State Government Budget 2017-18
State Budget 2017-18: What it means for local government and SA councils
The Local Government Association of South Australia (LGA) welcomes many of the projects and programs included within the 2017-18 State Budget. We recognise that this is a big spending budget that focuses on jobs and building the South Australian economy.
Unfortunately, most of the matters advocated by the LGA in its State Budget Submission for 2017-18 do not appear to have been acted upon, at least in this year’s Budget.
Click here for the LGA’s media release providing an initial response to the Budget.
Overview of the Budget finances
The Government’s 2017-18 Budget introduced into Parliament on 22 June 2017 targets an operating surplus of $72 million, with growing surpluses predicted thereafter. The Government's level of net financial liabilities (being the most comprehensive measure of indebtedness) is expected to be $21.5 billion at 30 June 2018. Net financial liabilities expressed as a percentage of operating revenue (i.e. the net financial liabilities ratio) is estimated to be 112 per cent in 2017-18. This compares with an estimated net financial liabilities ratio for the SA local government sector as a whole of 36 per cent in 2016-17.
Government operating expenses are expected to decrease in real terms by 0.1 per cent from 2016-17 to 2020-21, while taxation revenues are projected to grow in real terms by 1.9 per cent on average over the same period. GST revenue is expected to increase by around $370 million to $6.3 billion in 2017-18. The Budget commits to infrastructure investment of a least $1.5 billion per year over the next four years.
Gross State Product in South Australia is expected to grow by 2.75 per cent in real terms in 2017-18, following estimated growth of only 1.75 per cent in 2016-17. Employment growth in South Australia is expected to be 1.0 per cent per annum in 2017-18 and 2018-19. South Australia's trend unemployment rate was 7.1 per cent in May 2017, up from 6.9 per cent a year earlier. The Adelaide Consumer Price Index (CPI) is anticipated to be 2.0 per cent in 2017-18 and 2.25 per cent in 2018-19.
The Budget papers can be downloaded directly from the Department of Treasury and Finance website.
Main impacts on local government
All programs subject to formal agreements between the Government and the LGA (eg funding for public libraries) appear to have been maintained and indexed in accordance with their respective agreements.
As announced in April 2017 – see LGA Circular 17.1 on 26 April - the Budget confirms a ten-year extension of the Community Wastewater Management Systems (CWMS) Agreement from 1 July 2017. The new Agreement will result in the Government committing more than $47 million over 10 years to support the installation of CWMS infrastructure in regional towns.
Solid Waste Levy
No change has been made to the arrangements announced in last year’s Budget of progressive increases in the solid waste levy in the metropolitan area, rising to $103 per tonne by 2019-20. The levy in the metropolitan area is set at $87 per tonne from 1 July 2017, $100 per tonne from 1 July 2018 and $103 per tonne from 1 July 2019. The levy in country areas is set at half the amounts applying in the metropolitan area.
Overall, the increase in the solid waste levy is anticipated to generate additional revenue for the Government of approximately $72 million in the four years to 30 June 2020 compared with revenue which would have been generated in that period, if 2015-16 levy rates had been maintained without increase.
Apart from grant programs for the waste sector industry covering infrastructure, investment and innovation, proposed funding for climate change initiatives and allocations for Environment Protection Agency programs, the Government indicated in last year’s Budget that $14 million of its additional revenue through to 2019-20 would be applied towards local government waste and resource recovery programs.
The LGA will continue to advocate for the Government to declare its intentions for the use of approximately $90 million, sourced from past solid waste levy collections, which has accumulated in the Green Industries Fund.
Beyond the concessions negotiated by the LGA late in 2015, there has been no further changes to the level of extractive royalties that councils are required to pay (both where they have an extractive mineral lease over land being mined or where land being mined is not covered by a permit, claim lease, licence, tenement or private mine).
The so-called “rubble royalties” therefore will continue to impose a burden of approximately $1,000 per kilometre onto the cost of unsealed road maintenance in 23 country council regions.
The 2017-18 Budget confirms the ongoing provision of $500,000 per annum to the State’s eleven “Zone Emergency Management Committees” which are responsible for emergency risk management, planning and implementation of mitigation strategies.
As announced in April 2017, $250,000 has been allocated through the State Strategic Grants Scheme towards the implementation of the “Local Government Functional Support Group” (LGFSG). This will be a 15month project that will further define the responsibilities of the LGFSG, its required resources, develop LGFSG incident management processes within the State Emergency Management Plan, and engage with councils on the implementation of this new structure.
Signage of bushfire Last Resort Refuges
The LGA participated on the Country Fire Service’s working group that developed the proposal to manufacture, install and maintain signage for bushfire Last Resort Refuges to improve public safety by providing information about the location and use of Last Resort Refuges. The cost of the signage is $319,000 in 2016–17, with ongoing costs of $18,000 per annum (indexed) for maintenance.
As part of implementation of the reform of the State’s planning system, the Government has allocated $25.8 million over five years to develop an e-Planning information technology solution to move planning documents and processes on-line.
The Government is proposing that initial development costs and all ongoing operational costs of this initiative would be met, over time, by incremental increases in development application fees (commencing in 2018-19 or 2019-20) as well as introduction of annual council contributions (commencing in 2017-18). The Government is planning that the amount of individual council contributions would range from $4,000 to $36,000 per annum – scaleable depending on the extent of development activity and the expected level of benefits from the reform program.
The LGA believes that it is unfair and inequitable to require councils to contribute to the e-planning system before it is operational and before the assumed benefits of the system can be measured and realised. In addition, given the benefits that the Government will reap from the new system, the LGA believes that it would have been appropriate for the Government itself to meet a share of both the initial development costs and the ongoing operational costs.
The LGA continues to work with the Department of Planning, Transport and Infrastructure to determine the net impact on councils of transitioning to the new planning system, including ensuring that future savings to councils will offset the amount of any annual contributions. More recently, the LGA President, Mayor Lorraine Rosenberg, has written to the leaders of South Australia’s political parties and other Members of Parliament raising our concerns about this matter.
State-Local Government Infrastructure Partnership program
As announced in October 2016, agreement has been reached between the LGA and the Government on a State-Local Government Infrastructure Partnership program. The program involves the provision of funding of approximately $30 million by the Government to the LGA over the next ten years.
The ten-year funding commitment represents a present value to the local government sector of approximately $25 million and this amount will be paid by the LGA to 28 councils in 2017-18 as an up-front grant to meet 20 per cent of the cost of a wide range of infrastructure projects. Most projects will support longer-term economic development in one form or other.
As part of the Partnership, the LGFA will make available borrowings to councils for a ten year term at a discounted interest rate of 0.2 per cent above its borrowing costs.
Fund my Neighbourhood program
Funding of $40 million over two years has been allocated for a significant expansion of the Fund My Community pilot participatory budgeting initiative that has delivered 85 local community programs in 2017. This program will add value to the local community grants program that councils have made available to their communities over many years. Further detail about the eligibility criteria for this fund and how councils can be involved will be released by the State Government soon.
As announced in the 2015-16 Budget, an additional $70 million is being spent over four years commencing 2015-16 to improve key state-owned roads around South Australia to improve their safety.
In addition, the Government has confirmed that an additional $10 million per annum will continue to be allocated over the next two years to upgrade state-owned road safety infrastructure, including for shoulder sealing and audio-tactile line marking.
Dog and Cats online
As expected the Government has allocated a capital expenditure of $0.6 million over 3 years to develop the on-line portal to replace council registers covering dog and cat management (‘Dogs and Cats On-Line’) with the capital investment being recouped over time by increased dog registration fees and introduction of breeder registration fees.
Community Infrastructure Investment Fund
The Government has made an allocation of $5 million in 2017–18 for multicultural and community organisations to improve and upgrade infrastructure and to purchase equipment which will support the community and multicultural programs and services.
Disability and Inclusion
The Changing Places program will invest $200,000 in 2017–18 to support the construction of five facilities in partnership with local government and private/community providers. Changing Places facilities are fully accessible public toilets that meet the needs of people with a range of disabilities as well as the aged and incorporate full size height adjustable change tables, lifting hoists and non-slip floors.
Sport and Recreation
The Government has allocated $20 million over two years for grants to sporting clubs to establish or replace artificial playing surfaces that will improve programming for sports like soccer, hockey, tennis and bowls during inclement weather conditions. Grant funding will be prioritised on the basis of contributions made to the project, including by the club or local councils.
Also, the Government is investing $14 million over two years for the women's sporting facilities fund to continue to address the barriers to female participation. Grant funding for this initiative will be prioritised based on projects that have matching funding available from local government, Commonwealth or private sources.
Other matters of local interest
Gawler East Link Road
As announced in the 2015-16 Budget, funding of $55 million over the period 2016-17 to 2017-18 is being provided for the construction of the Gawler East Link Road, associated upgrade works for the intersection of Main North, Potts and Para Roads, and a contribution towards the upgrading of Potts Road.
This initiative will enable traffic to and from the Springwood development to by-pass Gawler Centre to access Main North Road. The Town of Gawler will assume responsibility for the Link Road once constructed.
Oaklands rail crossing grade separation
Contributions to the $174.3 million agreement between the Commonwealth and State Governments and Marion Council to upgrade the Oaklands Crossing to separate rail and road traffic by implementing a rail underpass under Diagonal Road.
The Commonwealth Government is contributing $95 million towards the project. The City of Marion has made an in-principle commitment to contribute $5 million in land, roadworks and green space while facilitating a special planning zone to allow high-density developments.
Mount Gambier airport upgrade (Limestone Coast)
The Government is allocating $1.1 million in 2017–18, in addition to a previous commitment of $2.95 million, to facilitate the upgrade of the Mount Gambier Airport.
The total state contribution of $4.0 million, together with funding from the District Council of Grant, the City of Mount Gambier and funding provided through the Commonwealth Building Better Regions Fund will allow direct jet services from Mount Gambier to Melbourne and Sydney.
Brownhill Creek Recreation Park Pedestrian Bridge
An allocation of $200,000 for the construction of a dedicated pedestrian bridge alongside the existing White's Bridge to provide safe passage across the creek for pedestrians and school groups that frequent the park who are currently forced to share White's Bridge with vehicles. Support of $8,000 a year is also provided for ongoing maintenance over the forward estimates to 2020-21.
Sea wall repairs — Coast Protection Board
An allocation of $1.25 million to support the City of Charles Sturt to repair the West Beach sea wall; and $600,000 to for Kingston District Council to repair the Wyomi Beach sea wall following damage by severe weather events.
Blackwood roundabout upgrade
The Government is investing$3.5 million in 2017–18 to upgrade the Blackwood roundabout to improve traffic conditions and safety. This will alleviate traffic delays through the roundabout and improve traffic flows through the centre of Blackwood, located in the City of Mitcham.
Main South Road Upgrade
$305 million has been set aside for the first stage of upgrades along South Road between Seaford and Sellicks Beach in the City of Onkaparinga, to begin in 2019.
$189,000 to allow the council to fit out its currently vacant civic library building to create space for a pop-up shop environment for interested parties to test their retail or business ideas
$183,000 for community amenity upgrades to improve the appearance of a number of neighbourhoods through additional landscaping, kerb replacement, pram ramps, crossovers and improved footpaths
$35,000 for city entrance upgrades as a contribution towards the installation of entry statements. The aim of the entry statements is to create a sense of arrival to Whyalla that instils a positive image of the city.
Electric vehicle charging (City of Adelaide)
The Government will contribute $275,000 in 2017–18 to partnerships with the City of Adelaide, SA Power Networks and Mitsubishi to install five electric vehicle charging stations in the central business district and North Adelaide. This will also fund a further partnership with the City of Adelaide, Azzo Engineering, JetCharge, Parking Sense and Nilson to provide 10 parking spaces with charging facilities in U-Park car parks along with an innovative electronic method for reserving the spaces for electric vehicle use.
Laneway battery demonstration program (City of Adelaide)
An allocation of $500,000 over two years to partner with the City of Adelaide to support laneway businesses to install battery systems in order to manage energy costs and demonstrate energy storage technology.
To download the LGA State Budget 2017-18: What it means for local government and SA councils Analysis document - please click this link ECM_651821_v4_State Budget Analysis 2017-18(138 kb)
LGA Solutions for SA State Budget Submission
The LGA’s 2017-18 State Budget submission was framed as a partnership that will deliver real outcomes for South Australia.
This submission outlines more than 20 issues and priorities for South Australian councils and communities, including pensioner concessions, regional population growth, the waste levy, energy, the transition to the State’s new planning system, community housing, NRM collection, coastal protection, stormwater infrastructure and emergency services.
You can download a full copy of the LGA's submission here.
To directly link to the South Australian Governments State Budget page please click here: SAGovtStatebudget2017-18