South Australia budget: state’s audacious bid to lure investment from Victoria
South Australia will launch an audacious campaign to lure investment away from Victoria using its low-taxing state budget to attract jaded Victorian businesses straining under the tax hikes of the Andrews government.
The Malinauskas government on Thursday honoured its promise of no new taxes and no tax increases with a state budget which also scrapped a hated housing tax for first homebuyers and axed another tax on remote outback residents.
On the downside, the budget failed to deliver a surplus, with spiralling health costs blowing a half-billion hole in state coffers over the past 12 months as a projected $233 million surplus became a $249 deficit thanks to a raft of measures aimed at honouring Peter Malinauskas’ key election promise to fix ambulance ramping.
The second budget brought down by Treasurer Stephen Mullighan completely removes stamp duty for first home buyers on new homes valued up to $650,000, while retaining the First Home Owners Grant in a bid to boost housing stock and make homes more affordable in the cost of living squeeze.
There are also no increases to payroll or land tax, in contrast to last month’s Victorian Budget which from July 1 hits 4000 businesses with payrolls of just $10 million with hefty tax hikes, and goes after mum and dad property investors with land tax increases by slashing the threshold for undeveloped properties from $300,000 to just $50,000.
Mr Mullighan told The Australian the best thing governments could do in a cost of living crisis was to avoid the temptation to increase taxes, especially on businesses which would have to pass on the costs to consumers.
He said the SA government “closely watched” last month’s Victorian budget and resolved then to launch an advertising campaign later this year in Victoria, headed up by Invest SA and the Department of Premier and Cabinet, urging Victorian businesses to head west and save.
“When the Victorian budget was released and they were going to make themselves even less competitive with SA in terms of their tax regime, we thought it was a perfect opportunity for us to get out there spruiking our credentials in Victoria,” Mr Mullighan told The Australian.
“If you are a large corporate employer, especially in these days when even people in senior positions perform remotely, the choice should be obvious. Why would you choose a high-tax, high-cost location like Victoria when you could come to a place like SA?”
“The tax settings in Victoria compared to the tax settings here are definitely an opportunity. Our government wants to welcome investment in SA. We know we have got very significant advantages in terms of the cost of doing business.
“We have got lower costs of living, much cheaper commercial space, an easier commute to work, we now boast the best events in the nation. Increasingly more and more people are choosing to come to SA to work and we want them to relocate to SA to invest.”
Mr Mullighan’s criticisms of Victoria’s tax regime were confirmed this week with independent data provided by Victoria’s Parliamentary Budget Office scotching claims by Treasurer Tim Pallas that his was the lowest-taxing state.
That data showed that each Victorian pays $5073 a year in state taxes compared to $4707 in NSW, $4115 in WA, $3667 in Queensland, $2970 in SA and $2900 in Tasmania.
“The fact that we are far and away the lowest taxing state on the mainland gives us a good story to tell,” Mr Mullighan said.
The SA budget will also play a party-starting role in transforming Adelaide’s reputation from dullsville to desirable destination, with a further $20 million being injected into the Major Events Fund which has already attracted the LIV Golf tournament and the AFL Gather Round to SA under four-year deals.
There is no transparency in the budget as to exactly how much taxpayer money was spent attracting those two events to SA, but the Treasurer said they had paid for themselves many times over in terms of their economic impact for business.
“There is no doubt about the sense that Adelaide has got its mojo back,” Mr Mullighan said. “This investment is important because it is making people reappraise their sense of the city and the state, and you now hear it all the time from people who had never even thought of coming here.
“The big opportunity os for us to get the message out more broadly that it’s such a desirable place to work and live.”
The key downside in the SA budget is the impact of health spending on the bottom line, with $470 million in unforeseen costs as the government grapples with the impact of the GP shortage and the higher than expected impact of Covid on the public hospital system.
The Government has also channelled some $200m into new measures to free up hospital beds on weekends and to provide virtual health care to get people out of emergency wards - all measures aimed at honouring Labor’s flagging 2022 election promise to return ambulance ramping figures to 2018 levels.
That promise has become a political headache for Labor with the highest ramping figures in SA history being recorded across several months now since Stephen Marshall’s Liberal government was defeated last year after just one term.
Opposition health spokeswoman Ashton Hurn questioned whether SA was doing a good enough job matching incentives being offered by other states to attract GPs to SA.
“There’s no genie in a bottle,” Ms Hurn said. “Peter Malinauskas and Labor can’t just wish to keep frontline
health workers here, we need a competitive plan with compelling incentives at the centre.”
“He needs to focus on meaningful incentives so SA can compete with other states to retain and attract crucial healthcare resources to our hospital system.”