Ratings Agency Moody’s Reaffirms Queensland’s Aa1 Credit Rating

Ratings Agency Moody’s Reaffirms Queensland’s Aa1 Credit Rating

Queensland Treasurer Curtis Pitt

Queensland Holds Firm On Credit Rating

Victor P Taffa

Ratings Agency Moody’s has reaffirmed Queensland’s Aa1 credit rating with a forecast economic growth rate of 3 ½ % in 2015-16 that is leading the nation.

Treasurer Curtis Pitt said Moody’s has recognised the significant balance sheet reform initiatives undertaken by the Palaszczuk Government over the last two State Budgets.

“While Queensland’s fiscal performance has improved due to the discipline of our Government, the fact remains that we are still on a negative outlook that was applied after the LNP’s (Liberal National Party) first Budget under now Opposition Leader Tim Nicholls.” Treasurer Pitt said.

“Despite some tough domestic and international economic conditions, confidence and growth are rebounding in Queensland under our economic plan.”

“An additional 41,500 jobs have been created in Queensland since January 2015.”

 

Queensland Maintains Rating Outlook Against The Rest

This year Moody’s have downgraded

  • Western Australia,
  • Tasmania,
  • Northern Territory.

Rating outlook changed from stable to negative by Standard and Poor’s

  • New South Wales,
  • Victoria,
  • Australian Capital Territory.

“I am proud of the significant achievements of the Palaszczuk Government in reducing the debt to revenue ratio since coming to office, specifically in 2016-17 the ratio of 70.7 % is down 20 % from the peak of 90.7 % in 2012-13.” Treasurer Pitt said.

“This is 15 % lower than forecast in the 2014-15 Budget of the former LNP Newman Government.”

“As a government, we have a firm commitment to ongoing reductions in the Debt to Revenue ratio.”

“The positives in the fiscal discipline adopted by the Queensland Government and reductions to our debt to revenue ratio have resulted in it becoming far closer to New South Wales and Victoria than in 2012 when Queensland was placed on a negative outlook under the LNP.”

“Under Labor debt is lower, unemployment is lower and economic growth is higher than it was under the LNP.” Treasurer Pitt said.

Treasurer Pitt said the Moody’s Report does note the Government’s additional expenditure, to restore frontline services.

“This has been necessary in order to restore frontline services to Queenslanders which were put in an untenable position by the cuts to jobs and services under the LNP.” Treasurer Pitt said.

“Our initiatives are fully funded and factored into both our short-term and long-term plans, with 86 % of growth in FTE’s being in frontline roles.”

“Furthermore, we’ve introduced an additional fiscal principle for the management of growth in the public service to ensure overall growth in full–time equivalent employees does not exceed population growth.” Treasurer Pitt said.

“Moody’s also noted that the State’s economic prospects remain enhanced by growth in the agricultural, education and tourism sectors, which are benefitting from the lower Australian dollar and lower interest rates.”

“However, risks remain over the transition from high levels of mining investment to more service-oriented growth.” Treasurer Pitt said.

“The Palaszczuk Government is aware of these challenges of the transition from the mining boom and the positive recent economic reports from the National Australia Bank, Westpac, CCIQ and Sensis are testament to the fact that we are up to the challenge.”

Moody’s recognises that Queensland is unique among Australian states with substantial financial holdings that are more than sufficient to fully fund its superannuation obligations.

The report also notes that the funds, managed by the Queensland Investment Corporation, amount to AUD36.3 Billion, including AUD28.9 Billion to offset superannuation liabilities, putting their position in surplus.

Queensland maintains regular contact with ratings agencies throughout the year, with an annual review meeting typically taking place after the release of the Budget. The most recent rating outcomes are:

  • November 2015 – Standard & Poor’s (now S&P Global) affirmed AA+ (stable) rating.
  • 31 August 2016 – Fitch confirmed AA (stable) rating.
  • 14 October 2016 – Moody’s affirmed Aa1 (negative), noting negative outlook in place since November 2012.