Mike Smithson: SA government delivered its budget as if it knows it already has the next election in the bag
The SA Labor government has delivered its 2025 state budget as if it knows it already has next year's election in the bag.
The annual document released yesterday was about as interesting to the average voter as watching paint dry.
There were only a few morsels aimed at winning the hearts and minds of battlers because treasury coffers are running low and have taken a substantial hit from Whyalla's demise and the resulting taxpayer cash injection.
This year's budget surplus has been whittled back to a meagre $18 million with state debt forecast to climb to $48 billion by 2029.
Treasurer Stephen Mullighan says there's no need to panic because SA's financial situation is totally manageable.
With an interest bill destined to hit $6.72 million per day others may think otherwise.
This budget smacks of a confident government looking to win next year's election based on the popularity of the Premier who continues to win over punters with his 24/7 charm offensive.
Peter Malinauskas has brought big events to the state such as the AFL Gather Round and LIV Golf which have elevated his status to the national stage.
His negotiating skills are thought by most to be second to none.
Labor holds 28 lower house seats in the state's 47 seat parliament so is as assured of victory as it ever could be.
That's why it didn't need to offer anything extraordinary to voters in a budget which was more about yawn than a new dawn.
Law and order were this year's flavours of budget day leaving SA's police commissioner smiling from ear to ear.
An extra 326 sworn officers will be pounding the beat by 2030 as part of a $395 million package.
There could be two reasons for the sudden windfall in an area which can be easily overlooked.
Commissioner Grant Stevens wields enormous influence and respect as he has since the covid days.
Stephen Mullighan now also wears the dual hat of Police Minister and desperately wants to keep his top cop onside.
But he has multiple juggling acts elsewhere.
Whyalla's steel woes will continue to be a drain on the public purse.
His health budget has blown out by almost half a billion dollars as new services come on-line requiring many more staff who will never be able to keep up with demand.
The spiralling problem of ambulance ramping was conveniently airbrushed from the Treasurer's presentation to the media, despite being one of the government's biggest headaches.
The housing sector claims there wasn't enough in it for them.
Cost of living is crippling families across the state.
And drought affected farmers are also reaching out for more life-saving assistance.
But the government's sights are set on winning next March.
If they're forced to wear the boring badge for this budget, it means they'll have more in the kitty for upcoming election campaign promises.
If Labor does win this predicted landslide election victory, they know they'll probably occupy the treasury benches for at least another eight years.
They can be as tough as they want with future budgets knowing their grip on the purse strings is long term.
But those controlling the levers also know they'll be happily retired on their parliamentary pensions as future generations pay down the massive debt.
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ABC News
an hour ago
- ABC News
With a 'direct ear' to the treasurer, have police outranked paramedics as the SA government's top priority?
"Having the direct ear of the treasurer certainly is an advantage for me as a chief executive and it's my job to make sure I exploit that." One day after the South Australian government handed down a budget with law and order as its centrepiece, SA Police Commissioner Grant Stevens smiled as he summed up the fortuitous position he finds himself in, just nine months out from the next state election. "It's one of those few occasions where we have a senior cabinet minister as the minister for police," he told reporters. "I'm grateful for that level of focus that the government is putting on law and order and policing in South Australia." Mr Stevens was referring to Stephen Mullighan — a long-serving Labor cabinet minister who happens to not only be police minister, but treasurer too. Having a cabinet boss who is also in charge of government spending gives Mr Stevens a unique opportunity to wield influence, and the latest state budget could be seen as a case in point. Hundreds of millions of dollars for more police officers, firearms and infrastructure formed part of what Mr Mullighan described as "the largest boost to police funding in the state's history". As ABC News previously noted, there was no mistaking the budget message the government was trying to send, with photos of police officers splashed across the budget papers and projected onto screens around the budget lock-up room. But turn the clock back three years, and the government was keen to spruik a different kind of frontline worker, whose presence was keenly felt at the last state election, and whose absence from the latest budget front-page raises questions about the government's priorities going forward. "Labor will fix the ramping crisis." It was an election mandate that brought the party to government in March 2022, and which has since become an annoying itch for MPs forced to defend the government's progress. When the Malinauskas government handed down its first budget in June 2022, a photo of a nurse, paramedic and doctor graced the front-page — a nod to the $2.4 billion in health spending budgeted that year. But in 2025, ramping remains high. Ambulances spent 3,700 hours waiting outside emergency departments in April, a decrease on the month before but still much higher than the worst month under the previous government. Despite the government's latest budget tipping an additional $1.9 billion into the health system over the next five years — $1.7 billion of which is just to address increasing demand — health unions were not too pleased. "This budget is strong on crime but soft on health," Australian Nursing and Midwifery Federation CEO Elizabeth Dabars said. "We know that they've put additional investment into health, but the reality is that the demands in the system on nurses and midwives are far too great to endure." Paramedics were equally scathing. "It is inconceivable that we are nine months out from the next election, and the government that promised our community that it would fix the ramping crisis, has not budgeted for any additional ambulance resourcing, or to address ramping and response times," Ambulance Employees Association general secretary Paul Ekkelboom said. "The best this government can do is reframe the narrative away from ramping, and abandon on its commitments to the people of South Australia." But Premier Peter Malinauskas said health remained one of the government's top priorities, and budgeted spending on health eclipsed spending on police. "Let's take nurses for instance: We committed at the last election that we would employ an extra 300 nurses. We've smashed those numbers out of the park by the tune of many, many hundreds," he told ABC News Stateline. "Similarly with doctors, we said we'd employ an extra 100 doctors into our system over the life of our time in government. Last year alone, we increased it by over 300 over and above attrition." When questioned on his progress on "fixing the ramping crisis", Mr Malinauskas pointed to ambulance response times. "They're rolling up to triple-0 calls on time and that is the difference between life and death," he said. "We have made inroads (in fixing the ramping crisis), notwithstanding the fact that clearly, we still would like to see ramping improve. "As those new beds come online that we've invested in so heavily and quite dramatically — and there are hundreds coming online over the next couple of years — we hope it improves." So, if health is still a priority for the government, what has prompted it to deliver a budget so heavily focused on law and order — especially when overall crime rates have dropped across the state? According to Mr Malinauskas, SA Police has a "genuine need" for more resources. "They've seen demand grow not in crime in the traditional sense and how we might think of it, but more through the burden of increasing demands around domestic violence responses … also with call-outs to mental health cases," he said. "We've seen that demand grow and we've also got a growing population. "We haven't had that big uplift in police numbers in our state now for quite a long period of time." "Tough on crime" policies are considered politically popular, but Mr Malinauskas denied crime would become an election focus for his government. "I'd much rather have elections focused on other matters — education for instance, rather than crime — but that doesn't mean there isn't a need that we have a responsibility to address." But that is also the case for the health system, which continues to struggle through ambulance ramping and bed block. Without a "direct ear" to the treasurer, it is yet to be seen whether doctors, nurses and paramedics will receive the same level of attention from Labor in the months leading up to March 2026, as they did ahead of the last state election.
News.com.au
3 hours ago
- News.com.au
‘Like winning lotto': $300,000-a-year public servant pensions under fire in super tax battle
Would a 90-year-old need a half-a-million-dollar per year pension to live on? As debate swirls around Labor's controversial superannuation tax changes, critics have set their sights on lucrative taxpayer-funded lifetime pensions paid to former high-ranking public servants and politicians which can stretch into hundreds of thousands of dollars per year. Politicians who entered parliament before the October 2004 election, including Prime Minister Anthony Albanese and opposition leader Sussan Ley, are still accruing benefits under the Public Sector Superannuation Scheme (PSS), a defined benefit scheme which pays out an annual pension — indexed to inflation and calculated by a formula including the member's average salary and years of service — when the member leaves office or retires at 55. 'It's like winning lotto,' said veteran fund manager John Abernethy, founder and chairman of Clime Investment Management. 'These guys are giving themselves lotto wins and then complain about paying tax on the income.' Treasurer Jim Chalmers' proposed tax changes, known as Division 296, would double the rate from 15 per cent to 30 per cent for superannuation balances over $3 million and, most controversially, include unrealised gains on earnings on assets held by funds such as shares, farms and property. Labor first announced the crackdown on tax concessions for very large super balances in 2023, but the legislation was blocked by the previous Senate. The changes look likely to become law as a deal with the Greens looms. Only around 80,000 Australians, or 0.5 per cent of the population, currently have super balances above $3 million, but industry groups have warned that if the threshold is not indexed to inflation it could eventually capture the majority of Gen Zs entering the workforce today. The measure is expected to initially claw back $2.7 billion a year and nearly $40 billion over a decade. 'What we need to do is make sure that our superannuation system is fair,' Prime Minister Anthony Albanese said this week. 'That is what we are setting out to do.' Division 296 will also be applied to defined benefit pensions to ensure 'commensurate treatment' as high-balance super funds — although unlike super account holders, those eligible will be able to defer the payments until they retire. Interest will be charged annually on the deferred tax liability at the 10-year bond rate, currently at around 4.5 per cent. Treasury estimates that 10,000 members with defined benefit interests will be impacted by the new tax in 2025-26, 'representing approximately 1 per cent of the total population with DB interests'. The Australian Council for Public Sector Retiree Organisations (ACPSRO), which represents more than 700,000 retired public servants, has flagged a possible challenge to the new law, arguing it's unfair. ASCPRO notes that unfunded pensions, which do not receive the 'generous and open-ended taxation concessions' available under regular superannuation, are already subject to normal income tax. Recipients who will be captured by the $3 million threshold are already paying a marginal tax rate of 45 per cent on that income, and Division 296 will likely take their marginal tax rate to 60 per cent, according to ASCPRO. 'I'm not stepping away from the fact that these are very wealthy people at the top of the public service — either retired High Court judges, Commonwealth department secretaries, deputy secretaries — it's a very small percentage but it's the principle of the thing,' said ASCPRO president John Pauley. 'Nowhere has the government explained to defined benefit pensioners how they're benefiting from tax concessions at present and therefore why it's fair, just and equitable for this additional tax impost to be paid on top of the tax they're already paying.' A person in an accumulation scheme who would be affected by the tax has the option of moving their assets out of super into another tax-effective vehicle such as a family trust, Mr Pauley argues, whereas those receiving defined benefit pensions have no such option. 'You're at the mercy of the government of the day,' he said. ASCPRO also takes issue with deferred interest being slugged on future pension payments. 'There is zero asset sitting behind these schemes — if you're unfortunate enough to get run over by a car two years into your pension there is nothing there [to leave to beneficiaries],' Mr Pauley said. 'This is the ultimate self-licking ice cream for the government. They are wanting to make people pay tax, not on unrealised capital gains, they're wanting people to pay tax on a hypothetical gain on an asset which doesn't exist, either during the accumulation phase or during the pension.' Mr Pauley estimated that for the roughly one million households receiving defined benefit pensions, the average was only in the range of $50,000. 'Teachers, nurses, police officers, members of the Defence Force, the bureaucrats who do the day-to-day work of government,' he said. 'Yes there's a few who are on very high incomes who have access to a defined benefit pension, [but] this wasn't something that is optional for them. When you signed up to work with the public sector it was a part of your workplace contract.' Mr Abernethy, however, argues any overhaul of super concessions should also include going back to the drawing board on the $166 billion unfunded liability 'black hole', which has continued to blow out beyond forecasts as existing members continue to accrue benefits prior to retirement. 'Just pay out the bloody benefits today and cap it at $3 million, if the government is saying $3 million is more than you should have in super,' he said. 'How about we have a come-to-God moment and say, 'If your net present value of your future pension is $10 million, I'm sorry, $3 million is more than enough. It's a windfall, guys, now you've got to look after yourself.' It would save the taxpayer a fortune.' He added that '[if someone says] that requires a complete renegotiation of what people thought they were entitled to — yes it does, come in spinner!' 'That's exactly what you're doing in super,' he said. 'Current taxpayers weren't even alive when these pensions were set. We've got $240 billion in the Future Fund, if that's not enough to clean out this liability and get rid of it then we better know now.' He suggested complaints about paying additional tax on defined benefit pensions were an apples-to-oranges comparison. 'Imagine I come up to you on the street, I don't know who you are, and promise to pay you $100 a year indexed for the rest of your life,' he said. 'Then in five years I say, 'Look, mate, I'm only going to give you $90.' Am I going to get angry? I didn't contribute to it, you're just taking $10 off my cashflow.' Mr Abernethy, in an op-ed last month, outlined what he saw as the 'diabolical issues' with defined benefits. He cited the example of a high-profile former politician, senior ADF officer or High Court judge in their early 70s who receives a $300,000 defined benefit pension this year. Assuming 3 per cent indexation, Mr Abernethy pointed out that at 75 years old the pension rises to $327,000, at 80 it rises to $380,000, at 85 it rises to $440,000, at 90 it rises to $510,000 and at 95 it reaches $590,000. 'Think about the numbers and you see that over the 10 years to 85, the pension receipts aggregate to about $4 million, and over the 10 years to 95 it aggregates to over $5 million,' he wrote. 'Would a 90-year-old need $510,000 a year to live on? Therefore, is it likely that these funds would flow from the beneficiary to others in a type of living estate? Is that what defined benefit pensions designed to do and are they consistent with Australia's superannuation policy?' Defined benefit schemes were phased out after former Treasurer Peter Costello realised the payments would explode the budget bottom line in future years if not closed off. The PSS has been closed to new members since 2005, while the earlier Commonwealth Superannuation Scheme (CSS) was closed in 1990. The CSS is a hybrid accumulation-defined benefit scheme, with some benefits linked to final salary and others based on an accumulation of contributions with investment earnings. For military personnel, the defined benefit schemes are the Defence Force Retirement and Death Benefits Scheme, the Defence Forces Retirement Benefits Scheme and the Military Superannuation and Benefits Scheme (MSBS). Following the closure of the MSBS in 2016, all defined benefit military schemes are now closed to new members. The schemes are unfunded or partially funded, meaning the payments come directly from tax revenue, to the tune of about $20 billion a year. In 2006, the government established the Future Fund with an initial contribution of $60.5 billion that included the proceeds from the sale of Telstra. The Future Fund was originally supposed to start paying out pensions in 2020 to take the burden off the taxpayer, but successive governments have delayed drawing from the fund. In November, Labor ruled out taking a dividend from the fund until at least 2032-33, when the savings pool is expected to have reached $380 billion. The announcement came as the Treasurer directed the Future Fund to prioritise investments in renewable energy, housing and infrastructure, sparking warnings that he was politicising the independently managed sovereign wealth fund. Former Labor Climate Change Minister Greg Combet, who was appointed chair of Future Fund by Dr Chalmers in January 2024, said the decision to defer withdrawals 'provides the Future Fund with the confidence to provide more focus and resources to the areas of national priority identified in the new investment mandate that align with our risk and return hurdle'. In an op-ed for The Australian Financial Review, Mr Combet said 'as of today, the value of the Future Fund covers about 79 per cent of the estimated APS superannuation liabilities' — suggesting the liability had grown to about $290 billion. The Future Fund was valued at $237.9 billion as at December 31. The most recent federal budget estimates liabilities for civilian superannuation schemes, including the CSS and PSS as well as pensions for judges, at $166 billion in 2024-25, rising to $179 billion by 2028-29. Including military superannuation schemes, the total figure was $303 billion in 2024-25 and $341 billion by 2028-29. Treasury's PSS and CSS Long Term Cost Report, published last year, forecast that the unfunded liability for the schemes would peak at $190.5 billion in 2033-34 before declining to $62.4 billion by 2060. As of June 30, 2023, there were a total of 100,574 CSS members, including 1333 still currently employed, and 214,793 PSS members, 54,870 still employed. 'People who are in public service are entitled to a payout, but that payout should have been calculated and created with a logical and fair mechanism,' Mr Abernethy said. 'Saying to someone you get paid your pension based on your average wage when you leave, you tell us when you want to get it … that's not fair. You create these different tiers of benefits. Society's got to sit back and say, what's fair and what's affordable? Everyone's trying to get at fairness in the super system, but there's only so much money in the pot.'
Sydney Morning Herald
3 hours ago
- Sydney Morning Herald
Time to pay the Deeming debt and focus on the job of opposition
If we accept that the fundamental aim of political parties is to win elections and then govern on behalf of their constituents, then there is a strong case that the Victorian branch of the Liberal Party no longer meets the definition. Having steadily improved in the polls under John Pesutto as the problems of the state's Labor government mounted, some predicted that Victoria's Liberals would turn the tide at federal level, winning a raft of seats and delivering Peter Dutton the prime ministership. Those lost in this pipe dream did not worry that the state branch was already reverting to the form of a circular firing squad, in which an ousted Pesutto and his nemesis, Moira Deeming, were expected to work together even as she pressed him for personally ruinous millions in court costs. Another member of the humiliated Team Pesutto, shadow health spokeswoman Georgie Crozier, then decided to angrily call out party colleague Sam Groth over alleged misuse of a taxpayer-funded car (which he insists was within the rules). The Victorian Liberal Party has lost six of the past seven state elections, stretching back to the defeat of Jeff Kennett in 1999. That first reversal came out of the blue, but ever since the state party has stumbled in the dark over its identity and leadership. For years, it seemed religious conservatives were determined to turn the party of the social establishment and capital into a Trojan horse for their agendas on abortion and homosexuality. At times – think Bernie Finn or Geoff Shaw – this looked like a simple case of the tail trying to wag the dog. Loading Deeming – who inherited Finn's Western Metropolitan seat – is the latest manifestation of this trend, with her eyes set firmly on an ideological destination to which her fellow MPs can either accede or be swept aside, and if that means remaining in opposition, so be it. At the height of his confidence, Dutton suggested intervention by the federal party in this mess. Such an undertaking seems laughable now, given that Sussan Ley is already up to her eyeballs in the battle to steer the Coalition's shrinking ship in Canberra and leading lights of the Victorian federal landscape, Josh Frydenberg and Michael Sukkar, have been discarded by voters.
