Ratings agency Moody's has announced that it will lift Western Australia’s credit rating from Aa2 to Aa1, with the McGowan government's strong control over spending highlighted as a key reason.
Ratings agency Moody's has announced that it will lift Western Australia’s credit rating from Aa2 to Aa1, with the McGowan government's strong control over spending highlighted as a key reason.
In a statement, the government said this increase would be the most significant improvement in WA’s credit rating since 2012.
“In revising its assessment of WA's credit rating, Moody's today praised the 'strong fiscal resolve of the state government following the March 2017 election' and emphasised the McGowan government's 'continued strong control over spending, alleviating pressure on the state's rising debt burden' as a key reason for its decision,” it said.
Moody's noted WA's projected budget surpluses would be underpinned by tight control over recurrent expenditure, including the continued application of the government's wages policy.
Moody's downgraded the state's Aaa rating in 2014, citing the 'weak policy response to the deteriorating financial and debt position' of the Barnett government.
It further revised down the state's credit rating in 2016.
Treasurer Ben Wyatt welcomed the credit rating upgrade.
"Today's announcement from Moody's is the clearest possible endorsement of the McGowan government's plan to restore the finances of the state,” Mr Wyatt said.
"Our long-term goal remains the return of the state's Aaa credit rating, but today we have seen proof that the hard work is paying off and that we are heading in the right direction."
The announcement follows S&P Global’s decision in October last year to improve the outlook on its AA+ rating for WA from ‘negative’ to ‘stable’.
The Chamber of Commerce and Industry of WA congratulated the state government for its commitment to rein-in expenditure growth.
“Today’s credit rating announcement builds on last month’s release of the state budget, which confirmed that spending restraint,” it said.
The chamber said the spending restraint was a key reason behind WA’s first operating surplus in five years of $553 million and a $6.8 billion reduction in peak net debt since the government’s first budget.
”Interest payments on debt will peak at $1.1 billion next year, which means it is crucial that responsible fiscal management continues,” it said.
State opposition leader Mike Nahan said a credit upgrade for WA was inevitable in the wake of the Morrison federal government’s GST reforms.
“This upgrade has happened in spite of McGowan government policies that have sent the domestic economy into recession," he said.
