On Monday of last week Standard & Poor’s lowered Queensland’s credit rating from AAA to AA+, causing a stir in the media and the electorate. The rating downgrade has resulted in a 0.4% increase in the interest rate Queensland pays on its state debt, approximately $200M this year and increasing to $300M the following year.
This week credit rating agency Moody’s weighed in and announced they will also review Queensland’s credit rating for a possible downgrade. The story attracted over 130 comments so far on the Courier Mail website.
If Queensland was a company, we’d have to stop trading because we would be insolvent – BANKRUPT.
- Bonny of Brisbane, Comment #1
Although Queensland now has the lowest rating of any state in Australia, the S&P report does not suggest bankruptcy is on the cards.
The stable rating outlook on Queensland reflects Standard & Poor’s expectation that the state will manage its financials within the ‘AA+’ rating category.
Some say that the downgrade is an inevitable outcome of the global financial crisis.
Blaming Bligh or the ALP for the WORLD FISCAL PROBLEMS is as pointless, immature and illogical as blaming the Mayor of Innisfail for Cyclone Larry.
- Greg of COORPAROO, QLD, Comment #11
In fact that is one of the main themes of Premier Bligh’s election campaign, that the global crisis is responsible for the Queensland economic downturn (an economy that enjoyed the benefits of the global mining boom) and that experienced hands are needed to guide us through these events. Not everyone agrees with that view.
The economic crisis is going to be blamed for it, but the fact is that this government made no preparations for a downturn in commodity exports. They saved none of the “boom period” money. They’ve had a chance and have failed….
- Carl of Brisbane, Comment #18
S&P has left the door open to Queensland returning to a AAA rating.
Upward pressure could be placed on the rating if the government introduces significant measures to strengthen its budgetary performance, it reprioritizes its capital program, or if the state’s economic prospects improves, thus boosting operating revenues.
However the Treasurer Andrew Fraser refuses to cut project spending to appease the credit agency.
Mr Fraser suggested the Government would have to scrap projects such as the Queensland Children’s Hospital, the Gateway Bridge duplication, the Northern Busway and other hospital rebuilding around the state to appease S&P and maintain its AAA rating.
“Supporting those jobs, supporting the employment that the capital program creates, supporting growth is what’s important here,” he said.
Although Queensland now has the lowest credit rating of any state in Australia, they are also the first to release new budget figures since the economic crisis began. The expectation of the government is that all state will be subject to credit rating revisions once they too release new budget figures.
Some Courier Mail readers ask whether these credit ratings should even be considered by the voters at this election.
Why should anyone care what Moody’s and Standard and Poor say ? These are the same companies that recommended sub-prime mortgages as AAA+ investments.
- Ian Semmel of Maleny, Comment #33
Aren’t S&P and Moody’s part to blame for the ‘Global Financial Crisis’? The ratings agencies gave the credit derivatives AAA ratings without any examination of the underlying value of the securities. Are we now to believe them when they ‘downgrade’ Queensland?
- Gina of Taringa, Comment #34
Though the credit rating announcements may weaken the ALP’s position in the campaign so far, our own reader poll has not shown a move of voters towards the LNP. While the ALP stands at just 29% the LNP has only 18% so far. The Greens and undecides share the lion’s share of the votes so far with 24% each, suggesting many voters are giving very careful consideration throughout the campaign and will either make a decision on polling day or have already decided that an economy based on more sustainable initiatives is better for Queensland in the long term.
