Independent global ratings agencies, Moody’s and S&P Global, have both given the Marshall Liberal Government’s second State Budget a tick of approval, with the Government applauded for its ‘solid financial management’.
The agencies have publicly endorsed the Government’s sustainable budget program which includes a significant projected increase in net debt to fund a pipeline of productive, job-creating infrastructure, with Moody’s describing the borrowings as ‘manageable’.
The 2019-20 State Budget, handed down yesterday, delivered a massive $11.9 billion infrastructure investment program over four years from 2019-20 to 2022-23 – including new schools, hospital upgrades, safer roads and congestion-busting projects – to drive ongoing positive economic and jobs growth and create a steady stream of work across the construction and trades sector.
“While the infrastructure spending program will drive a large increase in the state’s debt burden to $21.3 billion by fiscal 2023, it comes from a low base of $13.5 billion to fiscal 2019 and is manageable within the current Aa1 rating,’’ Moody’s states.
“The rating outlook is stable.”
S&P said that it expects the SA budget (AA+) to “remain in operating surplus, despite expectations of a lower goods and services tax grant revenue pool and a reduction in the share allocated to the South Australian government.
“South Australia’s economy, solid financial management, and exceptional liquidity continue to underpin our rating on the state.”
Treasurer Rob Lucas welcomed the independent endorsement of the Government’s 2019-20 Budget.
“This is welcome validation by two independent ratings agencies of the Government’s views in relation to this as being a sustainable program,’’ said Mr Lucas.
“We made it clear we wouldn’t be turning off the tap in relation to investing in productive, job-creating infrastructure and we believe now is a good time to borrow given the relatively low cost of debt currently available.
“The agencies’ reports have backed that view.”
Mr Lucas said SA was no different to other states in increasing its total non-financial pubic sector (NFPS) net debt from 2018-19 to 2022-23, with Victoria reporting increases of 94%, Tasmania (139%) and South Australia (57%).