Ratings agency Standard & Poor’s has expressed doubts about the recovery of South Australia’s budgetary performance, in the wake of yesterday’s state Budget.

S&P said in a statement that the state’s AA/A-1+ credit ratings would not be “immediately affected” by the Budget.

“The budget predicts a strong turnaround in the state’s non-financial, public–sector, budgetary performance with operating surpluses and substantially lower after-capital account deficits forecast from fiscal 2015,” the agency says.

“While the state’s higher revenue growth forecasts are supported by stronger goods and services tax (GST) revenue (due to strong growth in the pool and South Australia’s increased share), Standard & Poor’s considers the state’s budgetary performance is likely to recover at a slower rate.

“The upcoming closures of General Motors’ manufacturing plant; two power stations and a coal mine owned by Alinta; and the restructuring of mining and steelmaker Arrium are likely to weigh on unemployment, which may dampen the state’s fiscal recovery.”

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S&P said it expected “the state’s total tax-supported debt to rise sharply in fiscal 2017 when the Royal Adelaide Hospital comes on balance sheet”.

“This is a year later than flagged in the previous budget, but consistent with the state’s 2014-2015 Mid-Year Budget Review. The potential increase in debt is within our rating expectations.”

Other Budget reaction

Opposition Leader Steven Marshall: “The Weatherill Labor Government has failed South Australia. The Government has failed to provide a comprehensive jobs creation package in today’s underwhelming State Budget. Under Premier Jay Weatherill’s leadership, South Australia is in the midst of a jobs crisis. The economy has flat-lined. Unemployment is the highest in the nation. Labor has no plans for major new infrastructure projects. South Australians are paying more and getting less.”

Master Builders SA policy director Ian Markos: “The building, construction and property sector is delighted with any measure that cuts the cost of business, and this ticks that box. But there’s a risk – are we just going to see property deals done to take a profit rather than building a new future for South Australia? That’s the important question, and one the Treasurer surely is hoping is answered with a swathe of new jobs. And we would have liked to see more details of the costs behind the Government’s planning reforms. There are scant details, so we are left guessing on what will be one of the most important job-creation initiatives this Government is developing.”

Property Council executive director Daniel Gannon: “Taking an axe to stamp duty on non-residential property transfers sends a strong message of confidence to South Australia’s small- and medium-sized enterprises. But importantly, commercial stamp duty abolition will ensure boards across the country will sit up and pay attention to our state’s property market. Abolishing conveyancing stamp duty for commercial transactions gives South Australia an instant and powerful, competitive advantage over other jurisdictions.”

Business SA CEO Nigel McBride: “We welcome the removal of stamp duty on commercial property transactions and the extension for another year of the payroll tax for small business. We also welcome the increase in funding for tourism, the focus on attracting more international students and the creation of an Industry Attraction Fund. However, we are disappointed that there is not an aggressive job creation package. Looking to transfer payroll tax to the Federal Government is not the answer to removing the tax on jobs. South Australia has the highest unemployment in the Nation and what we need is stimulus for small business to be able to create sustainable jobs. We were also hoping that there would be a strategic infrastructure package that would provide the foundation for sustainable economic growth and job creation.”

SA Chamber of Mines and Energy chief executive Jason Kuchel: “Removing stamp duty, an impediment to resources exploration, will help build investor confidence in our state’s projects. Extension of the concessional duty to retention tenements will save the industry around $900,000 over three years. The removal of stamp duty on non-residential real property transfers by July 2018 will encourage resource sector activity and investment, making SA a more attractive jurisdiction to establish head office. The abolition of stamp duty on non-real property transfers, such as non-fixed plant and equipment, receivables, goodwill and other business assets will also be a substantive benefit to the sector.”

South Australian Council of Social Service: “SACOSS welcomes the broad direction of the SA state budget, but concerns remain over the lack of a sustainable tax base for South Australia… The Budget also highlights the heavy reliance South Australia has on the federal budget. For the South Australian economy to be given the boost that it needs, we need the federal government to play well with our state government, and to ensure that are major injections of funding come to this jurisdiction in order to drive the jobs growth we we require.”

– InDaily