Tackling SA’s giant debt in five easy steps

South Australia’s politicians are too timid to tackle our eye-watering pile of debt, but Matthew Abraham reckons there are some big-ticket items that could easily be culled.

Nov 03, 2023, updated Nov 03, 2023
Going up! Treasurer Stephen Mullighan and Premier Peter Malinauskas on Budget day this year. Photo: Brett Hartwig/InDaily

Going up! Treasurer Stephen Mullighan and Premier Peter Malinauskas on Budget day this year. Photo: Brett Hartwig/InDaily

Please, don’t lose any sleep over your debt – it’ll never have to be paid off.

The words “your debt” don’t refer to the money your family owes the bank for a crippling mortgage, snowballing credit card accounts and the loan you’re still paying off on the 2004 Mitsubishi Verada with the 3.5 litre V6 donk you can no longer afford to run.

No, that nightmare will definitely have to be paid back because the banks will chase you into the grave and beyond to get their cash back, every last cent of it.

The debt you’ll never have to pay off is the debt successive South Australian governments have gaily racked up on your behalf.

This week, The Advertiser reported that South Australia will have the nation’s second-highest net debt per capita by 2026-27, just behind Victoria, where the economy is a train wreck.

This isn’t good enough. Surely, with a little effort, we can plonk even more on the government credit card by 2026. Nobody likes coming second to the Vics.

Financial analysts EY – or Ernst & Young to their mates – calculate that by then, every taxpayer in this state will owe $19,014.43, up from $14,019.52 this year, already the highest in the nation.

That is a cute way of saying that our net debt will zoom from $26 billion this financial year to more than an estimated $37 billion by 2026-27.

This is no secret. It was all neatly presented in black and white in Budget Paper 3 in Treasurer Stephen Mullighan’s second budget tabled a few months back.

Like all state budgets, it was hopelessly out of date before it came off the photocopier.

They’ve seen what even minor cuts, like shuttering three Service SA branches, did to the one-term Marshall Government and won’t make the same mistake.

Having tracked the depressing rise in debt forecasts over dozens of state budgets, it’s a fair bet even the $37 billion estimate will prove wildly optimistic. Let’s round it off to a conservative $40 billion.

We’re not alone. All state governments are borrowing like there’s no tomorrow, and no yesterday.

“For the first time in history, state governments will need to issue more debt (almost $100 billion) over the next 12 months, than the Commonwealth Government (at almost $75 billion),” the EY report states.

Most states, including SA, aren’t getting enough cash flowing in to meet their debt repayments, so must borrow more money to bridge the widening gap.

The bean counters call this a “structural deficit”. A better description is “crazy”.

The good folk at EY think state governments can head off financial catastrophe in three ways: limit new spending, change existing policies to cut spending and “find new or more efficient revenue that will persist over time such as raising the GST and reshaping our company and personal tax system”.

That last bit is a crack-up, because life always seems so simple to economists.

The Victorian Labor Government did wheel out new taxes this year – a “temporary payroll tax surcharge”, stamp duty hikes and quirky new land taxes, including an “absentee owner surcharge”, code for a tax on beach shacks.

But they’re a bunch of crazed Socialists across the border.

Apart from some minor tinkering around the edges, the Malinauskas Government has shown little appetite for dropping spending on new projects, slashing existing ones or finding “new or more efficient” taxes.

That would take a degree of guts missing from the Labor Cabinet’s DNA.

They’ve seen what even minor cuts, like shuttering three Service SA branches, did to the one-term Marshall Government and won’t make the same mistake.

Marshall’s Treasurer, Rob Lucas, who piled on state debt at a blistering pace during the COVID pandemic, did introduce a complex new land tax on owners of multiple properties, a formula that torched his party’s small landlord constituency, driving it into Labor’s arms.

Former Labor Premier Jay Weatherill, an ideas man, once tried to push through a modest carpark tax, but it was dropped from the seventh floor of a U-Park by the Liberals.

But this doesn’t mean we can’t have a crack at the debt, does it? How hard can it be?

Here are five back-of-the-envelope ways to reduce SA’s “structural deficit”.

Kill the “non-stop” North-South Corridor, otherwise known as the “hard bit” of South Road.

The twin-tunnel project to allegedly make a nine-minute journey possible from the Brickworks at West Hindmarsh to Darlington has blown out from $9.9 billion under the former Liberal plan to the latest estimate of $15 billion, or almost $2 billion a minute.

It’s too much fiscal pain for too little commuting gain. Drop it and pocket the $15 billion, punching a big hole in projected state debt.

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Torrens to Darlington upgrade

Paved in gold? An artist’s impression of the northern portal to the Torrens to Darlington upgrade of South Road. Image: State Government

Abandon the new Women’s and Children’s Hospital on the heritage Thebarton Police Barracks site.

The new hospital will swallow $1.44 billion over the next four budgets. The final cost has already ballooned to $3.2 billion. The state clearly can’t afford it.

Spend $1 billion on the existing hospital at North Adelaide or create a smaller specialist children’s hospital on the old Le Cornu site at Keswick.

Set the $2.2 billion loose change aside in a “future fund” quarantined for improving health care for future generations of tin lids.

Drop the dead donkeys.

Surrendering plans to build a new WCH on the heritage-listed, park lands police barracks land means the police greys can stay put. Plans to relocate the horses and their handlers from the barracks to a grandiose $90 million new Horse HQ at Gepps Cross are laughable.

Run spin doctors through a rinse cycle.

The Malinauskas Government spends big on ministerial staff, otherwise known as “future Labor candidates”, and spin doctors, otherwise known as “media advisers”, who spend most of their time advising the media on the Premier’s brilliance.

Labor’s media and ministerial advisers rake in a collective $13.4 million annually. The Premier also reportedly has three staffers whose job is to make him look good on social media platforms.

Outside of ministerial offices, this number is dwarfed by the hundreds of spin doctors embedded throughout the state’s vast public service, waiting to jump through hoops for their ministers and frustrate media access to information.

It’s a wild guess, but halving the whole-of-government spin doctor count could save $100 million annually.

Let some air out of the tyres.

The state government runs an enormous car fleet, from ministerial limos, to cars for MPs and privately-plated vehicles for fat cats and minions throughout our 126,000-strong public service workforce.

Many of these cars are either petrol-electric hybrids, or fully electric. Normal people can’t afford an EV until a thrashed second-hand one bobs up at the government auctions.

Shaving the state car fleet by just 20 per cent would have to save $20 million. Can’t ministers catch the odd bus?

Without trying too hard, we’ve managed to save almost $20 billion from our state debt.

None of this will happen because we live in unforgiving times. It’s easier to pile on debt and leave the mess for the next government to ignore.

Luckily, state governments can’t go broke, although there’s a first time for everything.

So, sleep tight South Australia. The Mitsi looks just fine up on bricks, under the carport.

Matthew Abraham is InDaily’s political columnist. Matthew can be found on Twitter as @kevcorduroy. It’s a long story.

Corrections: This article has been edited to clarify that the $13.4 million budget is for media and ministerial advisers, not just media advisers. The Torrens to Darlington project will make a nine-minute journey possible, not shave nine minutes from the trip.

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