Australia's AAA credit rating has been reaffirmed by Fitch Ratings – another strong expression of confidence in the Coalition Government's economic management, following last month's reaffirmation from Standard & Poor's.
Australia remains one of only 10 countries with a AAA credit rating from all three major ratings agencies.
Fitch's report states that "Australia's fiscal position strengthened over the past year", noting "sustained spending restraint under the Government's budget repair strategy" and our "credible commitment to fiscal consolidation". The recently released Final Budget Outcome for 2017-18 was Australia's best in a decade. At just 0.6 per cent of GDP, the deficit was $19.3 billion less than expected when the budget was delivered in May 2017.
Fitch notes, the Government's commitment to returning the budget to balance by 2019-20 and surplus by 2020-21 and "forecasts that these targets will be achieved".
Fitch also notes our "effective policy making framework", highlighting Australia's 27 consecutive years of economic growth. The latest National Accounts show the Australian economy grew 3.4 per cent through the year in 2017-18 – faster than any G7 country and the fastest rate since the height of the mining boom in 2012. Fitch expects this strength to continue, updating its forecast for 2018 to 3.3 per cent.
Our strong economic management is delivering strong jobs growth, with the unemployment rate recently falling to five per cent – the lowest level since the height of the mining boom in 2012. Since the Coalition Government came to office in 2013, more than one million jobs have been created.
Today's announcement further boosts confidence in the economy, where business conditions are already well above historical averages and translating into a strong pipeline of investment and record job numbers.
Fitch expects "the ongoing house-price correction to remain gradual and orderly" due to "targeted macroprudential policies". Fitch warns, however, of the risks "a sharp house-price drop, for instance, from a larger pullback in investor demand" could have on the broader economy.
Labor's housing tax policy, including removing negative gearing and increasing capital gains tax, will do just this. It will damage Australia's housing market and destroy the equity that people hold in their homes, increasing the risk of financial instability and lower economic growth.
The Coalition Government's economic plan is working and Fitch's reaffirmation of our AAA credit rating is testament to that. Australia cannot risk a return to Labor's high tax and spend approach.