Budget bottomline a fiscal fantasy

The State Budget is based on a range of absurdly optimistic revenue assumptions that will require South Australia to transform overnight from economic basketcase to economic powerhouse to be realised.

“At the heart of the Treasurer’s dodgy figures is the assumption that South Australian tax revenue growth will rocket along at 6.2 per cent the largest of all the states,” said Shadow Treasurer Rob Lucas.

“The Treasurer claims we will achieve this stellar growth in tax receipts despite the same budget figures forecasting that South Australia will have the lowest average economic growth and lowest average jobs growth of all the mainland states for the same period.

“This fundamental contradiction is repeated time and again in the budgets forecasts. “For example, according to Tom Koutsantonis the South Australian housing market will be the fastest growing in the nation with stamp duty revenue growth of 9.4 per cent per annum.

That flies in the face of economic forecaster BIS Shrapnel’s latest Residential Property Prospects report which has the median house price in Brisbane increasing by 17 per cent over the next 3 years, Sydney by 10 per cent and Melbourne by 8 percent and Adelaide by just 5 per cent.

BIS Shrapnel described the Adelaide residential market as challenging with the 5 per cent increase actually represents a 4 per cent decline in real terms. “Treasurer Koutsantonis also has South Australia’s payroll tax revenue growing faster than that of Queensland and Victoria despite factoring in the lowest employment growth of all the states.

South Australian University Adjunct Professor of Economics, Dick Blandy has labelled the State Budget’s assumptions really very, very unconvincing.

In fact Professor Blandy is reported to have told Treasury officers ‘this is a fraud.’ Professor Blandy pointed out that to achieve the budget’s predictions the productivity of the Labor force which is still working, will have to rise by three per cent. Now that’s an extraordinary increase if that’s to be achieved (ABC 891 24 June 2014)