Australia’s credit rating safe for now: Moody’s
One of the world’s major credit rating agencies does not believe it will need to cut Australia’s triple-A credit rating at this stage, but it hasn’t stopped federal politicians trawling over well-trodden arguments in the run-up to the May budget.
Moody’s Investors Service has told Reuters it expects no change to Australia’s top-tier rating and stable outlook due to the country’s robust institutional framework and stronger fiscal position than many of its peers.
“We expect Australia’s financial system and economy to absorb possible external and internal shocks,” associate managing director Marie Diron told the international news agency on Thursday.
The Organisation for Economic Co-operation and Development made similar comments in its recent Australia survey of Australia.
However, Moody’s warned there might be a risk of a rating downgrade if the government changed its commitment to reduce its persistent budget deficit.
Australia is one of only a dozen countries still rated triple-A by all three major credit rating agencies – Moody’s, Standard & Poor’s and Fitch Ratings.
S&P cut its outlook for Australia to negative last July, the first warning of a potential downgrade because of the splintered politics in Canberra.
Prime Minister Malcolm Turnbull used a speech in Sydney to attack those that use political sound bites and petty point scoring over facing up to the nation’s economic challenges.
“Playing on the fears and vulnerabilities of some Australians is reprehensible, it is not an economic policy and it inches us closer to losing our triple-A rating,” Turnbull told the Australian Financial Review Business Summit.
But Labor’s finance spokesman Jim Chalmers says if the prime minister was serious about locking in Australia’s credit rating it wouldn’t be giving a $50 billion tax cut to the biggest businesses, including $7 billion to the big four banks.
“The triple-A credit rating matters a great deal to Australia, if we lose it under the Liberals it will smash confidence, it will push mortgage repayments up,” Chalmers told Sky News.
Assistant Minister to the Prime Minister James McGrath conceded the government would probably get the blame if the AAA rating was lost.
“But the government is still cleaning up the mess from Labor,” McGrath told Sky News.