Treasurer plots surpluses upon surpluses in mid-year mini budget
Treasurer Tom Koutsantonis expects the government will maintain surpluses “for years to come”, but net debt will rise to $37 billion in 2029.
The state government will maintain an operating surplus across the next four years, Treasurer Tom Koutsantonis announced today, despite an extra $964 million in new spending being announced since the 2025/26 State Budget was unveiled in June.
The South Australian state budget surplus for the 2025 financial year was $273 million, announced earlier in December.
This was significantly higher than the anticipated $18 million and buoyed by strong employment and the property market.
It was the third surplus in a row for the Malinauskas Labor government, building on 2023’s $41 million surplus and 2024’s $413 million surplus.
The figure was achieved despite state government spending on numerous issues that cropped up in the financial year, like the collapse of the Whyalla Steelworks and disability employment services company Bedford Group, drought conditions in the state’s regions and the algal bloom crisis off the coast.
The government today confirmed spending on its algal bloom response, the Royal Commission into Domestic, Family and Sexual Violence, a bailout of the Port Pirie Smelter, health services and ailing disability employment services company Bedford came to $964 million.
“The Malinauskas Labor Government has been committed to maintaining fiscal discipline while retaining capacity to act decisively when policy needs arise,” the Treasurer said today.
“This gives us capacity to manage debt while remaining nimble to make appropriate spending decisions.”
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Net debt is forecast to be $24.5 billion at 30 June 2026 –a $671 million decrease from the estimate at the latest State Budget.
The decrease is the result of a lower net debt outcome in 2024/25, and a lower than forecast net lending deficit ($267 million) in the 2025/26 period.
General government net debt is forecast to be $37.1 billion at 30 June 2029 – an $84 million increase from the projection in the 2025/26 state budget.
Koutsantonis said forecast budget surpluses of “nearly a billion dollars” create a “good set of numbers” to manage the forecast debt.
“You can consume that debt of $37.1 billion, pay our interest and still maintain surpluses,” he said.
“We can respond to things that are occurring the economy and have the resilience in place to deliver budget surpluses.”
The government expects minimal changes to the net debt to revenue ratio at 30 June 2029, unchanged compared to budget estimates.
Treasurer calls for “100 per cent” federal funding for $5bn Northern Water project
The Treasurer told reporters he was “not concerned” about the budget servicing a potential $5 billion Northern Water project and that the Commonwealth government should chip in “all of it”.
When asked how much was reasonable for the federal government to put towards the project, Koutsantonis said: “100 per cent, all of it, this is a nation-building project”.
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If built, Northern Water would oversee the construction of a 260 megalitre/day desalination plant and a 400km pipeline to transport desalinated water to the Far North to meet the needs of mining, defence and pastoral industries.
Koutsantonis said any debt taken on for the project would be serviced by government business, not subsidised by taxpayers.
“If there’s a shortfall in that debt servicing, there’s something we’ll have to contemplate, that’ll depend entirely on timing and the cost of water so I’m not concerned about it,” he said.
“What I am concerned about is the volume of debt, but we have said on numerous occasions, and the Premier said this as well, if Northern Water is good, if BHP decide to do their $20 million expansion, if they sign a binding water tank agreement with us that is sufficient to cover all of our cost of capital, if that’s in place when we build northern water, we reserve the rights to sell that asset and put that money back and pay down debt.”
Not on a Victorian trajectory
The Treasurer dismissed concerns that SA was on a Victoria trajectory with its debt forecast.
“If we weren’t maintaining budget surpluses, you’d be right to be worried but we are maintaining budget surpluses and what you’re seeing is a strong economy,” he said.
“Victoria have not stopped their infrastructure spend… what we’re saying is that with the Women’s and Children’s Hospital and North-south Corridor, we’re going to a point that we’ve not been to before for a short period of time.
“For one of the biggest projects, the North South Corridor, half of that money is coming from the Commonwealth Government.
“After that period we’ll go back to normal spending on infrastructure, which will be lower.”
The state government said SA was the third-lowest jurisdiction nationally based on state and territory budget reporting, and the lowest-taxing state on the mainland.
“It’s little wonder that in recent weeks BankSA’s State Monitor found consumer confidence in South Australia had reached its highest level in four years, while the Business Council of Australia has now ranked South Australia as the best place to do business in the nation for three years in a row,” Koutsantonis said.
In the revised figures, there continues to be no funding for a Tarrkarri First Nations arts and culture centre, which had concrete poured for a new gallery before the then newly-elected Malinauskas government halted the project in 2022 for a “urgent” review into its $200 million price tag.
The prime CBD land at North Terrace’s Lot 14 has drawn criticism from the Property Council and other stakeholders who want to see the land utilised.
State-of-the-art turbines acquired by the state that were set to power SA’s electricity grid at Whyalla have not yet been sold, but the Treasurer said he believed they would sell for more than the purchase price.
The money that would have been spent on preparing Adelaide to host the international climate conference COP31 has been reallocated across government spending after SA lost its hosting bid to Turkiye in November.
$8.3 million was set aside in the 2025-26 State Budget to prepare the city for COP31 and as of November, the Premier said $1.3 million had been spent mainly on wages, while $2.5 million had been spent by SAPOL.
