- WA rated AA+ by Standard & Poor’s credit rating agency
Ratings downgrade highlights challenges facing the State’s finances including the dramatic fall in GST revenue and strong demand for services due to unprecedented population growth
2013-14 State Budget framed with these challenges in mind and provides clear direction for a return to a triple A rating with the implementation of the Fiscal Action Plan
Treasurer Troy Buswell said today’s decision by international credit ratings agency Standard and Poor’s to downgrade Western Australia’s credit rating was disappointing but underlined the challenging economic times faced by the State.
“The decision to downgrade Western Australia’s credit rating from triple A to AA+ reinforces the necessity of implementing the Government’s Fiscal Action Plan,” Mr Buswell said.
“This reflects what we have been saying for some time about the need for structural change to carry WA into the future.
“While the Government continues to face strong opposition in attempting to implement the Fiscal Action Plan measures, this news today sends a strong message to both the government sector and the community that we cannot continue to live beyond our means and must address the structural imbalance in WA’s Budget.
“This requires us all to tighten our belts, a fact seemingly lost on many including the Opposition, who continually state we are not spending enough on government services and infrastructure.”
The Treasurer said this decision reflected the challenging conditions facing the State’s finances that the Government had been talking about for some time.
“As we have often said, WA’s rapidly declining GST revenue is having a significant impact on the Budget,” he said.
“This is exacerbated by the slowing growth in taxation revenue as our economy makes the transition from the construction phase of major resource projects to the production and export phase.
“This State also has experienced strong population growth of about 1,400 people a week, which is driving unprecedented demand for government services and infrastructure.”
Mr Buswell said the 2013-14 State Budget was framed with these challenges in mind and included a $6.7billion Fiscal Action Plan comprising new revenue measures, public sector workforce reforms, targeted program savings and program evaluation as well as re-prioritisation of the State’s Asset Investment Program.
“The Fiscal Action Plan demonstrates the Government’s commitment to ensuring the State’s finances remain on a sustainable footing by limiting growth in net debt to affordable levels,” the Treasurer said.
“Delivering the measures contained in the plan will be difficult and they will take time to fully realise.
“However, combined with a new suite of robust and transparent financial targets contained in the 2013-14 Budget, the plan will assist us in regaining WA’s triple A rating.”
Mr Buswell said despite the decision by Standard & Poor’s, the outlook for the WA economy remained strong.
The economy is forecast to grow by 3.25 per cent in 2013-14, which is the highest rate of growth forecast for any State this year, and above the 2.5 per cent forecast for the whole Australian economy.
Western Australia is rated triple A by Moody’s Investor Services
Ratings downgrade highlights the challenges facing the State’s finances including the dramatic fall in GST revenue, general revenue volatility due to the State’s reliance on resource royalties and strong demand for government services and infrastructure because of unprecedented population growth
Treasurer’s office - 6552 6400