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What we reviewed and why
The State Budget sets out the SA Government’s fiscal strategy, actual and forecast financial position and new policy initiatives. It is also a key tool to manage and monitor government programs and performance. This report gives our insights into key trends and risks for the State’s public finances based on our review of the 2024‐25 State Budget.
Our key insights
- The current challenging economic environment could put forecast net operating surpluses at risk. Cost of living pressures on household budgets and the possibility of lower employment rates increase the risk of downward revisions to budget forecasts for GST revenue and payroll tax. Wage negotiations for most of the general government sector workforce are also occurring in a period of high inflation.
- SA Health will face challenges achieving its savings targets and expenditure forecasts in the 2024‐25 State Budget given public hospital activity growth and difficulties it has had in improving the efficiency of its service delivery. If its savings targets are not met, other areas of the Budget may need to be managed to deliver forecast net operating surpluses.
- There are several risks attached to the SA Government’s very large capital program. This includes delivering projects on time and on budget given construction industry capacity and skills constraints. Relatively small percentage budget overruns on the capital program could also significantly impact the State’s overall financial position.
- Rising debt and interest costs owing to the scale of the State’s capital program may constrain the State’s fiscal capacity and its ability to deliver the same level of services in the future.
Key budget indicators
South Australia generally compares favourably to Victoria and to some extent New South Wales and Tasmania on key budget sustainability indicators. It is in a similar or less favourable position compared to Queensland and Western Australia.
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