Festival Centre to do further fire safety upgrades, I think if I can put it as euphemistically as possible, I was pretty surprised that those works didn’t occur when it was closed for that extended period for those initial $90 million of works.”

Mullighan said the fire safety work “should have been done back then” but could “no longer be ignored”.

He said additional work would be done to improve the plaza’s connection with Elder Park and provide a “seamless integration”.