Fears SA on Victoria trajectory with debt to hit $48bn in 2029
The state Liberal party said the 2025/26 State Budget “delivers no new vision for South Australia”, while an influential think tank fears debt levels puts the state on the Victorian path.
South Australia is staring down a “debt iceberg” according to the state Liberal party.
The state government yesterday unveiled its fourth budget, defined by a big spend on law and order and health investment hitting $9 billion in total.
State debt is estimated to reach $31 billion this year and by 2028/29 it’ll be $48 billion – $2 billion more than what the Treasurer forecast at the mid-year budget review just six months ago.
“The debt iceberg will sink the dreams of future South Australians,” SA Liberal Leader Vincent Tarzia said.
“What’s abundantly clear is that Labor is completely out of touch with the needs of South Australians and instead, is frivolously whittling away taxpayer dollars on vanity projects that don’t deliver any relief from sky-high energy prices, water bills and the housing crisis.
“A budget like this leaves South Australia vulnerable to economic shocks, which could come from any direction in the current economic climate.”
His fears are supported by conservative think tank Institute of Public Affairs, which said: “South Australia is a great state, however is showing worrying signs it could follow Victoria’s disastrous fiscal path”.
“With net debt set to almost double to 2029, future generations of South Australians are being left behind by a government that is increasingly following the lead of Victoria in budget mismanagement,” said IPA deputy executive director Daniel Wild, who ran as a Liberal candidate in the most recent Federal Election.
Mullighan yesterday said the debt was serviceable, pointing to the net debt to revenue ratio of 107.6 per cent in 2025/26, growing to 125 per cent in 2027/28. Compare that to Victoria’s expected ratio of 183 per cent by 2027/28, he said.
He’s also proud of new Australian Bureau of Statistics figures showing State Final Demand (a measure of the value of spending at the state level) in the March quarter grew by 1.3 per cent – almost double the next best in Queensland and ahead of the 0.2 per cent GDP growth nationally.
“We’d always like to see larger surpluses, but I think it’s understandable in the context of the current financial year,” he told InDaily.
“These are extraordinary demands on a state budget, and it really highlights why it’s important to be forecasting surpluses in the first place so that if something unexpected comes up you’ve got the capacity to respond without pushing the budget into deficit.”
SA Greens leader Robert Simms meanwhile described the state budget as “uninspiring”.
He welcomed the 25-cent public transport fares for student metroCARD holders but said it should have been extended.
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“They should have listened to the Greens and gone much further with 50-cent fares for all,” he said.
“Instead fares for everyone else are going to increase. In fact, most South Australians will see their fares go up by 20 cents.”
Business Chamber welcomes investment
South Australian Business Chamber CEO Andrew Kay welcomed the establishment of the $50 million South Australian Early-Stage Venture Capital Fund, which will invest in local startups and scaleups.
“A similar fund was created back in 2017 and some of the beneficiaries are now rising stars on the SA business landscape,” Kay said.
The $20 million for energy efficiency grants were “practical and timely”, Kay said, given cost pressures across the economy.
“We welcome the practical focus in this year’s budget,” he said.
“The next challenge is delivery – and ensuring that these programs support long-term economic growth across the business community.
“Looking ahead, a more ambitious approach to taxation, and regulatory reform remains essential to drive productivity and alleviate the cost of compliance pressures on business.”
Property sector ‘cash cow’ for state government
Property Council SA Executive Director Bruce Djite said property “continues to do the heavy lifting” to fund public services and infrastructure, and this is unsustainable.
“This budget proves once again that the State Government is over-reliant on the property sector as an income source and it must stop treating the sector as a cash cow,” Djite said.
Compared to the 2023-24 financial year, this budget’s revenue from total property taxes has increased 13.5 per cent, from $919.1m in 2023-24 to $1,121.7m.
Stamp duties on financial and capital transactions have incresed16 per cent, from $1,383.2m in 2023-24 to $1604.4m.
Djite said that while the budget includes positive signals for the property industry, the government needs to be more fiscally ambitious.
“With demands on the built form rising and costs escalating, we need to rapidly see more levers pulled to drive supply, attract capital and create the jobs, economic opportunities and vibrant liveable communities we all seek to inhabit,” he said.
Health sector wants performance, not promises
Australian Medical Association South Australia (AMA SA) president, Peter Subramaniam, said yesterday’s budget is a “missed opportunity” for new and innovative solutions in the health workforce.
While AMA SA welcome the $1.9 billion healthcare spend, Subramaniam said “announcements alone do not equal outcomes”.
“South Australians deserve a health system that performs, not just one that is promised,” he said.
“Despite record investment in healthcare under the Malinauskas Government, ambulance ramping hours have reached record highs and surgery waiting times have ballooned.
“It is not clear how this budget will fix that.”
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According to the AMA’s Ambulance Ramping Report Card, South Australian patients spent 45,399 hours ramped outside hospitals during the 2023-24 financial year, up from 15,239 hours in 2019-20.
Subramaniam also welcomed the $13.9 million spend on the Mental Health Co-Responder Program, but said it’s only part of the solution.
Road maintenance lagging
RAA Chief Executive Officer Nick Reade said while the budget funds important road upgrades, maintenance funding is “insufficient” to address SA’s growing $2 billion backlog.
“Ahead of this state budget, we called for $1 billion over four years to begin tackling our $2 billion road maintenance backlog which amounts to more than 2500 km of our road network,” Reade said.
Reade pointed to positives in the investment in Curtis Road, which he said was top of the list in RAA’s recent Risky Roads survey.
“The removal of the level crossing, together with a previously announced roundabout at Heaslip Road will go some way to improving that road,” Reade said.
“Ultimately, we’d like further improvements to Curtis Road in the future, including duplicating the road and progressing associated intersection and safety upgrades.”
He also welcomed the partnership between the state and federal governments to deliver the Adelaide Hills Freight Bypass, but believes the Commonwealth should have fronted 50 per cent of the cost, rather than the 80/20 split.
Reade said an 80/20 split would “save South Australian taxpayers hundreds of millions of dollars that could be used for other road upgrades”.
“There is strong precedence for similar projects interstate being funded on this basis, and we urge the Federal Government to re-consider the current funding arrangement to ensure the project is delivered without unnecessary delays,” Reade said.
Resources sector misses out
The South Australian Chamber of Mines and Energy said none of its wishes were granted in the state budget.
“The 2025-26 State Budget highlights the significant ongoing expenditure resulting from the Whyalla Steelworks being placed into Administration,” SACOME CEO Rebecca Knol said.
SACOME’s key takeaway from the FY25-26 State Budget is that no funding has been made available to progress strategic policy initiatives that the South Australian Chamber of Mines & Energy has identified as critical to growing the South Australian resources sector.”
“This signals a very challenging year ahead for the resources sector and the Department for Energy & Mining.”
Law and order budget out of touch
The Anti-Poverty Network said the pre-election budget “could have given us huge investments rebuilding our public housing stock – instead, we got a right-wing, populist, ‘law and order’ Budget, that will not make anyone safer”.
Anti-Poverty Network SA spokesperson Brendan Folwell said the public housing waiting list is “still enormous” and rents are “soaring” after three years of a Malinauskas government.
“We know it will take both Federal and State money, to build the large-scale, high-quality public housing we need across Adelaide, and regional SA, but last night’s State Budget was a missed opportunity for those devastated by our unaffordable, unforgiving housing market,” Folwell said.
Folwell said they are pleased to see the new 25-cent fares for student metroCARD holders but want to see the discounted fares go further.
“When so many South Australians are struggling to put food on the table and keep a roof over their head, we ask, why on earth would we not pass those same cuts to public transport fares to other concessioners, such as job-seekers,” he said.
Older South Australians “to be disappointed”
The peak body for South Australians older than 50 COTA SA said that demographic were “likely to be disappointed by the 2025-26 State Budget”.
“Older South Australians consistently tell us that cost of living is their main concern, and we would have liked to see more specific measures in the budget to address this for older people,” COTA SA chief executive Miranda Starke said.
“We are encouraged by the Treasurer’s statement that a surplus means government has capacity to respond to community needs, such as cost-of-living support, which is very needed for older South Australians.
“We are disappointed that, once again, the State Government has overlooked the chance to bring South Australia in line with the rest of the country by providing free ambulance services for older people on the full Age Pension.
“Many older South Australians are having to make an impossible choice – weighing up the cost of calling an ambulance against the urgency of their medical needs. This is a serious problem, and we will continue to advocate until ambulance services are free for those on a full Aged Pension.”
