A State Government campaign to blame federal funding cuts for the state’s economic woes looks to have backfired with new data showing households pulling back on spending.
The campaign began after the federal Budget was handed down on May 13 this year and ramped up when Treasurer Tom Koutsantonis delivered the state Budget on June 19th.
By the end of June the campaign had its own committee as Premier Jay Weatherill launched the “Federal Budget Response Taskforce. ”
The negative campaign has worked to raise fears in the community – more than any other state. However, it has also slowed spending in SA.
“SA households are more concerned about new costs rising from the federal Budget than any other state,” says the latest ING DIRECT Household Financial Wellbeing Index.
“This uncertainty will see SA households growing savings by cutting back on discretionary spending and lowering living costs.”
At a time when the state needs spending to stimulate its moribund economy, people are keeping their wallets and purses closed.
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The ING Index shows household financial well-being declined in South Australia in the period to July 2014.
“Household comfort with household bills has been hit especially hard, falling from 4.04 (out of a possible 7) in Q1 to 3.87 in Q2 – below the national average of 4.01,” it shows.
The index shows 54 per cent of SA households are more concerned about new costs rising from the federal Budget than residents of any other state (45 per cent nationally), 45 per cent of SA households will aim to grow savings this financial year and 40 per cent of Gen X households in SA will increase savings by cutting back on discretionary spending, while 43 per cent of Baby Boomers will focus on lowering living costs
The ING DIRECT Index measures household sentiment across income, debt, investments, savings and ability to meet household bills.
ING DIRECT spokesman John Arnott said “it’s worrying that to maintain, rather than improve, lifestyle is the main concern … for the financial year ahead. This highlights the cost pressures they currently face.
“Households nationally, including those in South Australia, are aiming to preserve their lifestyle through saving and actively cutting costs rather than relying on increased debt, which can lead to greater financial pain further down the track.”
The state campaign against federal cuts has been criticised by the Opposition as a step too far.
“It’s the height of hypocrisy for the Weatherill Labor Government to attack the Federal Government when the Weatherill Labor Government is cutting $1,033 million out of its own health budget,” Marshall told InDaily after his Budget reply speech.
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“The Premier also conveniently forgets to talk about the increases in federal revenue from sources such as GST; the net result is actually an increase in our funding position.
“The real problem is the State Government’s spending.”
Weatherill, however, is preparing this week to raise the stakes in his funding campaign.
He announced today that he will lobby crossbench senators, including Clive Palmer’s group, to challenge federal budget measures that have an impact on South Australia.
Palmer said he was willing to listen.
“I’ll let him know that we won’t desert the South Australians, we’ll stick with them, and we won’t let any of these measures go through the Senate and it’s only us that can stop them, no one else can, and we’ll guarantee we’ll do that,” Plamer told listeners on 891 ABC this morning.
“I think we need to have a whole new development plan for South Australia for its industries and things like that.
“We need to look at what sort of manufacturing we can get going in South Australia … In my business … you can export ore at say $50 a tonne, the Japanese turn it into nickel and sell it at $20,000 a tonne, and yet their wages are higher, their energy costs are more, and they suffer from the tyranny of distance.
“Why can’t we process some of our minerals in South Australia and sell them to world markets? … I think we’re all Australians, I don’t think we can just look at just the GST as being a source of revenue.
“The whole thing about GST as a state tax but whether the money comes from the GST or the general revenue, South Australia deserves to be supported and it also needs to have a transitional plan to go into the future and that’s what we’ll be doing. ”
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