Moody’s warns Australia on budget and triple-A rating
The Turnbull government’s preference for spending cuts over policies aimed at revenue raising will make balancing the budget difficult, according to global ratings agency Moody’s, which warned that government debt would continue to climb and put pressure on the nation’s AAA-rating.
The warning comes after NAB and JPMorgan both cautioned this week that Australia’s AAA credit rating could be in jeopardy unless the government maintains fiscal restraint in the upcoming federal budget.
Moody’s senior vice president Marie Diron said Treasurer Scott Morrison’s focus on curbing spending to the exclusion of revenue raising measures meant the government’s target of a balanced budget by 2021 would make it unlikely to achieve.
“Given previous difficulties in reducing welfare benefits, actual spending cuts may be modest,” Ms Diron said.
“Moreover, Mr Morrison’s announcement excluded measures to raise revenues. Without such measures, limited spending cuts are unlikely to meaningfully advance the government’s aim of balanced finances,” she said.
This would see government debt continue to climb, which would be a “credit negative” for the country, Ms Diron said.
Australia’s government debt has ballooned to 35.1 per cent of GDP last year, up from just 11.6 per cent a decade earlier. Moody’s expects debt to increase to 38 per cent of GDP in the 2018 financial year.
Opposition treasury spokesman Chris Bowen seized on the Moody’s analysis as evidence that Labor was best placed to preserve the nation’s AAA credit rating.
“Tough decisions are necessary on revenue and spending. Labor has been leading the debate … on high income superannuation, on tobacco, on negative gearing, on capital gains tax,” Mr Bowen said.
and who are you moodys?
a ratings agency..so powerful..to control the ability to issue or deny AAA ratings..they want taxes raised..will the government obey?
or will they risk the AAA?
lets see who really has the power..
“Australia’s government debt has ballooned to 35.1 per cent of GDP last year, up from just 11.6 per cent a decade earlier. Moody’s expects debt to increase to 38 per cent of GDP in the 2018 financial year.”