The 2023-24 Mid-Year Budget Review includes a record $1.2 billion investment in skills and further education while maintaining the budget’s return to surplus across the forward estimates.
After delivering the State Budget’s return to surplus with a $41 million operating surplus for the 2022-23 year, the MYBR estimates a $154 million surplus for 2023-24, increasing across the forwards.
While the Commonwealth’s MYEFO released on Wednesday last week revised SA’s GST receipts down by $206 million in 2023-24, and $116 million in 2024-25, strength in the state’s economy has seen improvements in state revenues of $229 million in 2023-24 and $272 million in 2024-25, driven by higher conveyance duty revenue and payroll tax.
These additional revenues have provided capacity for a record $1.2 billion investment in skills and further education including:
*National Skills Agreement ($689 million), funded in partnership with the Commonwealth Government, which will support approximately 150,000 new training places over the next five years.
*Support for creation of the new Adelaide University ($464.5 million over four years) including $320m for two new government owned research and student support investment funds, $114.5m for the acquisition of Magill and parts of the Mawson Lakes campus and $30m to attract international students.
*Tranche 2 of the Fee Free TAFE initiative ($25.7 million over four years).
Other key initiatives include:
* $168 million across 2023-24 and 2024-25 for a new road safety program to deliver road safety treatments on regional and urban roads, footpaths and cycleways, funded in partnership with the Commonwealth Government;
* an additional $125 million across 2025-26 and 2026-27 to complete the full duplication of Main South Road between Seaford and Sellicks Beach;
* $98 million across 2025-26 and 2026-27 to support the delivery of the Flinders Medical Centre upgrade and expansion project, in partnership with the Commonwealth Government;
* $22.7 million in 2023-24 through round one of the Commonwealth Government’s Disaster Ready Fund to deliver 23 projects across South Australia that will help drive long term resilience and mitigate the impact of disasters on communities;
* $20 million over three years, funded by the Commonwealth Government, to support the delivery of the Building Resilience to Manage Fruit Fly Package in South Australia.
The MYBR also shows the government’s overall net debt position is $3.3 billion lower in 2022-23 than it was forecast to be under the previous Liberal government, a 24 percentage point reduction in the key debt affordability metric, the state’s net debt to revenue ratio.
While debt will continue to increase in future years as the state continues to invest in major projects including the $15.4 billion Torrens to Darlington tunnels project and $3.2 billion new WCH, the improved position in the state’s finances provides capacity to do so.
Consistent with the approach in New South Wales and Victoria, the existing $3000 electric vehicle subsidy for new electric or hydrogen fuel cell vehicles will cease early from 1 January 2024. It’s estimated the move will save $12 million over two years.
This is after the Malinauskas Labor Government abolished the electric vehicle tax which would have slugged a typical motorist with a battery electric/hydrogen fuel cell vehicle travelling 15,000km each year an extra $375 per year.
Given the substantial new Commonwealth incentives including the electric car incentive amendments to fringe benefits tax (FBT) and cuts to import tariffs, the state subsidy is no longer necessary. It is estimated that the Commonwealth’s FBT exemption on a $70,000 electric vehicle provides a benefit of up to $12,000.
Individuals and businesses that have entered into a binding contract for the purchase of an eligible electric or hydrogen fuel cell vehicle prior to 1 January 2024, and are awaiting delivery of the vehicle, will still be eligible to receive the subsidy regardless of whether the vehicle has been registered by that date. This will ensure that those who have ordered an eligible vehicle on the expectation of receiving the relief will not be disadvantaged.
The existing three-year registration exemption will remain in place for eligible new electric vehicles valued below $68,750 and first registered between 28 October 2021 and 30 June 2025. This provides a saving of $148 per year indexed. Together with the abolition of the EV tax, these motorists are more than $500 a year better off.
As put by Stephen Mullighan
It’s important to return the budget to surplus and maintain prudent economic management.
After consecutive deficits racked up by the former Liberal Government before and during COVID, a stronger budget position gives us the flexibility to invest in key priorities, such as infrastructure and skills.
Every business owner is crying out for skilled labour and this huge injection of funding through the National Skills Agreement and university support package will ensure South Australia is well equipped to meet future demand.
