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SA budget plans for life without Holden

Money pit: The South Australian budget has predicted two years of economic pain tied in to Holden’s decision to quit Australian manufacturing.

Two years of slowdown to hit South Australia after Holden closure, budget says

20 Jun 2014

SOUTH Australia is preparing for a significant hit to payroll tax earnings as car-maker Holden starts to wind down in the lead up to the end of Australian manufacturing in late 2017.

The budget for the 2014-15 financial year, handed down by SA treasurer Tom Koutsantonis yesterday, takes the first steps towards planning for a future without Holden, starting with a $60 million jobs creation plan for the state.

According to the budget papers, the “Our Jobs Plan” initiative will provide “training and support for workers affected by the impending closure of GM Holden Ltd and affected motor vehicle component manufacturers, accelerate structural change in the economy to take advantage of new opportunities for growth, accelerate infrastructure provision, and support affected communities”.

The plan also recognises that SA parts makers will be equally affected by Toyota’s closure, which will take place alongside Holden’s in 2017.

Taking a slug, though, will be the state’s earnings from payroll tax as thousands of car industry workers lose their jobs.

“Payroll tax revenues have been softer than expected in the first half of 2014, with lower than expected payroll tax revenues in 2013–14 flowing through as a base effect in future years,” the budget papers say.

“From 2015–16, expectations for employment and wages growth have been revised down reflecting a more moderate growth outlook for employment given the decision by GM Holden Ltd and Toyota Motor Corporation to close their vehicle manufacturing operations in Australia.”

In light of that, the state has said Holden and Toyota’s closures are expected to reduce the pace of employment and economic growth in both the 2016-17 and 2017-18 financial years – although it did not say by how much.

It is not all grim news for South Australian taxpayers, though. In one sweeping reform, the Weatherill Labour government has said it would scrap its compulsory third-party insurance monopoly on vehicle insurance, potentially saving car owners about $140 a year as it allows private sector competitors to offer similar services.

The move gives the state access to a $1 billion cash reserve held by the state-run agency, and it has already committed to feeding $500 million into the state’s highways.

Almost $1.8 billion will pour into major roads projects within Adelaide and around the state’s arterial road network, but on the downside, renewing a driver’s licence becomes more expensive, and fines for traffic offences such as speeding will require South Australians to dig deeper into their pockets.

The government has also tipped $7.5 million from the public purse into a new $65 million motor racing facility proposed by convenience store operator Peregrine Corporation with the hope of attracting a V8 Supercars race to the venue each year.

SA’s austere budget is in response to claims the federal government has cut almost $900 million from its earnings base.

New South Wales’ Liberal government, meanwhile, said this week it was aiming for a surplus next financial year after the federal government’s decision to bring forward funding for Pacific Highway upgrades left it with a $200 million-plus deficit for the 2014-15 financial year.

Treasurer Andrew Constance announced plans for a new M9 orbital motorway that will ring western Sydney, and committed to spending more than $61 billion on road infrastructure over the next four years.

More than $220 million will be spent on rural roads projects, including a second bridge over the Clarence River at Grafton.

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