South Australians will lose a $3000 electric vehicle incentive as the state government banks growing budget surpluses over the next four years.
Rising tax takes will boost the state’s bottom line even as debt continues to grow, the government’s mid-year budget review revealed on Thursday.
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The state’s strong financial position was vital for the government’s ability to invest in crucial infrastructure and skills, Treasurer Stephen Mullighan said.
“It’s important that if we’re going to borrow more money on the state’s balance sheet, we do that to invest in productive infrastructure which will deliver benefits to the community in the decades to come, rather than borrowing more money to offset those continuing operating deficits as we’ve seen in the previous three financial years,” he said.
After bouncing back from three consecutive deficits with a slim $41 million surplus last financial year, South Australia is predicted to widen its surplus to $616 million by 2027.
SA Treasurer Stephen Mullighan delivered the state’s mid-year budget review on Thursday. Credit: AAP
However, net operating balances over the forward estimates were revised down $409 million compared with the June budget forecast.
The change was largely driven by skills and infrastructure expenditure.
Extra funding was included in the budget to support 150,000 training places as part of the National Skills Agreement, as well as $465 million to create Adelaide University and more money for road and hospital improvements.
This was partly offset by upward revisions to stamp duty and payroll tax revenue forecasts, as the jobs and housing markets continue to outperform expectations.
Shadow Treasurer Matt Cowdrey said the government had abandoned families battling rising inflation by not using the $2 billion in extra revenue to fund additional cost-of-living relief.
But the revenue outlook wasn’t all rosy. SA’s GST forecast for the next two years was revised down in the Commonwealth’s mid-year budget update on December 13.
Mullighan said he expects SA’s share of GST to decrease slightly when the Commonwealth Grants Commission completes its review into how the tax pool is divvied up between the states.
Electric car concession gone
Cut from the budget was a $3000 rebate for new electric vehicle purchases, which Mullighan said was unnecessary after the federal government introduced incentives worth $12,000. The move follows NSW and Victoria axing similar payments.
The Malinauskas government had already abolished a tax on electric vehicles which would have slugged a typical driver an extra $375 a year, the treasurer said.
A $3000 electric vehicle incentive has been axed in the SA’s government’s mid-year budget review. Credit: AAP
Buyers who have already placed an order on an electric vehicle or plan to do so by December 31, 2023 will still be eligible for the rebate.
South Australia’s three-year registration exemption will remain for drivers until June 30, 2025.
According to the treasurer, only about 2500 subsides were paid out of the 7000 budgeted for South Australian residents.
“What we are now seeing is a far greater number of electric vehicles purchased in South Australia beyond those transactions that attract the subsidy,” Mullighan said.
The mid-year review delivered an improvement to government debt forecasts and its projected debt to revenue ratio — a key metric used to assess the state’s capacity to service and take on more debt by ratings agencies.
Net debt is expected to grow from $17.7 billion to $28.1 billion by 2027, half a billion dollars less than predicted in June.
Interest payments on government debt dropped marginally from the June budget to $1.24 billion but are expected to creep up to $1.83 billion in 2027, when they will account for 6.2 per cent of all government expenditure.
Inflation for this financial year was revised upwards by one percentage point, with the Adelaide consumer price index now forecast to grow by 4.75 per cent.