South Australia Budget 2018–19 — What property investors need to know

The South Australia budget has been handed down and there are a few things that investors should keep an eye out for that could raise the value of their portfolios, as well as make buying property easier through land tax reform.

Delivered on Tuesday, the South Australia budget for the 2018–19 financial year has some bits and pieces that could see help improve the profitability of their portfolios, but nothing that directly targets investors.

The core takeaway for investors is a reform to land tax, while indirect measure that could see an impact to property include funding for tourism, industry, innovation and workplace sectors, infrastructure, roads and transport, health, education, energy, cost reduction and regional areas.

Land tax reform

The largest impact for property investors is on land tax reform, which is to bring in a lower marginal tax rate from 1 July 2020 and will see the tax-free threshold for land tax increased to $450,000, up from its current $369,000.

Additionally, the marginal tax rate for the value of land tax ownerships between the current threshold of $1.2 million and $5 million will also see a reduction from 3.7 per cent down to 2.9 per cent, which the budget papers note will reduce land tax bills and make South Australia’s land tax regime more competitive with other states.

“Land tax thresholds will continue to be increased each year in line with average increases in site values as determined by the Valuer-General to limit the impact of bracket creep,” the budget papers stated.

“It is estimated that this measure will benefit over 50,000 ownerships including around 8,000 that will no longer have a land tax liability.”

Tourism

From financial year 2018–19 for the next four years, the South Australia government plans to spend $50 million on tourism:

• $40 million over four years to event bid funding and conventions; and

• $10 million in 2019 to 2020 for marketing South Australia domestically and internationally.

Industry

From financial year 2018–19 for the next ten years, the South Australia government plans to spend $277.9 million on industry assistance:

• $100 million over four years to the economic and business growth fund for supporting South Australian industry and business growth;

• $27.9 million over four years to the research, commercialisation and start-up fund to support South Australian business collaboration with researchers and universities; and

• $150 million over 10 years to the regional growth fund to support regional South Australia and its communities.

Innovation

From financial year 2018–19 for the next four years, the South Australia government plans to spend $45.3 million on innovation:

• $43.9 million over two years to the creation of an Innovation and Commercialisation Precinct;

• $1 million over four years to a scholarship program for post-graduate research in finance and related sectors; and

• $400,000 over four years to a pilot program that will trial a new Visa category for start-ups to be based in South Australia.

Workforce

From financial year 2018–19 for the next five years, the South Australia government plans to spend $318.074 million on the workforce:

• $202.6 million over four years to 20,800 new apprenticeships and traineeships;

• $109.8 million over five years to supporting TAFE SA;

• $3.9 million over four years to advertising for apprenticeship and additional vocational education and training;

• $1.5 million over four years to support exporting for South Australian defence businesses; and

• $274,000 over two years to expedite drivers’ licenses for first and second year apprentices.

Infrastructure

From financial year 2018–19 for the next four years, the South Australia government plans to spend over $11.3 billion on infrastructure:

• $2.3 billion to roads infrastructure;

• $1.3 billion to education facilitites;

• $1.2 billion to water infrastructure;

• $1 billion to public transport;

• $854 million to health facilitites;

• $454 to residential housing;

• $389 million to the SA Water – Zero Net Electricity Cost 2020 project;

• $439 million over four years to new investments in community infrastructure;

• $315 million over four years to the regional roads and infrastructure fund;

• $20 million to GlobeLink over four years, which is planned to help improve freight export infrastructure; and

• $8.2 million over four years to Infrastructure SA.

Roads and transport

From financial year 2018–19 for the next five years, the South Australia government plans to spend over $858.7 million on roads:

• $395 million over four years in commonwealth funding to Regency Road to Pym Street and Joy Baluch AM Bridge;

• $305 million over five years to duplicate Main South Road from Seaford to Aldinga;

• $88.5 million over three years to construct an overpass at the intersection of Copper Coast Highway and Augusta Highway at Port Wakefield and the widening of the August Highway to four lanes through Port Wakefield;

• $16.5 million over four years to upgrading the safety and operation of the intersection of Main Road and Russell Street at Mitcham Hills, reducing congestion at the intersection of Shepherds Hill Road, Brighton Parade and Waite Street, upgrading lighting along the road corridor and upgrading Coromandel Parade and parking at the Blackwood Centre;

• $15 million to safety screens on 10 bridges along the Southern Expressway;

• $14.6 million over two years to the Penola Bypass;

• $5.5 million to undertake a business case on the delivery of the North-South Corridor between the River Torrens and Anzac Highway and Anzac Highway and Tonsley Boulevard;

• $5.2 million to upgrading the Candy/Lander and Main South Road intersection;

• $5 million over two years to upgrading the Nairne Intersection;

• $3.4 million over two years to upgrading Graves Street and Newton Road;

• $2.7 million over two years to upgrading Turner Street and OG Road;

• $1.3 million to upgrade Fosters Road;

• $500,000 to upgrading Lyndoch Road;

• $343,000 to upgrade the Black Top Road and Skyline Drive intersection; and 

• $200,000 to upgrading the Reynella exit of the Southern Expressway.

The South Australia government also plans to spend over $68.7 million over the next four years on public transport:

• $37 million over two years to constructing a right-hand turn for trams on North Terrace;

• $18.5 million to O-Bahn park ‘n’ ride carparks;

• $11.7 million to the City South tram line renewal;

• $679,000 over four years to the Wynn Vale Drive Bus Service;

• $600,000 to the Adelaide Tram; and

• $250,000 to consultations and studies of increasing access to the Tonsley train line.

Health

From financial year 2018–19 for the next 10 years, the South Australia government plans to spend over $1.2 billion on health:

• $800 million over five years to the health system;

• $140 million over 10 years to addressing the backlog of capital works requirements in country hospitals and health infrastructure;

• $52 million over four years to Royal Adelaide Hospital;

• $45 million over four years to reduce waiting lists;

• $30.7 million over three years to an immunisation program for Meningococcal B for babies through to adolescents;

• $23 million over four years to Modbury Hospital; 

• $20 million over four years to developing and implementing a rural health workforce strategy;

• $16 million over four years to a commission on excellence and innovation in health; 

• $16 million over four years to extend palliative care community outreach services;

• $14.5 million over four years to Noarlunga Hospital;

• $13.3 million over four years to local health network governing boards; 

• $12 million over four years to country cancer services; and

• $9.9 million over four years to The Queen Elizabeth Hospital.

Education

From financial year 2018–19 for the next six years, the South Australia government plans to spend $1.13535 billion on education:

• $692 million over six years to upgrade public and high schools;

• $261 million for two new schools, located in metropolitan northern and southern suburbs;

• $100 million for a new secondary school in Whyalla;

• $27.7 million over four years to move year 7 students into high school;

• $20.9 million over four years to improve literacy and numeracy;

• $15.5 million to address bullying, truancy and substance abuse;

• $12.2 million focus on teaching a second language;

• $5 million over two years to at least one new technical college;

• $800,000 over four years to make breakfast programs available to schools; and

• $250,000 to review school bus services in regional areas

Energy

From financial year 2018–19 for the next four years, the South Australia government plans to spend $185 million on energy:

• $100 million over four years to the home battery scheme;

• $50 million in grants over four years to the grid scale storage fund;

• $30 million over three years to demand response, aggregation and integration of distributed generation;

• $4 million to assistance for expediting early energy-related works; and 

• $1 million to an independent inquiry into water pricing in South Australia.

• $8.7 million over four years to regional hospitals which include:

o The Androssan Hospital;

o Mount Barker Hospital;

o Murray Bridge Soldiers’ Memorial Hospital; and

o Yorketown Hospital.

• $8.5 million over three years to a new aged care facility at Strathalbyn;

• $7.5 million over three years to reduce prescription drug abuse through a real-time monitoring of prescription medicine;

• $5.3 million over four years to a new Women’s and Children’s Hospital;

• $3.3 million over three years to a paediatric eating disorder service;

• $2.6 million over four years to an adult safeguarding unit;

• $2.5 million over four years to suicide prevention; 

• $2.1 million over two years to Mount Gambier renal dialysis services;

• $1 million over four years to the healthy towns initiative; and

• $160,000 over two years to an outpatient addition rehabilitation program in the Riverland.

Cost reduction

From financial year 2018–19 for the next four years, the South Australia government plans to spend $410.28 million on reducing costs:

• $360 million over four years to emergency services levy remissions;

• $29.7 million over four years to $100 sports vouchers for families with primary school aged children;

• $15.4 million to public transport fare reductions;

• $4.9 million to volunteer screening checks as a result of abolishing the $59.40 fee for screenings those who are working with children and the vulnerable.

Regional areas

From financial year 2018–19 for the next 10 years, the South Australia government plans to spend over $687.2 million on regional areas:

• $315 over four years to the regional roads and infrastructure fund;

• $150 million over 10 years to the regional growth fund;

• $192 million over 10 years to country health services;

• $12 million over four years to Regional Development Australia for economic development projects;

• $10 million over three years to address mobile black spots state-wide; 

• $5 million over two years to upgrading country fire service stations; and

• $3.2 million to environmental remediation activities at Bird Lake in Port Augusta.

Source Smart Property Investment