Western Australia has lost its AAA rating from Standard & Poor’s.
The credit agency made the announcement this afternoon, saying the state does not have the “political will” to reduce its debt.
Standard & Poor’s said WA lost its prized top-tier long-term issuer credit rating as, despite taking steps to improve its ledgers, “there is likely to be slippage.”
From the statement:
The lowering of WA’s long-term issuer credit rating reflects our view that while the fiscal action plan announced in WA’s fiscal 2014 budget improves the State’s path, in our view there is likely to be slippage, reflecting our view of limited political will, as evidenced by the early revision of some budget revenue and expenditure measures.
In a budget released in August the Liberal state government said its debt was expected reach $28.4 billion by 2016-17, after previously pledging to bring it down.
Since then unpopular revenue raising measures which had been hoped to boost coffers have been scraped. On Tuesday a plan to charge 457 visa holders with children in state schools a $4000 fee was watered down.
It was the second backtrack, after it also scrapped a plan to halve the tariff rate for households that feed in surplus solar power to the grid, which was projected to claw back $51 million.
“The ratings are constrained by our view of moderate budgetary flexibility and budgetary performance.
“WA’s debt burden is now at the high end of the domestic peer group, and in our view is likely to continue rising.”
The state’s short-term issuer credit rating of A-1+ has been affirmed.
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