State Budget

 

The major State/Local funding programs are now set by formal agreement between relevant Ministers and the LGA and as a result the most significant funding programs are simply confirmed in the Budget itself. Not all programs are covered by agreements however and it is recognised that the State retains its responsibilities to manage its own financial affairs - albeit with a special relationship with Local Government established by the State/Local Government Relations Agreement. Information regarding annual State Budgets is provided below.

State Government's Budget website   Federal Budget Information

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Premier and Treasurer Jay Weatherill's first Budget targets an operating deficit of $911 million in 2013-14 and indicates that an operating surplus will not be achieved until 2015-16.  The Budget provides a stimulus to the housing and construction sectors, a package of measures to support small business, lifts disability funding and continues the major investment in new infrastructure.  Overall, the State Government will invest nearly $2.6 billion in its infrastructure program in 2013-14.  New savings measures in the 2013-14 Budget include additional cutbacks in state agency operating expenses.

Gross State Product in South Australia is expected to increase by 2.5 per cent in 2013-14, following estimated growth of only 1.25 per cent in 2012-13 (reflecting weaker than expected economic growth caused in large part by subdued consumer spending and housing demand).  Some industry sectors, particularly trade exposed sectors and those reliant on consumer spending, continue to face difficult trading conditions as a result of the strength of the Australian dollar and the cautious approach of households towards spending.  Employment growth in South Australia in 2012-13 has been flat and is expected to be 1.0 per cent per annum in 2013-14.  South Australia's trend unemployment rate was 5.9 per cent in March 2013, up from 5.3 per cent a year earlier.  The Adelaide Consumer Price Index (CPI) is anticipated to be 2.5 per cent in each of the next four years.

The Government's level of net financial liabilities is expected to be $21.8 billion at 30 June 2014.  Net financial liabilities expressed as a percentage of revenue (i.e. the net financial liabilities ratio) is estimated to be 143 per cent in 2013-14.  This compares with a net financial liabilities ratio for the SA Local Government sector as a whole of 28 per cent in 2011-12.

The State Budget papers can be downloaded directly from the Department of Treasury and Finance website link above right.

Local Government Impacts

LGA media releases providing an initial response to the State Budget can be found here:  http://www.lga.sa.gov.au/goto/mediareleases

All programs subject to formal agreements with the LGA have been maintained and indexed in accordance with the agreements, reinforcing the importance of longer-term arrangements between governments.  Council rate concessions for pensioners and self-funded retirees remain at existing levels.

It is estimated that total State grants to Local Government will fall by about $11.9m although this is difficult to estimate because a number of programs are application based. This drop is primarily due to $8.7 million in stormwater recycling project funding (matching Federal grants) which end this year and the expected and agreed $1m cut in library funding.

SA Councils already receive the lowest per capita grants in the nation. Refer to the graph under the 2012 Budget infomation below. The LGA is currently updating these figures.

We have identified one revenue measure announced in the Budget which will impact directly on Councils. The solid waste levy ($42.00 per tonne in 2012-13 in the metropolitan area with the country levy half that amount) will be increased to $47.00 per tonne in 2013-14 and progressively increase to $63.00 per tonne by 2016-17 - again with the country levy half of these amounts.  Over the four years this represents an overall increase of 50 per cent on 2012-13 levels.

Detailed information prepared by the Office for State/Local Government Relations on expenditure programs in 2013-14 with implications for Local Government can be downloaded here: 

Summary Sheet:2013-14 State Budget – Summary of Payments to Councils(84 kb)

Detailed Information: 2013-14 State Budget – Detailed Info on Expenditure Programs(174 kb)

It is unclear at this stage whether the State will retain its AA+ credit rating. The State's credit rating has an impact on the cost of the Council borrowings.

The LGA appreciates the support of Treasury, the Office of State/Local Government Relations and other agencies which assist in the provision and interpretation of detailed information rapidly.

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Treasurer Jack Snelling's second Budget targets an operating deficit of $867 million in 2012-13 and indicates that an operating surplus will not be achieved until 2015-16.  New savings measures in the 2012-13 Budget include a further reduction of 1000 full time public sector employees over 3 years from 2013-14 and suspension of the electrification of the Gawler and Outer Harbor rail lines.  Overall, the State Government will invest more than $2.9 billion in its infrastructure program in 2012-13.

Gross State Product in South Australia is expected to increase by 2.75 per cent in 2012-13, following estimated growth of only 1.5 per cent in 2011-12 (reflecting weaker than expected economic growth caused in large part by subdued consumer spending and housing demand).  A pipeline of private and public sector capital projects provides a solid foundation for the state's economic outlook in future years, as does investment associated with the proposed Olympic Dam expansion.  Following estimated growth of only 0.5 per cent in 2011-12, employment growth in South Australia is expected to be 0.75 per cent per annum in 2012-13, accelerating to 1.75 per cent in 2013-14.

The Government's level of net financial liabilities is expected to be $19.8 billion at 30 June 2013.  Net financial liabilities expressed as a percentage of revenue (i.e. the net financial liabilities ratio) is estimated to be 131 per cent in 2012-13.  This compares with a net financial liabilities ratio for the SA Local Government sector as a whole of 30 per cent in 2010-11.

The State Budget papers can be downloaded directly from the Department of Treasury and Finance website link above right.

Local Government Impacts

An LGA media release providing an initial response to the State Budget can be found here:  /goto/mediareleases

All programs subject to formal agreements with the LGA have been maintained and indexed in accordance with the agreements, reinforcing the importance of longer-term arrangements between governments.  Council rate concessions for pensioners and self-funded retirees remain at existing levels. 

It is unclear at this stage whether the State will retain its AAA credit rating. The State's credit rating impacts on the cost of the Local Government Finance Authority's borrowings from financial markets.  These markets already appear to have factored in a likely decrease in the State's credit rating to AA+.

We have not identified any new revenue measures in the Budget which would impact directly on Councils.  However, there will be further increases in the solid waste levy in 2012-13 consistent with the announcement in the 2010 State Budget to progressively increase the levy from 2011-12 to 2013-14. The exact figures are not in the budget papers but we are estimating the metropolitan levy will rise to around $42 a tonne with the country levy at half that amount.

Although not directly impacting on Local Government, the Budget includes the announcement of an overhaul of regional development funding provided by the State.  From 1 July 2013, a new Regional Development Fund will provide $3 million per annum. This includes funding of $1.4m to Regional Development Australia committees to maintain a State funding involvement.  The LGA will be meeting with the Department of Primary Industries and Regions to seek further details of the proposed arrangements.

A table summarizing estimated grants, subsidies and other payments to Councils prepared by the Office for State/Local Government Relations (OSLGR) can be downloaded here: 2012-13 State Budget - Summary of Payments to Councils (62 kb)

Detailed information on each expenditure program impacting on Local Government also has been prepared by OSLGR and can be downloaded here:  2012-13 State Budget - Detailed Info on Expenditure Programs (84 kb)

SA slips further behind - an updated comparision of State Government funding to Councils by each State and the NT can be found below. The full set of updated ABS and Commonwealth data used to calculate the graph below can be downloaded here: State Grants to Councils per Capita by Jurisdiction 2004-2010 (47 kb)

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2011 Budget Highlights

There are no particular new bright spots for Local Government general funding in the 2011-12 State Budget and we expect SA's position as providing the lowest per capita funding for Local Government of any State or Territory in Australia to be maintained (see graph below)

Treasurer Jack Snelling's first Budget targets an operating deficit of $263 million in 2011-12 before returning to operating surpluses in the following three financial years. New savings measures in the 2011-12 Budget include a further reduction of 400 full-time public sector employees over two years (2012-13 to 2013-14). Overall, the State Government will invest more than $3.3 billion in its infrastructure program in 2011-12.

Gross State Product in South Australia is expected to increase by 2.75 per cent per annum in 2011-12, following estimated growth of 3.5 per cent in 2010-11 (which was boosted by a record broadacre crop). Employment growth in South Australia is expected to maintain its recent momentum, estimated to increase by 1.5 per cent per annum in 2011-12 and 2012-13, following estimated growth of 1.75 per cent in 2010-11.

The Government's level of net financial liabilities is expected to be $15.0 billion at 30 June 2012. Net financial liabilities expressed as a percentage of revenue (i.e. the net financial liabilities ratio) is estimated to be 95.6 per cent in 2011-12.

The State Budget papers can be downloaded directly from the Department of Treasury and Finance website link above right.

Local Government Impacts

An LGA media release providing an initial response to the State Budget can be found here:  https://www.lga.sa.gov.au/goto/mediareleases

All programs subject to formal agreements with the LGA have been maintained and indexed in accordance with the agreements reinforcing the importance of longer-term arrangements between governments.

Boosts to black spot local road funding and community recreation and sporting facilities grants announced last year have been maintained as foreshadowed.

We understand the State is retaining its AAA credit rating which is important as it impacts Council borrowing costs.

We have not identified any new revenue measures in the budget impacting on Councils however the foreshadowed 35% increase in the Solid Waste Levy from 1 July, 2011 is  implemented.  This will add about $1.65m to Council costs taking the total SWL payment by Councils to about $10.5m. This is not offset by small increases in Zero Waste SA grants and we believe that unspent funds in the Waste to Resources Fund will now exceed $20m.

Funding commitments to a number of specific one-off projects including major roadworks and a sports hub in Port Augusta, a leisure centre in Campbelltown, five metropolitan stormwater harvesting projects and disaster funding related to flooding earlier this year are met.

While the State is projecting an increase from $33.5m to $33.8m in concessions on Council rates, it appears there is no change in the concession level but simply a projected increase in the number of pensioners.

An extract from the Budget Statement related to Local Government Finances can be downloaded here: Final 2011 State Budget Statement Appendix F (155 kb)

A table of additional information regarding programs impacting on Local Government prepared by the Office of State/Local Government Relations (OSLGR) can be downloaded here: LG Summary Table 2011 State Budget (152 kb)

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2010 State Budget

Budget Highlights

A link to the State Budget website where the full budget papers can be downloaded is provided above right. It should be noted that a new Budget Document "Budget Paper 6 - Budget Measures Statement" outlines changes to existing forward estimates and a rapid way of reviand the Sustainable Budget Commission's second and final report can also be found via this link.

The ninth budget of Treasurer Kevin Foley targets and operating deficit of $389m in 2010-11 before returning to operating surpluses in the following four financial years. Infrastructure spending of $10.7 billion over 4 years is planned.

Gross State Product in SA is expected to increase by 2.75% in 2010-11. Employment growth is expected to maintain its recent momentum, increasing by 1.25% in 2010-11.

Local Government Impact

LGA media releases responding to the budget can be found here: /goto/mediareleases.

A very welcome additional funding boost has been provided to the Rural Road Safety Program of $2m and to the State Black Spots Program of $1m totalling $3m for this year and each of the next 3 years. While discussions have not commenced we would anticipate at least one third of these funds would come to Local Government for local roads. In addition the Community Recreation and Sport Facilities Program - highlighted by the LGA and Sport SA during the State Election Campaign as inadequate - will receive a boost of $5m this year and each of the next 3 years.

A series of specific commitments made as part of the State Election process are being honoured in the Budget. In addition all Government program commitments to Local Government are met, based on fundign agreements with the LGA incorporating indexation delivering for example:

• Stormwater funding rising to $4.4m
• Community wastewater management funding rising to $3.5m
• Library funding rising to $17.8m*

Funding of $2.6m from ZeroWaste SA to Councils is welcomed even thought expected and derived from Council payment of the Solid Waste Levy (see below).

On the negative side the budget includes an increase to the Solid Waste Levy (to $35 a tonne in the metropolitan area next year moving to $50 a tonne over time - with detail on the country levy not yet published). Based on estimates of domestic waste making up 33% of waste to landfill this will see Council contributions increase by $5.83m over the next three financial years. Note the LGA has issued a separate media release on this issue. 

The President, Mayor Lewis has also expressed concern about a proposal for metropolitan Councils or the Adelaide and Mt Lofty NRM Board to fund sand transfer, beach and harbour management works growing from $2.2m to $3m a year. "I don't believe Councils which already spend significant funds to maintain beachfronts should be asked to fund State programs," she has said.

The Budget also contains a proposal for Councils to pay a $15 "lodgement fee" on unpaid expiation notices (such as parking fines) to the Courts Administration Authority for fine collection work. This is proposed to raise $533,000 in 2011-12 and indexed in future years.

Also of concern is a proposal in forward estimates for 2013/14 for public library funding to be cut by $1m. This would impact on negotiations with the Government in relation to the library funding agreement for the next five years (2011-2016).  In the same year (2013/14) the budget papers foreshadow an intention to end State contributions to Regional Development Australia bodies (saving $4m a year).

Councils are expected to receive about $7.5m from the Open Space Fund in 2010/11 although the final figure may increase depending on revenue to the fund and on success of Council applications under competitive grant programs. In addition the State is maintaining concessions on Council rates to pensioners wand others with an increase in the number of recipients bringing the total funding to $33.5m.

All programs are estimated to provide about $65m to Councils in 2010/11 and with the concessions the total is expected to reach nearly $100m. This would be a real terms cut from the estimated $101.4m provided in the previoius year, however direct comparisons are difficult when some programs are based on applications.

An extract of the Budget Statement related to Local Government Finances can be downloaded here: 2010-11 Budget Statement - Appendix F (71 kb)

A table of additional information regarding programs impacting on Local Government prepared by the Office of State/Local Government Relations (OSLGR) can be downloaded here: 2010 State Budget - Local Government Implications Paper (146 kb)

Local Government accounts

The Budget papers show that Local Government recorded an aggregate operating surplus of $24m in 2008/09. This would have been a break-even operating result (ie income equal to expenses) but for the early receipt of Commonwealth grants otherwise due in 2009/10. This result compares with an aggreate operating deficit of $50m in 2003/04 and aggregate deficits of nearly $90m about 10 years ago. Local Government's net financial liabilities of $433m are relatively modest in relation to infrastructure and assets of about $16 billion (the equivalent of a $13,000 mortgage on a $350,000 house).

Local Government capital investment expenditure in 2008/09 was a record $542m representing a 61% increase on the 2003/04 figure. In 2008/09 the level of capital expenditure was supported heavily by Commonwealth Government economic stimulus funding.

The LGA is reviewing detail in the budget papers and with agencies and will provide update information as appropriate. The LGA acknowledges the support provided pursuant to the State/Local Government Relations Agreement by the Treasurer, Minister for State/Local Government Relations anb by the staff of OSLGR and Treasury.

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2009 State Budget  

Budget Highlights 

Treasurer Kevin Foley's eighth budget targets an operating deficit of $304m in 2009-2010 before returning to operating surpluses in the following 4 financial years. An operating deficit of $265m is now estimated for 2008-09 compared with the original budget estimate (see below) of a $160m surplus.

Infrastructure spending of $11.4 billion over 4 years is planned. The budget targets additional savings for the public sector of $150m in 2010-11, $250m in 2011-12 and $350m in 2012-13. To identify savings initiatives the GOvernment will establish a Sustainable Budget Commission.

Gross State Product is expected to contract by 0.5% in 2009-11 and employment is forecast to fall by 1.5 percent through the year to the June quarter 2010.

Local Government Impact 

LGA media releases responding to the budget can be found here: /goto/mediareleases

All Government program commitments to Local Government are met based on funding agreements with the LGA incorporating indexation delivering for example:

• Library funding rising to $17.2 million;
• Stormwater funding rising to $4.3 million;
• Wastewater management funding rising to $3.45m.

Funding from Zero Waste SA for Councils of almost $2m is welcomed even though it was expected - and derived from Council payment of levies to the State for residential waste disposal.

Councils are expected to receive about $11m from the Open Space fund in 2009/10 but the final figure depends on application processes. In addition the State is maintaining concessions on Council rates to pensioners and others with an increase in the number of recipients bringing the total funding to $33.2m.

All programs are estimated to provide about $62m to Councils and with the concessions the total was expected to reach $95 million. This would be a real terms reduction in overall funding from the estimated $94.2m provided in the current year however direct comparisons are difficult when some programs are based on applications.

The Local Government Section of the Intergovernment Finance Chapter (4) of Budget Paper 3 can be downloaded here: Extract 2009 State Budget Paper 3, Chapter 4 (59 kb)

A table of additional information regarding progams impacting on Local Government prepared by the Office of State/Local Government Relations (OSLGR) can be downloaded here: 2009 State Budget - Local Government Implications Paper (102 kb)

Full budget papers can be found here:  http://www.treasury.sa.gov.au/dtf/budget/publications_and_downloads/current_budget.jsp

Local Government accounts 

The Budget papers show that, for probably the first time on record, Local Government's aggregate operating deficit was eliminated in 2007-08 (actually a slight surplus of $300,000 rounded to the nearest million as $0m. This result compares with an aggregate operating deficit of $50m in 2003-04 and aggregate deficits of nearly $90m 10 years ago.  Local Government's net financial liabilities of $416m are relatively modest in relation to infrastructure and assets of about $14 billion (the equivalent of a $10,000 mortgage on a $350,000 house).

Local Government capital investment expenditure in 2007-08 was a record $447 million representing a 33% increase on the 2003-04 figure.

The LGA is reviewing detail in the budget papers including revenue measures and will provide update information if necessary. The LGA acknowledges the support provided pursuant to the State/Local Government Relations Agreement by the State/Local Government Relations Minister and the OSLGR and SA Treasury.

2008-09 Mid Year Budget Review

Treaurer Foley's 2008-09 Mid Year Budget Review was presented on 19 December 2008.  The Budget Review document is available from the Department of Treasury and Finance web site via the following link:  http://www.treasury.sa.gov.au/dtf/home_page.jsp.

At this stage the LGA is not aware of any significant direct impacts on Local Government in the Budget Review but will provide further comment on this web page if warranted after a detailed examination.

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2008 State Budget

Budget Highlights:

Treasurer Kevin Foley's seventh budget contains a net operating surplus of $160 million while committing to an investment of $2 billion in transport infrastructure over the next decade. The budget projects an investment of more than $700 million on State Roads in country and metropolitan areas. The Budget predicts Gross State Product will rise by 2.75% and employment will grow by 1.5%.

The budget speech, media releases and the full budget papers can be found on the State Government's Budget website linked above or at: http://www.statebudget.sa.gov.au/.

The LGA's initial media response to the budget can be found here: State Budget Response. 

Local Government Impact:

The LGA acknowledges the support provided by the Office of State/Local Government Relations consistent with the State/Local Government Relations Agreement, in particular in the preparation of the table attached below "State Budget Implications for Local Government - Summary - 2008-09.

As highlighted above, major programs impacting directly on Councils are addressed in long-term agreements such as libraries and stormwater management with a Community Wastewater Management Systems (CWMS) agreement under negotiation and each of these program areas will increase by CPI as agreed in 2008/09.

Funding through the Local Government Disaster Fund is projected to reduce but remains available to respond to disasters which may result in damage to Local Government infrastructure.

Pensioner concessions on Council rates are projected to exceed $30m again with a slight reduction predicted due to anticipated lower calls under the drought response element. The maximum in concessions remains unaltered and without application of indexation as is the LGA's position.

At this point we have not identified any other unexpected increases or decreases in direct funding to Local Government. The budget does contain a number of specific capital projects which will, we believe are likely to be supported by the Councils concerned.

The table prepared by the OS/LGR can be downloaded here: State Budget Implications for Local Government - Summary Table 2008-09 (295 kb)

The Local Government section of the Intergovernmental Finances chapter of Budget Paper 3 can be downloaded here: Extract from State Budget Statement 2008-09 (411 kb)

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2007 State Budget

Budget Highlights:

Treasurer Kevin Foley's sixth budget has maintained an operating surplus ($30m) while attempting to renew infrastructure. The centrepiece is the annoucement of a $1.7 billion long-term project to replace the Royal Adelaide Hospital. It also includes a reduction of payroll tax over two years predicted to provide more than $300 million in relief over 4 years. The budget predicts Gross State Product will rise by 4% and CPI by 2.5% in 2007/08.

The Budget speech, media releases and the full budget papers including the Regional Statement can be found on the State Government's Budget website linked above or via: http://www.statebudget.sa.gov.au/.

Local Government Impact:

The following information highlights the impact on Local Government from initial LGA analysis. The LGA acknowledges the support provided by the Office of State/Local Government Relations, in particular in the preparation of the Summary Budget Implications for Local Government (below) which provides more detail on key programs than can be found in the Budget Papers.

Solid Waste Levy:

Of the most significance is the budget information which delivers on the State's foreshadowed doubling of the solid waste levy. As Councils are aware, the LGA has consistently raised concerns with the foreshadowed doubling of the levy since it was announced without consultation in September, 2006. The 2007 State Budget Papers confirm our worst fear. The levy has been increased by slightly more than double and projected income for the EPA has risen by a corresponding amount (more than $10 million). The corresponding transfer to the Waste to Resources Fund has increased by more than $5 million. However the State contribution to the EPA budget has fallen by more than $5m.

As a result it is clear that Councils' challenges in waste management and recycling have been increased as a result of the levy increase and, most frustratingly, that half of funding removed from ratepayers is being used to prop up State General Revenue.

The President has issued a specific media release regarding this issue - click here. In addition the relevant page from the Budget Papers, is highlighted here: 2007 EPA Budget extract (74 kb)

Other issues:

The Government has met a number of important commitments to the LGA in relation to funding for Libraries, Stormwater and Community Wastewater Management Systems (CWMS) with indexation of these programs involving more than $23m in ongoing funding for Local Government. In addition, there are several one-off items, including an expected $5m contribution to Councils which suffered flooding damage to roads in the current financial year.

There are also several new programs including a $100,000 program to assist Councils in relation to illegal dumping and a $100,000 program to support volunteer resoucing.

Several programs have not received indexed funding and some have come to a conclusion. A number of programs are dependent on an application process and so funding outcomes for Local Government will not be known until much later in the financial year.

If one-off or timing-related payments are removed from the program total along with the increase in pensioner concessions (based on the increasing number of eligible recipients rather than on the rate of concession) and it is assumed that application based programs achieve the same level of funding for Councils overall as in 2006/07, the total State funding for Local Government is slightly less than the expected outcome for the current year.  

A general media release has also been issued covering issues other than the Solid Waste Levy - click here. The following table prepared by the Office of State/Local Government Relations provides more useful information around individual program areas:

State Budget Implications for Local Government - Summary 2007-08 (260 kb)

Local Government's financial position and overarching intergovernmental issues:

The SA Budget Papers continue to lead the nation in providing clear information on the overall financial position of Local Government and its contribution to SA. Members may recall that Federal Local Government Minister Jim Lloyd acknowledged this at the LGA Conference in April. Councils' conservative approach to debt continues to assit the State Government in achieving its AAA+ financial rating. Summary data for the sector continues to show a slow improvement in Local Government operating results - a sector wide operating deficit of $24m (1.9% of operating expenses) in 2005/06, down from $50m  (5.4%) in 2001/02.

Local Government's combined net financial liabilities in 2005/06 were $358m or 28% of operating revenue. This compares with the State's NFL of $8,636m and NFL ratio of 71% largely resulting from un-funded superannuation liabilities. 

Chapter 4 of the Budget Statement (Budget Paper 3) includes the following section highlight key issues in State/Local and Commonwealth/Local funding in SA.

Extract from Budget Statement 2007-08 (438 kb)