COVID hits SA budget but surplus looms

Tim DorninAAP
South Australia Treasurer Rob Lucas is confident the state's budget will soon return to surplus.
Camera IconSouth Australia Treasurer Rob Lucas is confident the state's budget will soon return to surplus. Credit: AAP

Extra costs related to COVID-19 have hit the South Australian budget, with the deficit for the current year now expected to grow to $1.6 billion.

But the state government says its finances will surge back into the black next year with its pandemic recovery well on track.

Releasing the mid-year budget review on Monday, Treasurer Rob Lucas said the government was continuing to deliver what was needed, in health and other areas, during the pandemic.

That commitment will add about $200 million to the deficit in 2021/22 compared to the $1.4 billion forecast when the budget was handed down in June.

However, the government said it was still forecasting a return to a modest surplus of about $100 million in 2022/23, growing to around $500 million for each of the following two years over the forward estimates.

"We continue to provide whatever additional health funding is required for vaccinations, testing regime and COVID-related expenses," Mr Lucas said.

"At some stage through next year, that expenditure will tail off."

The mid-year review also revealed the budget bottom line for 2020/21 was significantly better than expected with the deficit falling to $563 million, down from the original forecast of $1.8 billion.

That was the result of higher than expected GST and stamp duty revenue and lower expenditure in some areas, including grants to councils for infrastructure projects.

The state's economy is expected to grow by 2.5 per cent in the current year while jobs growth has been revised up from two per cent to 2.5 per cent.

Mr Lucas said South Australia had the fastest-growing economy in the nation, with more people employed full-time now than ever before.

"The review reaffirms our commitment to driving the state's strong economic and jobs growth, growing our global reputation as one of the safest and best places in the world to live, work and raise a family," he said.

"Through sound fiscal management and our pro-business, pro-jobs agenda that encourages private sector investment, we are sending a clear signal to the rest of the world that South Australia is well and truly open for business."

The review also confirmed recent commitments from the government including extra funds to increase hospital bed capacity to deal with COVID-19 admissions, more money for child protection and incentives for people to buy electric cars.

Get the latest news from in your inbox.

Sign up for our emails