SA Budget: Rush to Surplus Risks State’s Economic Recovery
Following the release of today’s State Budget, The Australia Institute has suggested that efforts to return to an early surplus will harm South Australia’s economic performance and undermine the state’s employment recovery from COVID-19.
- According to the State Government, the budget will return to surplus in 2023-24.
- Previous recessions have shown that unemployment takes an extended period of many years to return to pre-recession levels, indicating a return to surplus in just a few years’ time is premature.
- Heroic growth estimates of between 3 and 4.75% for both Gross State Product and State Final Demand every year from 2021-22 onwards cast doubts on whether the surplus is achievable.
“Prioritising a surplus as we emerge from an economic crisis, over further investment to create jobs and grow our economy, is poor economic management,” said Noah Schultz-Byard, SA Director at The Australia Institute.
“While government stimulus in the short-term is welcome, a surplus just a few years down the road will not help struggling South Australian families who have lost employment to put food on the table.
“If the government were to take proper advantage of the historically low interest rates that are on offer right now and invest more in employment intensive industries such as education and healthcare, it would grow our state economy and improve employment outcomes over the long-term.
“An ideologically driven rush to a surplus would undermine our economic recovery from COVID-19 and fail to deliver the number of jobs that our state needs.”