- State Budget 2005/2006
by Associate Professor John Spoehr
The State Government couldn't have wished for a better economic climate in which to deliver its pre-election State Budget. Spectacular growth in revenue, fuelled by high levels of household expenditure and the property boom, has enabled it to deliver $836 million dollars worth of tax cuts to South Australians over the next four years.
Strong growth in revenue in the State Budget was bolstered by strong household demand for goods and services which grew by around 4.2 percent last year, adding around 2.5 percentage points to growth in State Final Demand. The contribution of households to the economy is set to decline over the next year or so as householders are forced to reduce unsustainable debt levels.
General revenue was around $460 million more than expected due to strong growth in property tax and the GST returned to South Australia from the Commonwealth Government. Property tax revenues are likely to be 13 percent higher or around $126m more and GST revenue $86m than expected. This has helped to underwrite the multi-million dollar tax cut package.
The revenue windfalls of recent years can't go on for ever. The budget assumes a significant slowing of revenue growth over the next few years. Revenue is estimated to decline by around 4.5 percent in next financial year on the back of a slowdown in the property market and slower economic growth. Any prolonged drought will make economic and budgetary conditions difficult over the next few years. The last drought reduced Gross State Product by around 1.9 percent, largely due to a reduction in agricultural exports of around 12 percent.
Given recent strong economic growth and the fact that estimates of recent budget surpluses have been underestimated, the budget surplus for the last financial year is likely to be much higher than the $173 million estimated in the budget papers. The budget surplus for 2003-04 was $385 million, suggesting that the Government is likely to have some flexibility to announce new expenditure announcements in the lead up to March 2006 election. How we tackle looming skill shortages arising from the ageing of our workforce should be at the forefront of policy-makers minds.
While infrastructure expenditure is up this year by $65 million to $1.04 billion, the realisation of the Government's vision in the State Infrastructure Plan will require identifying a significant program of public borrowing to supplement the allocations made in the budget over the next few years.
Associate Professor John Spoehr
Executive Director
Australian Institute for Social Research
The University of Adelaide
- Professor Graeme Hugo awarded Inaugural Healthy Development Award
27 May 2005
One of Australia 's foremost demographers, Professor Graeme Hugo, has been awarded the inaugural Healthy Development Award. Prior to presenting the Healthy Development Adelaide Inaugural Oration last night at the State Library, Professor Hugo was presented with the award by the Vice-Chancellor, Professor James McWha. The title of the Oration was Demographic Change and its implications for Healthy Development in South Australia.
Healthy Development Adelaide is a research cluster of the University of Adelaide started by Professor Robert Norman and Professor Caroline McMillen in June 2004 as part the university's response to the National Health and Medical Research Council's (NHMRC) priority to provide everyone with a healthy start to life.
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