Stateâs 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”
S&P Global Ratings confirmed Queenslandâs AA+ credit rating â which it has held since 2009 â is at risk if further pressure to the budget is applied.
âAny additional spending, whether on new policies or cost blowouts, could weaken Queenslandâs budget and increase debt beyond our expectations,â analyst Anthony Walker said.
âThis could pressure our AA+ credit rating on Queensland, especially if additional spending is not offset by savings or revenue increases.â
The ratings agency did not indicate what the credit score could fall to.
Queenslandâs 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 treasurerâs stark warning Queenslandâs budget has blown out due to the former governmentâs âflagrant spendingâ.
âWe have inherited a weakened position, following the flagrant spending and debt settings of the previous government,â Treasurer David Janetzki will say during a keynote speech in Brisbane on Wednesday.
Janetzki said he was committed to stabilising the stateâs financial position and securing the AA+ credit rating however briefings have revealed this may not be tenable.
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âI didnât 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,â 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 wonât stabilise, Janetzki said.
During Janetzkiâs first meeting with S&P Global, he said the rating agency warned Queenslandâs existing financial position would âincrease pressure on key credit rating metrics, with deepening fiscal deficits translating into continuing strong growth in debt levelsâ.
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 âcalm and methodicalâ approach to the budget, Janetzki promised to get debt under control without cuts to the public service.
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