SOUTH Australian Premier Jay Weatherill rules out tax hikes to cover a shortfall in revenue from BHP Billiton shelving $30 billion Olympic Dam plans.

Mr Weatherill made the pledge during a live chat on adelaidenow yesterday, during which he also rejected suggestions the delay would affect the cost of a new $2.8 billion Royal Adelaide Hospital.

Asked during the chat if state taxes or fees could be expected to rise as a result of the $30 billion mine expansion's shelving, Mr Weatherill replied: "No."

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SA will miss out on millions of dollars in royalties as a result of the Olympic Dam delay but Mr Weatherill told The Advertiser they were not going to be a pot of gold and weren't expected to flow until well after the current four-year Budget cycle.

"They didn't provide the windfall people might have expected," he said.

Asked why he said taxes would not rise, Mr Weatherill said the main revenue stream from the project was always going to be the added benefits of extra payroll tax and other stamp duties which would flow from increased employment and other economic growth riding on the back of the project.

However, these revenues would pick up in the future as the current economic slowdown petered out.

"Concerns about the revenue effect are overstated because the lion's share of the royalties were not going to occur for some substantial time," he said.

"No substantial revenue growth from royalties had been factored into the state Budget."

Olympic Dam now contributes about $60 million a year in state mining royalties, which had been projected to rise to $250 million annually when the expansion would have been in full operation - sometime in the 2020s.

However, this would not have been an absolute gain because South Australia would have lost some funds as part of the complex federal-state financial arrangements.

At present, the state's only significant options for tax increases are payroll tax, stamp duties, gambling taxes and motor registration fees.

Speaking to The Advertiser yesterday, Mr Weatherill reaffirmed the seven key elements of his Government's plan to build the state's economy.

They are:

* having an advanced manufacturing sector

* a broad base of mines and resources

* expanding the state's food-production systems

* affordable housing

* providing for early childhood development

* building a vibrant city

* ensuring safe neighbourhoods

"Premium foods are obviously very well sought-after in the growing regions of the world to our north," Mr Weatherill said.

"We have seen very exciting discoveries just in the last week in Santos with their shale gas discoveries in the Cooper Basin, BP are drilling in the gulf for gas and oil.

"So there is a very broad base just in the resources sector, but we are concentrating on our manufacturing sector to expand that to be an advanced manufacturing sector."

Mr Weatherill said while answering readers' questions on adelaidenow that growing advanced manufacturing involved building a highly-skilled work force, building on defence and clean tech industries, plus new research and development.

Opposition Leader Isobel Redmond, who also blogged live on adelaidenow yesterday, said the Government had ignored the manufacturing and agricultural sectors.

"Small business, which has been the backbone of this economy, is being squeezed by a government which has created the highest taxing state in Australia," she said.

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On her economic blueprint, Ms Redmond said clearly there was a need to rein in government waste.

"This Government continues to spend unbelievable amounts on consultants and media/spin doctors," she said.

"They also waste money by doing things such as cancelling the new prison at Murray Bridge ($10 million) and cancelling the Newport Quays contract."

She said government had to be made more efficient in delivering services.

Originally published as BHP cancels Olympic Dam expansion