The SA Government has raised its compulsory third party (CTP) premiums by nearly 5% in its 2012/13 budget.

The average CTP premium will go from $489 to $512, bringing the revenue from CTP insurance from around $60 million up to $66 million in 2012/13 budget. This is expected to increase by another $2-$3 million a year until 2015/16.

The budget says state debt will rise to $8.76 billion in 2015/16 with a predicted deficit of $867 million in 2012/13 – the largest in the state's history.

Treasurer Jack Snelling says “tough choices” had to be made in the budget, but ratings agency Moody’s says it expects SA’s financial performance to further deteriorate over the next four years.

Revenue from insurance taxes was revised upwards in 2011/12, due mainly to the anticipated one-off payment of back-taxes related to some insurance policies.

Mr Snelling says that excluding the impacts of the back-payment of taxes, underlying growth in stamp duty on insurance premiums in 2012/13 “reflects industry expectations of growth of between 3% and 8% in domestic and commercial insurance premiums”.

Increases in general insurance, CTP and life insurance premiums mean that total SA insurance taxes will rise from a budgeted $405.4 million in 2012/13 and increase steadily to $447 million in 2015/16.

The Local Government Disaster Fund has allocated $7.3 million to assist councils with repairs to infrastructure following storms and flooding in the summer of 2010/11.