Steelworks sale on track despite hit on state budget

The sale of an embattled steelworks is progressing better than the state government had hoped, despite the toll on the budget of propping up the business.

In the wake of the South Australian budget being handed down and the state being forced to absorb costs in keeping the Whyalla steelworks alive, Premier Peter Malinauskas is positive about the sale of the company.

"We're actively engaged already with potential buyers for the steelworks," he told ABC Radio National on Friday.

"In fact, that's going a little bit better than we had even hoped."

In February, the state government took dramatic action in Whyalla, rushing through legislation so it could place the city's steelworks into the hands of administrators KordaMentha because of the mounting debts of OneSteel's owners, GFG Alliance.

Since then, the SA government had ruled out taking an equity stake in the troubled steelworks but Mr Malinauskas said the federal government has not done the same.

The federal government is "open-minded" to an equity stake and the state government will work in conjunction with them, Mr Malinauskas said.

Supporting the administration of the Whyalla steelworks has taken a big hit on the state budget handed down on Thursday, with next year's surplus revised down from $449 million to $179 million.

Mr Malinauskas said that it is partly the result of the state having to fund the administration 50-50 with the federal government until a buyer is found.

"We're committed to sovereign steelmaking in this country and willing to bear the brunt of that hit," he said.

The budget allocated $650 million towards the $2.4 billion Whyalla "sovereign steel" package announced jointly with the federal government in February.

Treasurer Stephen Mullighan's state budget offered few sweeteners to residents, instead headlining with a $395 million "law and order" package to fund hundreds of extra police officers.

The law and order package includes $172 million across six years to recruit 326 officers, lifting numbers to 5000 by 2030/31.

More police security officers, civilianisation of administrative roles, and recruiting will deliver 630 extra police officers in frontline roles by 2031.

The centrepiece was not welcomed by the opposition who said the government, which is facing an election in March, is "out of money and out of ideas".

The budget also featured $73 million in already announced drought relief to relieve the escalating impact of near-record low rainfall across most of SA's farming regions in recent years.

Mr Malinauskas has not ruled out further drought assistance if the conditions continue despite the pressure on the budget.

"We're going to wait and see how the conditions unfold," he said.

"There's a bit of (rain) forecast this weekend, we hope it buckets down, but if it doesn't, the government will continue to engage with our farming community."