Queensland loses again as NSW takes credit rating gong
Jacob Shteyman |
Queensland has been dealt the first downgrade to its credit rating in 17 years, heaping more borrowing costs onto the state’s budget.
Adding to the ignominy for Treasurer David Janetzki, the loss of Queensland’s AA+ rating with credit agency S&P Global came on the same day NSW received an upgrade to its credit outlook.
Queensland’s budget performance would remain “very weak” over the next two to three years compared to peers with a similar rating, S&P said on Friday.
The state’s historically large infrastructure program ahead of the 2032 Olympics and forecast deficits contrasted with previous expectations for sound surpluses from 2028, it said in a report.
“Persistent inflation, rising interest rates, higher wages, and softening property market sentiment will likely weigh on Queensland’s budgetary outcomes and fiscal recovery over the next two to three years,” it said.
The state could also expect lower stamp duty revenues after property tax changes in the federal budget exacerbated a deepening housing downturn, S&P said.
The agency’s comments bolstered Mr Janetzki’s earlier barb, laying the blame for Queensland’s deteriorating finances with the federal treasurer, as well as the previous state Labor government’s “fiscal vandalism”.
“Jim Chalmers has cratered confidence in the property industry across our country,” Mr Janetzki told reporters near Toowoomba.
Queensland’s stamp duty revenue was $223 million lower in the first two months of the financial year, which Mr Janetzki said would result in around a billion dollars in reduced revenue in 2026/27.
“Then there’s Jim Chalmers’ cost shifting: NDIS, stranded Australians, natural disaster funding. So there is a clear range of problems that we have that the federal government has failed to appropriately fund,” he said.
In a separate broadside on his fellow banana bender, Dr Chalmers said Queensland had done very well out of the Commonwealth government under Labor.
Stamp duty had soared 58 per cent in Queensland in the past two years, he said, while GST payments from the federal government were almost $20 billion this year, up $2.6 billion compared to the year prior.
“State Treasurer David Janetzki is getting billions more in Commonwealth support, billions more in stamp duty and GST, and billions more in coal royalties,” Dr Chalmers said in a statement.
“At the same time, he has been softening Queenslanders up and telling them that a credit downgrade is ‘inevitable’.
“That’s a damning indictment on the Queensland government’s economic credibility after almost two years in charge of the coffers.
“A credit downgrade risks higher debt costs and less money for the services Queenslanders deserve.
“David Janetzki has some real questions to answer.”
Queensland’s June budget forecast a deficit of $6.2 billion in 2026/27, with gross debt projected to exceed $200 billion by 2028/29.
S&P slapped a stable outlook on Queensland’s AA rating.
It came shortly after the agency revised its outlook for NSW’s AA+ rating from negative to stable.
“The stable outlook reflects our view that New South Wales’ financial management will deliver cash operating surpluses and narrower deficits after capital accounts,” S&P said.
The Minns government’s “excellent financial management” was helping to contain expenditure growth, delivering sustained cash surpluses over the coming years, the agency said.
Population growth and household consumption may lead to stronger revenue growth in the 2026/27 financial year, offsetting softer stamp duty revenue.
AAP