South Australia has taken a $1.3 billion GST hit from the federal budget with Treasurer Rob Lucas warning the write-down in revenue presents further challenges to the state's already stretched finances.
The GST fall for 2020/21 is even bigger than that forecast by the state government in its June economic update.
"While not unexpected, this massive GST write-down obviously presents further challenges as we prepare to deliver our own budget next month," Mr Lucas said.
"Compared with estimates in our first budget GST revenue has declined by almost $5.2 billion over the four years to 2021/22.
"Such a significant reduction in forecast revenues, together with all the other impacts of the global COVID-19 pandemic, clearly puts further pressure on the state budget."
But the treasurer said the state government would not hike taxes and remained committed to doing everything it could to save as many jobs as possible, even if it meant significant increases in the deficit and state debt.
"That's an inevitable consequence of COVID-19 and the people of South Australia will want us to do whatever we can in terms of spending to manage the transition," Mr Lucas said.
He also flagged continued infrastructure spending in the SA budget with an emphasis on small to medium-sized projects that can be completed within the next two years.
The treasurer welcomed wage subsidies outlined in the federal budget, the fast-tracking of income tax cuts and the supplementary payments for pensioners.
"This is a significant jobs budget that will go a long way in helping more South Australians get back into work," he said.
But opposition treasury spokesman Stephen Mullighan said the federal government had short-changed SA on infrastructure spending.
If the state had been granted its population share of infrastructure investment it would have received an extra $580 million over four years.
"Right now, we have the worst unemployment rate in the nation, and thousands of jobs are going begging in SA as our state misses out on federal funding for critical projects," Mr Mullighan said.
The Civil Contractors Federation also raised concerns with funding for road projects, including SA's modest $625 million share of the $10 billion national spend.
Chief executive Phil Sutherland said the cash would not make much of a dent in SA's road maintenance backlog and half of the SA projects to get funding were two, three or more years away.
