Budget tightrope: balancing debt, cost of living relief
A state government is walking the budget tightrope as it grapples with the need to reduce living costs while managing a hefty profit with mounting debts.
South Australian Treasurer Tom Koutsantonis will announce his fifth budget on Thursday, marking the state’s first since 2017 when its net debt was $6.1 billion.
It’s currently approaching $35 billion.
The treasurer, who took the reins after Stephen Mullighan abruptly quit politics last year, acknowledged the debt would rise by more than the $48.7 billion forecast by mid-2039 in the mid-December budget review.
Flinders University public policy lecturer Josh Sunman said the theme of the budget was to emphasize fiscal restraint.
“I think the government is acutely aware of the potential for a debt spiral to emerge,” he told AAP.
“They’ve implemented these massive infrastructure projects, and despite the cost of living crises, they really don’t have the capacity to do anything else.”
Work is currently underway on the $15.4 billion Torrens to Darlington tunnel project, which will complete the city’s north-south corridor link, and the new Women’s and Children’s Hospital, which will cost an estimated $3.2 billion.
“The government is signaling very clearly (in the budget) that they do not intend to offer a lot of aid, and this is the perfect spot for that in this cycle, they just got re-elected with a huge majority,” Mr. Sunman said.
The Treasurer recently responded to calls to ease the cost of living by saying: “It would be great to give everyone free public transport, free parking and a puppy.”
Mr Sunman said Prime Minister Peter Malinauskas and his ministers reflected “a real sense of fiscal responsibility”.
“They don’t want to be seen as Victoria and I think they will work hard to get the debt spiral under control, but an unforeseen crisis may arise that requires a different approach.”
The government has already been grappling with costly unforeseen crises in recent years, including bailouts for the Whyalla steelworks and the Nyrstar smelter in Port Pirie, a strategic fuel reserve and devastating algal blooms and drought.
Shadow Chancellor of the Exchequer Ben Hood said the debt rescue plan was a non-negotiable budget inclusion.
“We are currently paying approximately $5.3 million per day in interest alone, a figure expected to reach almost $8 million per day by 2029,” he said.
“Not only have Labor failed to manage the budget, they also appear to be in complete denial of the seriousness of the situation.”
Mr Koutsantonis said the debt would rise unless the Liberals proposed canceling the tunnel project and the hospital.
“The power of the state can afford this. The debt-income balance is sustainable and I think we need to implement these projects for the long-term growth of our economy,” he said.
One Nation leader Cory Bernardi says SA faces an intergenerational debt that is being drained in part by mismanaged infrastructure projects.
He said the CFMEU was a “lawless criminal cartel” that was “openly harsh on Prime Minister Malinauskas”.
“That’s why One Nation is proposing a debt ceiling bill so there can be real accountability to parliament and control of ongoing extraordinary spending,” he said.
