Budget analysis: The worst is yet to come
The frightening message for South Australians from Tom Koutsantonis’s budget is this – you ain’t seen nothing yet.
Despite the cuts and the increase in charges to households and pensioners, there is – in all likelihood – much worse on the way.
In a first in this correspondent’s experience, the budget contains a $332 million sleeper – a cut that is coming your way unless the Weatherill Government has an unlikely win in its campaign to have the Abbott Government reverse its budget decisions on health and education funding.
Even more exquisitely painful, Tom Koutsantonis and Jay Weatherill want you to join the grim party and help them decide where the cuts should be made.
It could be an entire hospital, it could be the whole Environment Department (yes, that’s the actual example that the Treasurer used today during a briefing of journalists).
Koutsantonis says he’s not going to do to the South Australian public what the Abbott Government has done, and simply impose unexpected cuts.
No. In a new take on Weatherill’s “debate and decide” mantra, they want your ideas on slashing services.
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This was the weirdest rhetorical point in today’s budget – but it wasn’t just rhetoric.
Koutsantonis has structured budget surpluses from 2015-16 which are fatter than they need to be, in order to prepare for the possibility of more cuts from the Commonwealth.
“What if ‘budget repair stage two’ means stopping the NDIS,” he asked.
“I need to have capacity in our budget because I don’t know what’s coming next.”
This shadowy $332 million is probably why the budget isn’t anywhere near as bad as many expected.
The cuts are deep, that’s true,, and Koutsantonis produced a neat graph showing expenditure as a percentage of Gross State Revenue falling below 15 per cent – for the first time ever, he asserted.
However, most of the Government’s promises are kept – the O-Bahn tunnel, the neonatal unit at Flinders Medical Centre, a new school for the city, South Road upgrades and a range of others.
Pensioners will get an increase in energy and medical heating and cooling concessions, but they will lose their council rates discount.
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A few promises have gone by the wayside – at least for the time being.
Promised hospital upgrades across the city have been put on ice.
Koutsantonis says this isn’t a broken promise, because the money has been allocated. I’m not sure the community will care about the rhetorical niceties – if their upgrade isn’t delivered, they will view it as a broken promise.
And is the privatisation of the Motor Accident Commission’s compulsory third-party insurance a broken promise? Possibly, although the Treasurer insists Labor only promised not to privatise essential services.
In terms of the state’s economic outlook, there are a range of middling forecasts – for unemployment to grow slowly (it fell in the past year, despite last year’s prediction of growth), and for economic growth to pick up to moderate levels.
Koutsantonis gave a solid, if not overly confident, assessment of the state of the economy.
“The economy’s metrics are good,” he said, with construction picking up and exports at record levels.
However, the forecasts are all potentially moot.
It’s been a long time since a South Australian treasurer hit any forecast targets – for spending restraint (that was missed this year), employment growth (it actually fell this year), and returning the budget to surplus.
Net debt is estimated to hit $6.8 billion this financial year, another increase on the most recently updated figures produced in January ($6.7 billion). It’s predicted to fall to $4.5 billion in 2014-15 before ballooning to $7.14 billion in 2015-16 (less than the previously forecast $9.6 billion).
On his economic forecasts, Koutsantonis is also ready to blame the feds if, like his predecessors Jay Weatherill and Jack Snelling, many of his predictions fail.
“The Commonwealth Government casts a long shadow over our estimates,” he said.
We’re all, it seems, living under a shadow.
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