State’s credit rating at risk for first time in 15 years

Queensland’s credit rating could be downgraded as a result of cost blowouts as the government blames its predecessors for “flagrant spending”

Dec 04, 2024, updated Dec 04, 2024
Queensland Treasurer David Janetzki. Photo: Russell Freeman/AAP.
Queensland Treasurer David Janetzki. Photo: Russell Freeman/AAP.

S&P Global Ratings confirmed Queensland’s AA+ credit rating – which it has held since 2009 – is at risk if further pressure to the budget is applied.

“Any additional spending, whether on new policies or cost blowouts, could weaken Queensland’s budget and increase debt beyond our expectations,” analyst Anthony Walker said.

“This could pressure our AA+ credit rating on Queensland, especially if additional spending is not offset by savings or revenue increases.”

The ratings agency did not indicate what the credit score could fall to.

Queensland’s credit rating sits at equal second with South Australia at AA+ with Western Australia on top at AAA.

NSW, Tasmania and the ACT have an AA+/Negative rating while Victoria is AA/Stable.

The forecast follows the treasurer’s stark warning Queensland’s budget has blown out due to the former government’s “flagrant spending”.

“We have inherited a weakened position, following the flagrant spending and debt settings of the previous government,” Treasurer David Janetzki will say during a keynote speech in Brisbane on Wednesday.

Janetzki said he was committed to stabilising the state’s financial position and securing the AA+ credit rating however briefings have revealed this may not be tenable.

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“I didn’t want to be a treasurer who has a ratings downgrade on my watch … however, knowing what we know now, I am in an unenviable position where that could well be the case,” Janetzki said.

Queensland Treasury warned the Liberal National government in the first days of taking office that the state was facing a heightened risk of credit rating downgrades and a growing debt burden that won’t stabilise, Janetzki said.

During Janetzki’s first meeting with S&P Global, he said the rating agency warned Queensland’s existing financial position would “increase pressure on key credit rating metrics, with deepening fiscal deficits translating into continuing strong growth in debt levels”.

Janetzki blamed the declining coal royalty income is set to fall from $10 billion in 2023-24 to $6 billion in 2024-25, GST shortfall and inherited project cost blowouts for the added pressure on the budget and likelihood of a credit rating downgrade.

But with a “calm and methodical” approach to the budget, Janetzki promised to get debt under control without cuts to the public service.

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