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Treasurer Lucas, don’t cut vital services to ‘fix’ $400m budget blow

Community Sector Pleads for Revenue Raising Measures in State Budget

The South Australian Council of Social Service (SACOSS) is pleading for an urgent move on revenue raising measures in the State Budget, following last week’s dramatic announcement from the State Government that revisions to GST sharing would deliver a $400m budget blow.

SACOSS calls on State Treasurer, Rob Lucas MLC, to look at revenue options to balance the books and not just to cut vital services.

The Commonwealth Grants Commission 2019 Update revealed SA’s share of GST would reduce by $72m this year and $329m in 2019-20, which SACOSS says would create significant pressures on the State Budget.

SACOSS has also warned that there were also other threats to state revenue coming from possible reductions in SA Water dividends to government; potentially hundreds of millions of dollars over coming years.

SACOSS says that, combined, these revenue hits pose a real question about the government’s ability to fund vital services, but simply cutting those services to balance the budget would be a damaging response.

SACOSS CEO, Ross Womersley, said:

“The community, including the business community, benefit from the services provided by state government. We need a tax base to pay for those services, and when there are blows to that tax base, we need to consider ways of restoring government income – not just cutting services that people, and vulnerable and disadvantaged people in particular, rely on.

“SACOSS warned the previous government not to rely too heavily on GST payments to prop up the budget, as GST rose from 26.1% of state revenue in 2009-10 to a planned 35.2% in the 2018-19 budget. As the dramatic changes announced last week show, GST was always a poor substitute for a solid state tax base.”

SACOSS is proposing two revenue options for the government to address the revenue problem in the short term:

  • Changing the aggregation arrangements on land tax to mirror NSW and Victorian systems, as identified in the 2015 State Tax Review. This would basically close a loophole that allows landowners with multiple properties to organise their property ownership to minimise tax (see attached briefing note) and would net the State Budget in the region of $30m per annum.
  • Reversing or delaying the changes to land tax announced in the last budget which have not yet been commenced. This would see the tax free threshold remain at $369,000 (rather than rising to $450,000) and the top tax rate commencing at $1,231m – rather than the proposed $5m. This would claw back $44.4m in 2019-20 budget year without increasing anyone’s tax (as the budget changes are not in effect yet).

Ross Womersley, said:

“These changes would go some way to offsetting the impact of the GST write-down, but in the longer term we need further discussion about how we will raise state revenue and how we can save money by investing in early interventions to reduce the need for costly tertiary expenditures in health, child protection and a range of community services.”


Published Date: 
Tuesday, 5 March 2019