Australia’s AAA credit rating has been reaffirmed by Standard & Poor’s (S&P) in a strong expression of confidence in the 2019-20 Budget and the Coalition Government’s economic management.
In its report, S&P notes that Australia’s “economic growth prospects remain sound” and that our “public finances traditionally have been a credit strength for the rating”.
S&P states, “Better labour market conditions and commodity prices have helped to lift government revenues. The resulting boost to income and, in particular, company taxes, combined with expenditure restraint, have helped the central government forecast a return to surplus in 2020.” It further notes that “commodity prices and employment and wage trends over the next few years should continue to support revenue growth”.
Today’s report confirms Australia as one of only 10 countries which has a AAA credit rating with all three major ratings agencies.
In 2019-20, the Budget surplus will be $7.1 billion or 0.4 per cent of GDP. Over the forward estimates, surpluses will total $45 billion. Surpluses will continue to rise over the decade, reaching more than one per cent of GDP and eliminating Commonwealth net debt by 2030. All of this is being achieved without increasing taxes.
Under the Coalition Government’s economic plan, one million new jobs were delivered as promised and ahead of schedule. The unemployment rate has fallen to 4.9 per cent, its lowest level in more than seven years, and the proportion of working age Australians on welfare is at its lowest level in 30 years.
Our future is bright and the Government has committed to creating another 1.25 million new jobs created over the next five years, driven by our economic plan of lower taxes, more infrastructure and better skills.
The Government is also providing tax relief for families and small and medium-sized businesses. S&P notes, “Recently announced tax changes could provide some support to the household sector, if introduced.”
We must not, however, be complacent. As S&P states, “While our base case is for a soft landing, our ratings could come under pressure if house prices fall sharply and increase risks to fiscal accounts, real economic growth, and financial sector stability.”
Labor’s housing tax policies will do just this. They 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. Now is the worst possible time for Labor’s experiments with the housing market.
Our strong economic performance and the important reforms that we are undertaking would all be put at risk by a Shorten-led Labor Government and its high tax and spend agenda.