2024-25 SA State Budget Update

On 6 June 2024 the Malinauskas South Australian Government delivered its third Budget, with a focus on cost-of-living, health, education, training and housing.  

After facing criticism for state-wide cancellations in elective surgery and increased ambulance ramping hours, the State Government is pledging an extra $2.5bn in funding for the State’s ailing health sector over five years. 

Despite the prominence of the State Prosperity Project in the Premier’s vision for the state, only modest investments have been made towards the Upper Spencer Gulf green industrial projects. Instead, funding focuses squarely on developing the workforce needed to build and sustain these projects and other national defence priorities across the state. 

A higher than anticipated surplus for 2023-2024 of $306m was recorded following an increase in tax revenues flowing from higher than forecast house prices over the year. The four-year estimates project year-on-year surpluses, with a $248m surplus projected for the 2024-2025 year. However, previously projected net debt over the forward estimates has now increased by more than $2.2bn to $39.75bn by 2026-2027, rising to $44.2bn by 2027-2028.

State Prosperity Project and Infrastructure

Treasurer Stephen Mullighan tempered expectations of increased infrastructure spending in the lead up to the Budget, saying the State Government is “significantly reducing the number of additional infrastructure announcements that we’re making.” 

This follows confirmation that the State Government has taken on $15.4bn in debt to fund the Torrens to Darlington (T2D) motorway and $3.2bn for the Women’s and Children’s Hospital. Construction on the T2D and main Women’s and Children’s Hospital is anticipated to commence in 2025. 

A further $498m has been allocated for the Flinders Medical Centre upgrade and expansion, which is expected to be completed by December 2028. 

The Budget also provides road safety and traffic management upgrades on the South Eastern Freeway between Crafers and the Tollgate ($200m) and at Mount Barker ($150m). 

A modest investment has also been made in State Prosperity Project developments in the Upper Spencer Gulf:

• $4.1m over four years to support large-scale hydrogen and renewable energy projects in South Australia; 
• $3.6m over two years to support a green iron and steel industry; 
• $5.8m over two years to deliver accommodation in Whyalla and ensure the hydrogen project construction workforce can be housed during the construction phase; 
• $1.7m over two years to support the Whyalla Steelworks transition to green steel; and 
• $6m will be allocated over the next four years to attract overseas and interstate investment. Applications under the program will open in July 2024. 

Education and Training

The Budget makes significant new commitments to develop South Australia’s future workforce including:

• $275.6m to increase the number of training places by approximately 35%, with priority for funding across the defence, health, building and construction, early childhood education, clean energy transition and ICT sectors; 
• $53.1m to increase the VET workforce, invest in equipment and develop curriculum aligned to the state’s economic priorities; 
• $13.3m to support workforce planning in the defence industries program; and 
• $9m to support programs in regional areas to connect learners, trainers and employers where it is needed most. 

The State Government has committed almost a billion dollars of new funding towards education programs, including: 

• $250m to build and expand public schools: 
• $62.7m for a new primary school and preschool at Mount Barker, expected to start operating in 2028; 
• $155.3m for a new high school in the northern suburbs for 1300 students (location yet to be determined); 
• $38.1m to upgrade and expand existing schools: 
• Surrey Downs Primary $16.5m; 
• Bellevue Heights Primary $7.6m; 
• Mount Gambier High School $6m; 
• Le Fevre High School $4m; 
• Mount Barker High School $4m; 
• $715m over five years to deliver preschool for three-year-olds: 
• This includes $339.7m over five years to deliver universal three-year-old preschool, which will be delivered to long daycare providers from 2026 and other kindergartens will phase the program in over the period between 2026 to 2032; 
• $127.3m over four years to provide 30 hours a week of pre-school to children at risk who are aged three and four; 
• $96.6m over four years to grow the early childhood workforce; 
• $30.6m over four years to align the support for four-year-olds and three-year-olds; and 
• $14m over four years to partner with Aboriginal communities to support the delivery of three-year-old preschool among Aboriginal children. The first two hubs will be established in 2025 at Port Pirie and in Adelaide’s northern suburbs.

Defence 

In addition to generating a skilled workforce, the State Government is allocating funding to promote SA defence industries and projects, including: 

• $6.8m over four years to increase Defence SA’s presence at major exhibitions locally and overseas and promote AUKUS projects; and 
• $30m to the development of a $60m Australian Defence Technologies Academy at Lot Fourteen, to drive sovereign research and defence capability development.

Support to Reduce Cost-of-Living Pressures

The State Government has announced a $266.2m extension of existing cost-of-living measures, including: 

• $51.5m in 2023-2024 to fund a $243.90 one-off boost for the 210,000 households who have already received the cost-of-living concession payment this year; 
• $36.6m over four years to double the cost-of-living concession for approximately 73,000 renters and Commonwealth senior health card holders; 
• $54.6m over four years to double the sports vouchers program to two per year, and expand its use to include music lessons. The program will support approximately 100,000 children; 
• $24m to deliver a $200 reduction to government school parents, caregivers and independent students for the materials and services charge for the 2025 school year, supporting up to 120,000 school children; 
• $14.1m to improve access to concessions for tenants in share houses, including disability accommodation and expand access to glasses, emergency electricity payments and funeral concessions; 
• $10.6m over four years for increased public transport concessions for all Health Care Card holders, saving passengers $2.25 per trip; and 
• $17.9m over three years for a social housing energy upgrade initiative to provide insulation upgrades and replacement of inefficient appliances to deliver energy cost saving benefits for tenants in public and community housing. 

$18.4m over four years has been allocated to support non-government organisations to meet wage and inflation pressures.

Health

Addressing ongoing challenges in the health sector remains a focus of the State Government, with $2.5bn being invested over the next five years. Highlights include: 

• SA Ambulance Service receiving another $24m for three new ambulance stations at Marion, Two Wells and Whyalla respectively; 
• $23.5m for SAAS to introduce an electronic patient care record (ePCR) system; 
• $10.7m to expand the Clinical Telephone Assessment (CTA) Service staffed by 15 paramedic telehealth clinicians; 
• $30.2m to build an extra 56 beds across the Queen Elizabeth and Lyell McEwin hospitals next year, on top of the 550 already pledged by the State Government, which includes: 
• $13.7m to deliver 36 extra beds at the Queen Elizabeth Hospital; 
• $16.5m to deliver an extra 20 beds at the Lyell McEwin Hospital; 
• $17.1m over four years to expand critical dialysis services in the northern metropolitan area, delivering an anticipated 30-chair renal haemodialysis unit, expanding the service by an additional 21 chairs to cater for an expected 30 per cent increase in demand over the next 10 years; and 
• $5m in funding for youth mental health services. 

Housing

As with much of Australia, housing affordability continues to be an issue affecting many South Australians, especially first home buyers. These pressures will continue to mount in coming years as skilled migration for the Upper Spencer Gulf and AUKUS economic developments increases.   

The State Government has committed almost half a billion dollars in new funding for the development of housing and new-build incentives, including: 

• $14m over four years for the abolition of stamp duty for all first homebuyers who build or buy a new (non-established) home, irrespective of the price of the home; 
• $16m over four years for an extension of the $15,000 first home buyers grant for another four years; 
• $425m over 10 years to deliver 1315 homes in Seaton (replacing 388 public homes with 865 houses and 450 apartments, with at least 15% to be designated as affordable housing and 30% as social housing); 
• $150m over 10 years for 626 new homes in Port Noarlunga and Noarlunga Downs, of which 15% will be affordable housing and 80 will be new SA Housing Authority homes; 
• $135.8m over five years to build and upgrade 442 additional social housing dwellings; 
• $30m over three years to boost regional housing; and 
• $1.1m over two years for Consumer and Business services to provide assistance to consumers seeking to resolve disputes with builders and contractors relating to the building industry and to better and monitor non-compliance by builders.  

Transport and Road Safety 

Road safety received a small increase in funding for targeted upgrades, including: 

• $80.1m for road safety, in addition to the $98m announced in last year’s Budget 
• $2.6m for new variable speed signage near schools, including a reduction to 40km/hr in some locations; 
• Priority push button crossings and new cameras will be installed at a cost of $38.7m over four years: 
• 30 new cameras, including 12 red-light speed cameras in 2024-2025 and three new point-to-point cameras in 2025-2026, will be installed over the next four years as part of a major road safety crackdown (Advertiser 3 June 2024). The remaining 15 are expected to be operational by mid 2026. 
• $35m over three years to deliver road safety maintenance such as road resurfacing, replacement of safety barriers and audio tactile line markings, maintenance of electrical assets including traffic signals; and 
• $3.8m over three years for the construction of a new heavy vehicle rest area along the Princes Highway at Salt Creek, funded 80:20 with the Commonwealth.

Tax and Levies

The State Government has maintained its commitment not to introduce new taxes or substantially increase existing taxes, with the indexation of fees and charges expected to increase by 3% (and not to exceed 4.3%). The 2024 Budget confirms indexed increases to the Emergency Services Levy, which would equate to a $6.55 increase per year from 1 July for a median-value residential property (Advertiser 3 June 2024).  

The increase in the Emergency Services Levy will help to fund: 

• $5m over two years for the Metropolitan Fire Service and Country Fire Service to undertake PFAS substance testing and remediation; 
• $2.8m in additional funding to relocate the Prospect State Emergency Service unit to Angle Park; 
• $817,000 will fund an audit of CFS facilities; and 
• $435,000 over two years will go towards helping the State’s Volunteer Marine Rescue associations to maintain their rescue capability. 

General practitioner wages related to bulk-billing services will be exempt from payroll tax from 1 July 2024. 

Tourism and Hospitality

Minor investments have been proposed for the tourism and hospitality sector including: 

• $26m in grant funding will be shared across 17 South Australian projects under the first round of the State Government’s Economic Recovery Fund. The combined value of the projects is worth more than $219.2m.  

• $11.5m of this has been allocated for regional tourism, infrastructure development: 

• $3.5m loan for Seppeltsfield’s Oscar Hotel; 
• $1m grant for the Kangaroo Island Seaview Motel Expansion; 
• $1m grant for the Rawnsley Park Station EcoVilla Expansion; 

• $14.8m for manufacturing innovation projects: 

• $2m for Inovor Technologies’ space and maritime surveillance investment; 
• $1.1m grant for AML3D project; 
• $1.9m grant for entX Limited; 
• $460,300 for George Street Steel; 

• $5m for the maintenance and repair of jetties between 2027-2028, extending the State Government’s $20m commitment announced in last year’s Budget. 

Corrections

A $226m expansion of the Yatala Labour and Adelaide’s Women’s Prisons will include: 

• $205m over four years to deliver another 312 high security prison beds at Yatala Labour Prison (taking total beds to 1158, a 37% increase). Work is expected to begin in August 2025; and 
• An expansion of the Adelaide Women’s Prison will be delivered with a further $21m over two years for 40 additional beds, taking total capacity to 316. Work will commence in January 2025. 

Law and Order 

Police services will receive funding to implement new technology and provide administrative support, freeing up additional operational resources. This will include: 

• $19m over four years to develop and implement the SA Police digital police station, an online system to allow people to make reports; 
• $8.5m over four years to fast-track a telephone resolution desk, to allow police to contact people who have made reports over the phone, rather than attending non-emergency incidents in-person; 
• $9.3m delivered over four years for the employment of up to 24 internal corporate or administrative roles in the Police Force, allowing up to 100 police officers and staff to conduct operational duties; and 
• $16.6m over five years for a communications campaign and compliance activities to discourage the use and illegal sale of vapes and tobacco. 

$3.3m in funding for frontline domestic violence service pilots will also be provided in 2024-2025. 

A Future Focused Economy 

South Australians have been feeling the strain of cost-of-living pressures, housing affordability concerns, and a health system that has struggled to cope with increased demands. The Malinauskas State Labor Government will be hoping that this Budget goes some way to alleviate those concerns, while investing in the skills, education and infrastructure needed to prepare the state for the big economic opportunities ahead of it.  

Many of these green industry and defence projects will require significant investment in a skilled workforce – and the infrastructure and services to support it – decades or more before they commence operations. As public debt mounts, the State Government is betting on these longer-term investments paying off for future generations. 

Contacts

This transformation of the state economy presents significant challenges and opportunities. If you’d like to discuss the Budget in further detail, including the opportunities it presents for you, please contact: 

Sandy Biar, Associate Partner, Communications, SEC Newgate – [email protected]