Just a week after Lucas handed down a mid-year financial statement surplus which boasted a $40.1 million surplus for 2018-19, SA Treasury officials today sought urgent advice from the Commonwealth after Monday’s Mid-Year Economic and Fiscal Outlook from his federal counterpart Josh Frydenberg revised GST payments to South Australia down to $6.815 billion in the current financial year.

That’s $72 million less than the $6.887 billion forecast in Lucas’s own mid-year budget review.

Asked if SA had missed out on an expected $72 million windfall, Lucas confirmed today: “It looks like it for this year.”

“That seems to be the initial advice,” he said.

He later confirmed Treasury’s “initial analysis” of the GST downgrade showed “there would be a $577 million write-down in forecast GST collections for SA in the four years between 2018-19 and 2021-22”.

“Based on current estimates, our upcoming budgets would face small deficits over the next few years instead of modest surpluses if we didn’t take corrective action,” Lucas said.

“If these estimates are confirmed in next year’s Federal Budget, the Government will take corrective action.”

But he insisted there was room to move to remain on track to deliver his promised surplus in 2019-20.

“The bottom line is whatever the numbers are it adds to the difficulty the state confronts [and] clearly budget savings tasks will have to be delivered,” he said.

“We obviously have contingencies – every sensible budget has contingencies within it – but it reduces our capacity to respond to other [budget] requests through the year.”

He noted ominously that the Government would “have to stick much more rigidly to the enterprise bargaining aggregate we’ve got in our budget”, adding: “We’re hopeful there will be some growing revenue from our existing base.”

He said GST forecasts “do swing around wildly”, noting that this time last year the MYEFO predicted a similar revenue reduction, which didn’t eventuate.

But he insists last week’s surplus is “not wiped out”.

“The Government’s indicated we’re intent on producing modest surpluses – and we’re still intending to produce a modest surplus,” he said.

“We’ll just have to manage it through savings… we won’t be able to spend some of the contingencies on other funding bids that come up through the year.

“There are a lot of variables in a $20 billion budget that move up and down – this is another one, which by the end of the year may move again.”

He said SA Treasury officers will work with Federal Treasury officers “in analysing these GST estimates over the coming weeks”.