The South Australian budget will return to surplus on schedule thanks to a big jump in GST returns, the strong property market and higher gambling taxes.
Treasurer Stephen Mullighan says the state will get an extra $419 million in GST during the current financial year, and an estimated $1.7 billion more across the forward estimates.
He says state taxation measures, including stamp duties on property sales, will bring in $192m more in 2022/23, and a further $337m over the next three years.
He says that will combine to put the budget back in the black in 2022/23 and maintain surpluses across the forward estimates, despite rising costs and extra spending.
"The mid-year budget review continues the government's efforts to strengthen the state's finances after COVID, with a return to surplus, lower debt and improved budget metrics forecast," Mr Mullighan said on Friday.
"Additional revenue forecasts since the State Budget have allowed the government to meet the challenge of rising interest costs, higher inflation, and the need to continue investing in frontline services."
The budget review has revealed a $244m increase in interest charges on the state's borrowings this year, with rising rates likely to add an extra $801m by 2026.
That will cut the forecast surpluses in coming years.
The government is now expecting a $206m surplus in 2022/23, down from the $233m forecast in June with the surplus rising to $649m by 2025/26, down from the previous projection of $643m.
The state's net debt will also continue to rise to hit $24.6 billion by 2025/26.
Mr Mullighan said the government was confident the budget could cope with allocating extra funds to key areas and the increased cost of major projects, including Adelaide's north-south road corridor and construction of a new Women's and Children's Hospital.
Extra spending included in Friday's budget review included the previously announced $51.6m assistance package for those impacted by flooding along the Murray River, $85m to the health sector, $125m to upgrade freight routes, $26.7m for child protection services and $52.8m to tourism.
Overall, the SA economy was forecast to grow by 5.1 per cent in 2021/22 with growth trimmed to 2.25 per cent for the current financial year.
Employment growth is set to remain flat at around one per cent across the next four years.
The budget will return a deficit of $829m for 2021/22, but that is down from the previous forecast of $1.7b.
The government's budget review came as the latest briefing from the University of Adelaide's SA Centre for Economic Studies also pointed to a slowing in growth in the coming year.
"Growth prospects going forward are held back by the fact that the economy is now close to full employment," centre Executive Director Jim Hancock said.
"It is likely that growth will slow in 2023 in response to higher real interest rates and slower growth in the national and international economies."
But Mr Hancock said there were also positive signs for SA with farmers set for a bumper harvest, labour market conditions remaining strong and strong recent growth in business investment.
Opposition treasury spokesman Matt Cowdrey said the state government was relying on cost shifting and project delays to balance the books.
"We have a buy later, pay later premier and it's South Australians who are going to pay the price," he said.
"(Premier) Peter Malinauskas made some lofty promises during the election, but he shouldn't be bumping major infrastructure projects just because he's struggling to pay for them."
