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Big spending budget aims to drive economy, jobs


The State Government is following up on last year’s big borrowing budget with another spending spree on a range of projects and schemes aiming to create jobs and fuel the SA economy. We unpack some of the major items that spearhead the budget.

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Government banks on big spend to drive economy

The State Government is banking on significant spending and continued strong economic growth to drive the South Australian economy forward.

The deficit for 2020-21, announced in Tuesday’s State Budget is expected to be about $1.8 billion – down from the $2.6 billion forecast last year – while total net debt is expected to rise from $22b to $33.6b by 2024-25.

But the government predicts a return to surplus in 2022-23 – a year earlier than expected.

Treasurer Rob Lucas said employment in South Australia is forecast to grow by 1 per cent in 2020-21 and by 2 per cent in 2021-22.

SA’s unemployment rate has been subject to significant fluctuations in the past six months. It was the lowest in the nation in November at 6.2 per cent before jumping in the new year to be the nation’s highest in January, February and March.

A big fall in the jobless rate in April helped SA briefly shrug the unemployment state tag before regaining it in May with a jobless rate of 5.8 per cent.

“We still have a challenge in terms of the recorded unemployment rate,” Lucas said.

“It remains an ongoing challenge … but the fundamentals we believe are right.”

South Australia is set to record economic growth of 2.25 per cent in gross state product (GSP) in 2020-21, well above the forecast of 0.75 per cent and almost double the national 20-21 growth rate of 1.25 per cent.

The 2021-22 GSP growth rate is forecast to be a healthy 3.5 per cent. However, this is below the booming national growth rate prediction of 4.25 per cent.

North-South corridor cost blowout

Treasurer Rob Lucas revealed the cost of the Torrens to Darlington stage of the South Rd project had blown out by $1 billion to $9.9b, up from the $8.9b set out in the 2020 budget.

The higher estimate had been driven by updated plans which included expanding the tunnels from two lanes to three, to accommodate three lanes due to greater traffic volumes than first predicted.

Lucas said it made sense to adjust the project, and budget, before work began.

“Now is the time to make the decision,” he said.

However, Budget papers said project costings “will be finalised on completion of the business case”.

The project is expected to slash travel time by 24 minutes and be completed by 2030.

Riverbank arena planning flagged

The government has committed $78m from 2022-23 to 2024-5 for planning and preparations to build the new 15,000-seat arena for sports, entertainment and conventions, which is expected to cost $662m and be completed in 2027-28.

Early site works will include a tunnel under Morphett St, which will eventually link the new arena with the Adelaide Convention Centre and broader Riverbank precinct.

Lucas said the revised total cost was less than the $700m originally forecast, and would be further offset by the sale of the Entertainment Centre at Hindmarsh, which he estimated would net “tens of millions of dollars”.

The new Adelaide Riverbank Arena is forecast to generate total revenue in the order of $49.2 million per annum and incur total operating costs in the order of $34.5 million per annum once operational.

Wine funding to help producers find markets outside China

More than $5 million will be provided over four years to help the state’s wine exporters recover from Chinese tariffs that have threatened to cripple the industry.

The funding will support SA wine industry export growth and diversification in priority markets such as the US, UK, Japan, Korea, Hong Kong, Malaysia, Singapore, Korea, UAE, Vietnam and Europe.

The initiative is funded from the Jobs and Economic Growth Fund and follows the tariffs of more than 200 per cent placed on Australian wine by the Chinese government last November and later extended for five years.

Trade Minister Stephen Patterson said the $5.4 million Wine Export Recovery and Expansion program will focus on major e-commerce and retail campaigns, as well as in-market tasting programs in developing markets.

He said the state government was steadfast in its support for such a key industry and the program would deliver further assistance by delivering business-to-business virtual events for new channel development and sales.

“We’ve been consulting extensively with the industry and the Department for Trade and Investment has collaborated with regional, state and national wine industries and government partners, and we’ll continue to do so as the program is delivered over the next four years,” Patterson said.

South Australia’s wine exports are valued at more than $2 billion, accounting for 70 per cent of the total value of Australian wine exports in 2020. However, a reliance on the Chinese market in recent years has highlighted the need for urgent diversification.

Screen industry schemes aim to build movie momentum

The success of recent South Australian productions has prompted an additional $29.4 million investment to ensure the state continues to be a destination of choice for the production of film, television and digital content.

The funding includes $22.8 million to extend the Post-Production, Digital and Visual Effects (PDV) Rebate Scheme, introduced this year, to 2024-25 and $6.6 million for the Screen Production Fund.

The PDV initiative provided $2.7 million in 2020-21 and has allocated $2.1 million in 21-22 before increasing to $6 million per year until 24-25.

The Screen Production Fund will provide an indexed $1.6 million a year to the SA Film Corporation to bring the total fund to $3.1 million a year.

The fund supports the production of screen content for the commercial release via theatrical, broadcast or digital platforms that generate significant economic outcomes for the state.

Projects funded under the scheme are expected to be substantially produced and post-produced in SA.

“This twin investment builds on the outstanding success of recent productions like Mortal Kombat, Gold and The Tourist to ensure South Australia remains a destination of choice for screen production,” said Innovation and Skills Minister David Pisoni.

“South Australia is in the midst of a golden age of screen production with high quality international, national and local productions providing jobs for local crews and artists.”

Mining investment to drive innovation

A test mine and innovation centre will be built at the existing OZ Minerals Prominent Hill Mine in South Australia’s north with the help of $8 million in state government funding.

The Arkani Ngura National Test Mine and Innovation Centre will support the development and commercialisation of technology in the resources, space and defence sectors in partnership with industry.

“From the potential to store hydrogen underground to the testing of prototype mining and defence equipment this new facility will place South Australia at the forefront of industrial innovation,” Energy and Mining Minister Dan van Holst Pellekaan said.

The State Budget also includes a $1.1 million commitment to a state-of-the-art spectral geoscience instrument for the State Drill Core Library to help discover the resources that will become the mines of the future.

“The ADI funding is an investment in a future where South Australia has the tools and knowledge to efficiently utilise its available mineral resources,” van Holst Pellekaan said.

“The State Budget 2021-22 also has $2.2 million over the next four years to expand the free, confidential and independent Landowner Information Service to support landowners in engaging with mineral exploration companies.”

Road funding to improve key corridors

Despite axing the controversial Hove level crossing project, the State Government will spend hundreds of millions of dollars on a series of road projects to upgrade city and country roads and highways.

The projects, which comprise of Commonwealth and State funding in an 80:20 split include $202 million over three years to build a Sturt Highway bypass around the town of Truro and $180 million over four years to complete the next stage of the duplication of the Augusta Highway from Nantawarra and Lochiel.

A $60 million upgrade of the Heysen Tunnels on the South Eastern Freeway over two years has also been included under the shared funding model as has a $40 million project to upgrade Key Kangaroo Island road corridors over three years.

The State Government has also set aside $36 million over two years to increase the life of the Old Murray Bridge to increase its operational life by 30 years.

In Adelaide, $45 million has been budgeted over three years under a 50:50 arrangement with the Federal Government to upgrade the intersection of Marion Rd and Sir Donald Bradman Drive at Cowandilla in a bid to improve traffic flow to and from Adelaide Airport.

Funding of $6 million has also been set aside over two years for upgrades to the intersection of Nottage Terrace and North East Rd at Walkerville.

Infrastructure and Transport Minister Corey Wingard said the projects would sustain thousands of jobs for a number of years.

“When it comes to road works, we know they can be a hassle, and we know there is plenty of work underway across the state at the moment and we thank all South Australians for their patience,” he said.

“But every time you see road works it’s important to remember that’s a South Australian in work and that’s the Marshall Liberal Government building what matters for our state.”

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