David Pemberthy and Will Goodings six to nine five double a breakfast.

David Pemberthy and Will Goodings six to nine five double a breakfast.

It is still dark outside. You'd say gloomy if not for the fact that I think we're all delighted. Its raining and it's going to rain significantly over the course of the weekend. Stay indoors, enjoy the footy or whatever you do over a long weekend, or maybe tune into the Facebook and YouTube livestream right now because the Treasurer Obo South Australia is in the chair the morning after handing down the state budget.

It is still dark outside. You'd say gloomy if not for the fact that I think we're all delighted. Its raining and it's going to rain significantly over the course of the weekend. Stay indoors, enjoy the footy or whatever you do over a long weekend, or maybe tune into the Facebook and YouTube livestream right now because the Treasurer Obo South Australia is in the chair the morning after handing down the state budget.

Treasurer, good morning to you morning, Will wanting David to be with you.

Treasurer, good morning to you morning, Will wanting David to be with you.

Thanks for coming in, Treasurer. Are we living beyond our means? Oh?

Thanks for coming in, Treasurer. Are we living beyond our means? Oh?

We've got the budget in surplus.

We've got the budget in surplus.

It was one of the things that was important to us to do when we came into government to get the budget back into surplus after COVID.

It was one of the things that was important to us to do when we came into government to get the budget back into surplus after COVID.

We've done that and.

We've done that and.

We're pretty anemic surplus.

We're pretty anemic surplus.

Look this year.

Look this year.

It is because we've had to respond very quickly to things like Whyala and the drought. But that's you know, I think that underlines why you've got to aim for surpluses so that the budget's got some capacity to respond either to economic or community needs. And we've got not only a surplus for the current financial year, smaller though it is compared to what we originally predicted because of those reasons. But we're forecasting surpluses across the Ford estimates, and that's what gives us the confidence while we've got capacity, while we can still deliver surpluses while making those massive investments in those big infrastructure projects and taking on the extra debt.

It is because we've had to respond very quickly to things like Whyala and the drought. But that's you know, I think that underlines why you've got to aim for surpluses so that the budget's got some capacity to respond either to economic or community needs. And we've got not only a surplus for the current financial year, smaller though it is compared to what we originally predicted because of those reasons. But we're forecasting surpluses across the Ford estimates, and that's what gives us the confidence while we've got capacity, while we can still deliver surpluses while making those massive investments in those big infrastructure projects and taking on the extra debt.

Onto Ayala and the drought two examples of how unforeseen events place pressure on the budget. So if you have such a slim surplus now and we've got borrowings that are so high that yesterday you've got a formal warning, a formal shot across your bows from standard and pause about they might actually reduce the state's credit rating, aren't we running it too tight?

Onto Ayala and the drought two examples of how unforeseen events place pressure on the budget. So if you have such a slim surplus now and we've got borrowings that are so high that yesterday you've got a formal warning, a formal shot across your bows from standard and pause about they might actually reduce the state's credit rating, aren't we running it too tight?

Well? I think you should also.

Well? I think you should also.

I think you've also got a factor in how else we responded to Wyala. So you know, we had six hundred million dollars set aside for the hydrogen Jobs Plan, which we were committed to rolling out over the last twelve months. As I said yesterday, particularly my budget speech, when it became clear to us that we were going to have to intervene on WYALA, and when it became clear that we were going to have to put in such a huge amount of money to partner with the Commonwealth to do that, you know, we've taken a responsible you know, it's a regrettable decision for us because we're passionate about hydrogen, but we've taken a responsible decision to defer that to make sure that we could ease the pressure on the state's balance sheet by stepping into WYALA so significantly. So if you can keep the budget in surplus, if you're prepared to reorder your priorities to make sure that you've got room to act in support of either the economy or the community, I think that's a responsible way to manage the finances. Where have there all the surpluses over the future gone, Because if you look at the deterioration from the media budget review in the surpluses that will being forecast, then obviously this year it's gone from two hunred one million to eighteen and you've said, okay, whaler and drought and so forth. The following year it was meant to be four hundred and forty nine million, it's going to be one hundred and seventy nine. The year after that six hundred and forty three, it's going to three hundred and sixty nine. And this all comes at the same time. At the budget identifies the huge and unexpected windfall we got in the GST an extra three hundred and eighty six million over the period of twenty seven.

I think you've also got a factor in how else we responded to Wyala. So you know, we had six hundred million dollars set aside for the hydrogen Jobs Plan, which we were committed to rolling out over the last twelve months. As I said yesterday, particularly my budget speech, when it became clear to us that we were going to have to intervene on WYALA, and when it became clear that we were going to have to put in such a huge amount of money to partner with the Commonwealth to do that, you know, we've taken a responsible you know, it's a regrettable decision for us because we're passionate about hydrogen, but we've taken a responsible decision to defer that to make sure that we could ease the pressure on the state's balance sheet by stepping into WYALA so significantly. So if you can keep the budget in surplus, if you're prepared to reorder your priorities to make sure that you've got room to act in support of either the economy or the community, I think that's a responsible way to manage the finances. Where have there all the surpluses over the future gone, Because if you look at the deterioration from the media budget review in the surpluses that will being forecast, then obviously this year it's gone from two hunred one million to eighteen and you've said, okay, whaler and drought and so forth. The following year it was meant to be four hundred and forty nine million, it's going to be one hundred and seventy nine. The year after that six hundred and forty three, it's going to three hundred and sixty nine. And this all comes at the same time. At the budget identifies the huge and unexpected windfall we got in the GST an extra three hundred and eighty six million over the period of twenty seven.

Twenty eight, and an extra nearly eight hundred million dollars from taxation because of the price of property and so forth. So there's a deterioration in terms of surplus of nearly seven hundred and fifty million dollars at the same time as there's an unexpected windfall of an excess of a billion dollars. Where's all that money gone.

Twenty eight, and an extra nearly eight hundred million dollars from taxation because of the price of property and so forth. So there's a deterioration in terms of surplus of nearly seven hundred and fifty million dollars at the same time as there's an unexpected windfall of an excess of a billion dollars. Where's all that money gone.

Well, specifically next financial year, a lot of that surplus has been set aside within the budget in case we need to extend the period of administration for Whaler. So that explains why next year's surplus is only one hundred and seventy nine. Otherwise it would be half of our share, or one hundred and eighty four million dollars high. But yes, you're right, we have had stronger revenues and those surpluses are a little lower because that's given us the capacity to make some of the spending decisions that we announced yesterday in the budget, all the way from placing which you guys have reported on, to the health system, to the cost of living support, to have another goal in investing in housing as well. So each year you work out what's happening with your revenues, how much capacity you've got, and then you make your spending decisions accordingly.

Well, specifically next financial year, a lot of that surplus has been set aside within the budget in case we need to extend the period of administration for Whaler. So that explains why next year's surplus is only one hundred and seventy nine. Otherwise it would be half of our share, or one hundred and eighty four million dollars high. But yes, you're right, we have had stronger revenues and those surpluses are a little lower because that's given us the capacity to make some of the spending decisions that we announced yesterday in the budget, all the way from placing which you guys have reported on, to the health system, to the cost of living support, to have another goal in investing in housing as well. So each year you work out what's happening with your revenues, how much capacity you've got, and then you make your spending decisions accordingly.

Well to that end, there's an area of the budget you guys have set yourself targets about restrain spending and responsible budget management. One of those is operating expense growth not exceeding four percent a year. And this just strikes me as a some heroic assumptions are being made given where we've been this last year operating expense growth, how much we spending grew by eight point eight percent. This year ahead it's forecast to four point one percent, so that's beyond the target. Then the years after that one point nine percent, two percent, two point eight percent. What gives you confidence that you guys are going to be able to control yourselves in the out years of the budget when all the evidence suggests you haven't met your targets in the first two.

Well to that end, there's an area of the budget you guys have set yourself targets about restrain spending and responsible budget management. One of those is operating expense growth not exceeding four percent a year. And this just strikes me as a some heroic assumptions are being made given where we've been this last year operating expense growth, how much we spending grew by eight point eight percent. This year ahead it's forecast to four point one percent, so that's beyond the target. Then the years after that one point nine percent, two percent, two point eight percent. What gives you confidence that you guys are going to be able to control yourselves in the out years of the budget when all the evidence suggests you haven't met your targets in the first two.

Yeah, I mean certainly last year and in the current year, we've had to put a huge amount of additional funding in for areas, not just why Ala, that's not the majority of it, but we've also had to sign up to new partnerships with the Commonwealth on skills funding, on our schools funding, and we've also tried to take the opportunity to invest in additional health expenditure. But as I've said on your program before, we are tipping in an extraordinary amount of additional money into our health system. Yesterday our announcements took the total over our first over our first budgets and including this budget to nine billion dollars in total. And incidentally, I heard the bloke from the AMA on before saying.

Yeah, I mean certainly last year and in the current year, we've had to put a huge amount of additional funding in for areas, not just why Ala, that's not the majority of it, but we've also had to sign up to new partnerships with the Commonwealth on skills funding, on our schools funding, and we've also tried to take the opportunity to invest in additional health expenditure. But as I've said on your program before, we are tipping in an extraordinary amount of additional money into our health system. Yesterday our announcements took the total over our first over our first budgets and including this budget to nine billion dollars in total. And incidentally, I heard the bloke from the AMA on before saying.

Health fills four goals down.

Health fills four goals down.

Well, it must be a high scoring game if you've tipped in nine billion dollars into health, and that's how they're feeling about it.

Well, it must be a high scoring game if you've tipped in nine billion dollars into health, and that's how they're feeling about it.

But that can't.

But that can't.

Continue on into the future. And while we've got expenditure growth across our health system into the future, it's not going to continue on at the pace that it has been because the task that we've had in this first period has been trying to restore the capacity in our hospitals to stop the cuts that had been factored into doctors and nurses and ambulance officers by the previous government. I think we've done a lot of that restorative work. That's continued a bit in yesterday's budget. But once we've restored that capacity, we're not going to have to keep dialing it up to the same extent for the next four or five years.

Continue on into the future. And while we've got expenditure growth across our health system into the future, it's not going to continue on at the pace that it has been because the task that we've had in this first period has been trying to restore the capacity in our hospitals to stop the cuts that had been factored into doctors and nurses and ambulance officers by the previous government. I think we've done a lot of that restorative work. That's continued a bit in yesterday's budget. But once we've restored that capacity, we're not going to have to keep dialing it up to the same extent for the next four or five years.

But isn't the problem we have, Well, okay, we'll rephrase this isn't the problem that you have as a government and that we have as a community. When you hear all the lobby groups after seven o'clock. I mean, the chief criticism that people make, regardless of the field that they represent, these are we'd like to see more money being spent there. And there's this sort of political status quo that is reinforced by a service hungry public, which is that spending more than ever before is regarded as a measure of success. So can I return to debt? It goes up four billion roughly every year for the next three years. It's forty eight point five billion in three years time. Now I know we can say, well, Victoria, it's going to be one hundred and ninety six billion at the same time. Well, proportionally, i'd say that puts say about the same given the population of the two respective states. Is debt ever going to come down in this state or do we just not care about it anymore?

But isn't the problem we have, Well, okay, we'll rephrase this isn't the problem that you have as a government and that we have as a community. When you hear all the lobby groups after seven o'clock. I mean, the chief criticism that people make, regardless of the field that they represent, these are we'd like to see more money being spent there. And there's this sort of political status quo that is reinforced by a service hungry public, which is that spending more than ever before is regarded as a measure of success. So can I return to debt? It goes up four billion roughly every year for the next three years. It's forty eight point five billion in three years time. Now I know we can say, well, Victoria, it's going to be one hundred and ninety six billion at the same time. Well, proportionally, i'd say that puts say about the same given the population of the two respective states. Is debt ever going to come down in this state or do we just not care about it anymore?

No, we absolutely care about it, and you know, I welcome the fact that there's attention because we should be talking about the fact that we are taking a historically aggressive position, taking debt onto the state's balance sheet in order to build, in particular these two massive infrastructure projects. We don't certainly don't compare ourselves to Victoria or a spider be anything like them, but we are are we No, not at all proportionally, And you would have seen in the presentation I provided yesterday and in the budget papers that when you compare South Australia against other states like New South Wales or Queensland, and of course Western Australia is in outlier for other reasons. But when you compare ourselves to those other states, we still compare favorably on our balance sheet and debt metrics.

No, we absolutely care about it, and you know, I welcome the fact that there's attention because we should be talking about the fact that we are taking a historically aggressive position, taking debt onto the state's balance sheet in order to build, in particular these two massive infrastructure projects. We don't certainly don't compare ourselves to Victoria or a spider be anything like them, but we are are we No, not at all proportionally, And you would have seen in the presentation I provided yesterday and in the budget papers that when you compare South Australia against other states like New South Wales or Queensland, and of course Western Australia is in outlier for other reasons. But when you compare ourselves to those other states, we still compare favorably on our balance sheet and debt metrics.

It doesn't understand and pause warning yesterday, which is pretty embarrassing. Just within minutes of the budget they put out a statement like that. Doesn't that suggest that these people who are totally independent, they know how money works, they know how dangerous dead is.

It doesn't understand and pause warning yesterday, which is pretty embarrassing. Just within minutes of the budget they put out a statement like that. Doesn't that suggest that these people who are totally independent, they know how money works, they know how dangerous dead is.

They basically said.

They basically said.

To you, watch out, guys, because you're on you're potentially on the same trajectory as a failed statewide Victoria.

To you, watch out, guys, because you're on you're potentially on the same trajectory as a failed statewide Victoria.

Well, I don't think they said we're on the same trajectory as Victoria. But they're absolutely right to issue that release, and it's the same release pretty much that they put out last year. You've got to make sure your budget doesn't get out of control or you'll be in lined for a downgrade. And so that's why we've made sure that we're running surpluses and that our key debt affordability metric compares very favorably to the other states that have already been looked at by S and PS and been put on negative watch for their credit rating, whereas we have them.

Well, I don't think they said we're on the same trajectory as Victoria. But they're absolutely right to issue that release, and it's the same release pretty much that they put out last year. You've got to make sure your budget doesn't get out of control or you'll be in lined for a downgrade. And so that's why we've made sure that we're running surpluses and that our key debt affordability metric compares very favorably to the other states that have already been looked at by S and PS and been put on negative watch for their credit rating, whereas we have them.

Can you find out of control for us? Because non financial public set to debt to revenue ratio is probably good way of looking at it. Net debt is fine, but we hope the economy grows and so forth, and revenues may well increase. But the budget says debt to revenue ninety nine point nine percent this year, you get to the out years of the budget, it gets to one hundred and thirty six point seven percent. It's growing every single year over that period. So what's too much? Is it one hundred and fifty percent?

Can you find out of control for us? Because non financial public set to debt to revenue ratio is probably good way of looking at it. Net debt is fine, but we hope the economy grows and so forth, and revenues may well increase. But the budget says debt to revenue ninety nine point nine percent this year, you get to the out years of the budget, it gets to one hundred and thirty six point seven percent. It's growing every single year over that period. So what's too much? Is it one hundred and fifty percent?

Is it two hundred percent?

Is it two hundred percent?

You set out of control? What number is out of control?

You set out of control? What number is out of control?

Yeah?

Yeah?

So I think the way we look at this is how can the budget afford to service the debt that we're taking on, not just in the current year, but sustainably into the future. So are we running surpluses? So even after we pay for all of the operating costs of hospitals and schools and police and roads and that sort of thing, and also paying for our debt service payments our net interest costs, are we still running a surplus? And this budget shows that not only are we in this year, but we're projected to across the Ford estimates, and we've proven our bona fides by doing that each year since we've been in government. But then secondly, that metric that you that you were talked about before, the net debt to revenue ratio, this year it is it's ninety nine point nine percent according to the budget papers. This is also the same financial year that was the last year of the previous Liberal government's Rob Lucas's Ford estimates their our years. In their last budget, they projected the net debt to revenue ratio to be one hundred and twenty nine point six percent. So for the same year, debt is two billion dollars lower this year, and that key debt affordability metric that writing's agencies like Standard and Pause look at is a full thirty percentage points better. And what that shows is our revenue, the size of our budget has grown. It's given us a greater capacity to take on more debt, to service that debt and still run budget surplus.

So I think the way we look at this is how can the budget afford to service the debt that we're taking on, not just in the current year, but sustainably into the future. So are we running surpluses? So even after we pay for all of the operating costs of hospitals and schools and police and roads and that sort of thing, and also paying for our debt service payments our net interest costs, are we still running a surplus? And this budget shows that not only are we in this year, but we're projected to across the Ford estimates, and we've proven our bona fides by doing that each year since we've been in government. But then secondly, that metric that you that you were talked about before, the net debt to revenue ratio, this year it is it's ninety nine point nine percent according to the budget papers. This is also the same financial year that was the last year of the previous Liberal government's Rob Lucas's Ford estimates their our years. In their last budget, they projected the net debt to revenue ratio to be one hundred and twenty nine point six percent. So for the same year, debt is two billion dollars lower this year, and that key debt affordability metric that writing's agencies like Standard and Pause look at is a full thirty percentage points better. And what that shows is our revenue, the size of our budget has grown. It's given us a greater capacity to take on more debt, to service that debt and still run budget surplus.

By the sounds of that, it sounds like and look, you know we don't get polling. We had by elections, and on the strength of those it sounds like you guys will be in power longer than the Ming dynasty one hundred and thirty six point seven percent, and your expectation is well that number will continue to go up in the next term of government.

By the sounds of that, it sounds like and look, you know we don't get polling. We had by elections, and on the strength of those it sounds like you guys will be in power longer than the Ming dynasty one hundred and thirty six point seven percent, and your expectation is well that number will continue to go up in the next term of government.

Well it may well.

Well it may well.

I mean, as I've said on this program previously, and you guys asked me about this last week, I think it was do we expect it to continue to go up. It will until we finish the major construction period of the tunnels and the women's and children's hospital. The Ford estimates that we've got in this budget is not quite there. We've probably got another financial year or a couple of financial years until we finish that. But then what you'll see is that level of capital expenditure or infrastructure spending each year that we showed yesterday. It's going to be seven billion dollars per year for the next three years, and then in the last year it starts coming down six billion dollars and that will continue to will down.

I mean, as I've said on this program previously, and you guys asked me about this last week, I think it was do we expect it to continue to go up. It will until we finish the major construction period of the tunnels and the women's and children's hospital. The Ford estimates that we've got in this budget is not quite there. We've probably got another financial year or a couple of financial years until we finish that. But then what you'll see is that level of capital expenditure or infrastructure spending each year that we showed yesterday. It's going to be seven billion dollars per year for the next three years, and then in the last year it starts coming down six billion dollars and that will continue to will down.

Look that because this is this thing, because like crystal ball sort of approach would be that in ten years time, the big argument will be the mega suburbs stretching all the way between all Dinger and Yanker Lilla need a new Nolunger hospital. Like things change and it feels like we're too far The debt has put us too far behind to keep running these big ticket items unless we take what like the Bobcar Michael Leagan approach. Michael Eagan, you said, there go, I'm just going to pay for the debt that's all I'm going to do, and then you just stand up to caucus and he stood up to all the lobby group and said we're going to make New South Wales debt free. And he did a terrific job at that because he said no.

Look that because this is this thing, because like crystal ball sort of approach would be that in ten years time, the big argument will be the mega suburbs stretching all the way between all Dinger and Yanker Lilla need a new Nolunger hospital. Like things change and it feels like we're too far The debt has put us too far behind to keep running these big ticket items unless we take what like the Bobcar Michael Leagan approach. Michael Eagan, you said, there go, I'm just going to pay for the debt that's all I'm going to do, and then you just stand up to caucus and he stood up to all the lobby group and said we're going to make New South Wales debt free. And he did a terrific job at that because he said no.

Well, I was working in a government here in South Australia when in two thousand and seven and two thousand and eight we did exactly the same thing here in South Australia. We paid off general government sector debt. And I remember the calls from the media from a business essay at the time, screaming at the government to take on debt, to use the state's balance sheet to invest in social and productive infrastructure. And so that's what we're doing, making sure that we're not racking up debt because the budget's recording massive deficits and we're borroing money to service those deficits. We're borroing money to build infrastructure that's going to benefit successive generations of South Australians. And I think that that's an appropriate thing to do as long as that debt remains serviceable and affordable.

Well, I was working in a government here in South Australia when in two thousand and seven and two thousand and eight we did exactly the same thing here in South Australia. We paid off general government sector debt. And I remember the calls from the media from a business essay at the time, screaming at the government to take on debt, to use the state's balance sheet to invest in social and productive infrastructure. And so that's what we're doing, making sure that we're not racking up debt because the budget's recording massive deficits and we're borroing money to service those deficits. We're borroing money to build infrastructure that's going to benefit successive generations of South Australians. And I think that that's an appropriate thing to do as long as that debt remains serviceable and affordable.

And I think the.

And I think the.

Budget shows in the settings that we've got it is serviceable and affordable. If it becomes unserviceable and unaffordable, you'll start seeing that by the fact that we start running deficits or our interest costs get out of control. But I think we're in an environment at the moment where we've got the balance right. We can still have a surplus so we can respond to community needs when we need to unexpectedly, but we can also afford to meet the costs of taking on this debt to deliver a really productive infrastructure for the benefit of the future.

Budget shows in the settings that we've got it is serviceable and affordable. If it becomes unserviceable and unaffordable, you'll start seeing that by the fact that we start running deficits or our interest costs get out of control. But I think we're in an environment at the moment where we've got the balance right. We can still have a surplus so we can respond to community needs when we need to unexpectedly, but we can also afford to meet the costs of taking on this debt to deliver a really productive infrastructure for the benefit of the future.

We always appreciate our chats. A treasure thank you so much for coming in. And now I'm going to during the air break. I want to find out how long theming industry was impowerful. A couple hundred years. Steve Oligan, Treasurer, thanks for joining us in this studio.

We always appreciate our chats. A treasure thank you so much for coming in. And now I'm going to during the air break. I want to find out how long theming industry was impowerful. A couple hundred years. Steve Oligan, Treasurer, thanks for joining us in this studio.

Thanks so much, guys,

Thanks so much, guys,