A global credit rating agency has restored Western Australia’s AAA credit rating, noting that the state continues to outperform its national and global peers.
Key points:
- WA credit rating upgraded from AA + to “stable” AAA
- It follows a “strong economic reboot” in the state since mid-2020
- The Prime Minister says he highlights WA as a safe place to invest
It is the first time WA has received the highest rating in nine years.
In a report released today, S&P Global said the update was the result of “WA’s solid financial management history, a very high revenue economy and exceptional liquidity.”
Today’s update follows that the state has reported a $ 5.7 billion surplus in this year’s budget.
The S&P report said the improved rating also reflected WA’s budget exceeding its national and global counterparts, and the state’s GST agreement.
“A strong economic reboot in Western Australia since mid-2020 has driven broad-based revenue growth, including transfer fees and payroll taxes,” the report said.
Limits adjusted to public sector wages were also a contributing factor, although it was observed that there was pressure to increase wages.
The infrastructure pipeline helped raise the rating
The report also commented favorably on the government’s plans to spend $ 33.9 billion on infrastructure over the next four years, including its Metronet project.
Infrastructure projects such as Metronet helped the state achieve qualification. (Provided by: Public Transport Authority)
That was even though the agency hoped the government would not be able to spend all that money, given the pressures on the construction sector.
The potential sale of state-owned betting agency TAB was also positive in the eyes of analysts.
WA withdrew from its AAA credit rating in 2013 amid declining revenues and a state debt explosion.
At the time, it prompted then-Prime Minister Colin Barnett to take drastic measures to control the budget, including the privatization of public services.
The financial reputation of the “restored” state: Premier
In a statement, Prime Minister and Treasurer Mark McGowan pointed to the record of the previous liberal-national government.
Mark McGowan says the rating will allow the government to fund major projects for the state’s future. (ABC News: James Carmody)
“WA’s financial reputation has been restored after five years of hard work to repair the state’s finances,” he said.
“Restoring our AAA credit rating allows my government to provide stability to Western Australians and fund major projects for the future of the state.
“It will also ensure that the state pays less interest on its future loans and emphasizes that Western Australia is a safe investment destination.”
The credit rating of a state like WA directly affects the interest rates the government pays on the loans it has.
Posted 1 h 1 hour ago Monday 27 June 2022 at 06:35, last updated 17 minutes 17 minutes ago Monday 27 June 2022 at 07:44