Independent credit rating agency S&P has issued a stark warning to state and territory governments to stop spending and warned that credit ratings would be at risk if spending continued at ‘pandemic stimulus’ spending levels.
Credit ratings are directly linked to interest costs on repaying state debt.
‘Federal and State governments rolled out a series of massive support packages to help keep businesses and households afloat,’ said S&P credit rating analyst Martin Foo.
Mr Foo went on to warn that S&P would closely monitor whether COVID-19 crisis budgets would be prolonged and rebranded as election budgets.
“This is exactly what Mr Malinauskas and Labor are promising with their reckless and unfunded $3 billion in election promises,” Treasurer Rob Lucas said.
“This is yet another example of the massive risk posed to our state’s economic recovery if Labor and Mr Malinauskas are put in charge of the state’s finances.
“Mr Malinauskas continues to refuse to say how he would pay for his $3 billion in election promises.
“Ultimately, it will be struggling families and businesses who will have to pay for Labor’s reckless spending through increased taxes, charges and levies, or other decisions which increase costs to them.
“Whether it’s a return to the massive hikes to ESL, water and power bills South Australian endured under the former Labor government, or whether they’ll introduce new taxes – households and businesses are in for a world of hip-pocket pain under Labor.”
The global pandemic has meant that all governments have incurred significant increases in government debt as they sought to save as many lives as possible and as many jobs and businesses as possible.
With interest rates rising, the attitude of credit rating agencies will be critical to SA’s credit rating and interest costs on repaying our debt.
Over the last four years, whilst other states have had their ratings reduced, the Marshall Liberal Government has actually achieved an improvement in our credit rating from AA to AA+.