South Australia's Budget: Familiar Challenges and New Risks Emerge

South Australian Treasurer Tom Koutsantonis has presented his first state budget since 2017, confronting lingering issues from nearly a decade ago alongside new economic uncertainties. The budget highlights ongoing struggles with the Whyalla steelworks and significant challenges in delivering the new Women's and Children's Hospital.

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We've allocated $3.2 billion and we're not ashamed to say this project is having difficulties.

The Whyalla steelworks, which has been in administration since early 2025, continues to require substantial state support. The latest budget allocates an additional $159.5 million, bringing the total state and federal funding towards the struggling enterprise to nearly $3 billion. The budget papers also flag "unquantifiable potential exposures to the state" should further complications arise with finding a new owner, classifying the steelworks as a risk.

Similarly, the new Women's and Children's Hospital project faces considerable difficulties. The design is not yet finalized, with potential completion now pushed to at least 2031, a significant delay from the original 2024 target. Treasurer Koutsantonis acknowledged the project's struggles, stating, "We've allocated $3.2 billion and we're not ashamed to say this project is having difficulties." He vowed to maintain budget discipline despite these challenges.

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But I'm not going to raise the white flag.

Beyond these specific projects, the budget acknowledges broader economic risks stemming from global geopolitical instability, particularly the ongoing Iran War. Koutsantonis noted that economic forecasting has become more difficult, leading the government to deliberately under-forecast revenue and overestimate expenditure. This contrasts sharply with 2017, when geopolitical risks were primarily centered on the Chinese economy and U.S. interest rates.

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There's going to be budget discipline, and budget discipline means sticking to budgets as much as we possibly can.

The state's net debt is projected to rise substantially, from $13.8 billion in 2017 to an estimated $53.7 billion by 2029-30. This increase is attributed to major capital programs, including the South Road upgrade and the new hospital. The budget's risk statement emphasizes that "large capital programs increase the risk of additional cost," a concern amplified by the current high inflationary environment.

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I don't know what shocks are coming next.