30 August 2019

Tick for ACT economy as AAA rating confirmed for another year

| Ian Bushnell
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AAA credit rating

The ACT’s fiscal position is expected to remain strong and its growth in debt to be manageable.

International ratings agency Standard & Poor’s has confirmed the ACT’s AAA credit rating for another year, attributing its decision to the Territory’s robust financial management, high-income economy, and exceptional level of liquidity.

S&P said the ACT was budgeting for a relatively large infrastructure program over the next few years, but it expected its fiscal position to remain strong and its growth in debt to be manageable.

“The stable outlook reflects our expectation that the ACT Government will continue to deliver on its priorities broadly within budget, while maintaining a high level of liquidity and containing its debt burden at a manageable level,” it said.

But S&P said it might reappraise the situation if the ACT’s deficits turn out to be much larger or more prolonged than expected, resulting in a steeper rise in its debt burden.

Despite headwinds, the local economy remained strong, it said.

“The ACT maintains a high level of cash available to service debt, and its economy is very wealthy compared with its peers,” S&P said.

Chief Minister Andrew Barr said the ACT’s rating is the highest awarded by Standard & Poor’s, and recognises the Territory’s very strong fiscal position following the release of the 2019-20 ACT Budget.

The ACT was one of only three states or territories in Australia – and among only a handful of jurisdictions around the world – to hold a AAA rating.

“Through the 2019-20 Budget, the ACT Government is investing to build the hospitals, schools and transport infrastructure Canberra will need in the 2020s and beyond,” Mr Barr said.

“We are getting on with these important investments now to ensure we can deliver the services Canberrans expect as our city grows. This will allow the ACT Government to hire more nurses and more teachers, keep our assets in public hands and plan for our future in a fiscally responsible way.”

“In the coming weeks, the ACT Government will release a comprehensive Infrastructure Plan, outlining the investments required to cater for a growing population in both our town centres and our suburbs.”‘

S&P expects the ACT’s fiscal position to weaken slightly during the next two years as the Government ramps up its infrastructure spending, and says delivering this infrastructure program could be a challenge, given capacity constraints in the engineering and construction industry.

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HiddenDragon6:14 pm 02 Sep 19

“….and exceptional level of liquidity….”

Canberrans worried about the evaporating liquidity in their household budgets now know what’s happened – it’s gone to the ACT Revenue Office.

Capital Retro4:57 pm 02 Sep 19

“As the population is ageing, retirees on fixed incomes cannot keep pace with price hikes….rates, water, electricity, gas, rego, etc. ….”

The ACT government doesn’t care about people in this situation – we are invisible and their policy on concessions for “downsizing” is a joke.

Capital Retro8:09 pm 01 Sep 19

We are lucky we have access to the best rating report credit can buy.

Capital Retro9:34 pm 31 Aug 19

Let’s hope lightning doesn’t strike twice.

Yep we should have with all the increases to rates and taxes we pay!

Capital Retro8:41 am 31 Aug 19

“…………containing its debt burden at a manageable level,” it said. Note the use of the word “burden”

This is the elephant in the room. We need more detail on this. It would also appear that the debt will be increasing following Mr Barr’s recent overseas borrowing foray armed with his AAA credit rating. Indeed, he confirms that by stating a comprehensive infrastructure plan will be announced soon.

I don’t know anyone in Canberra who feels the same way about the Territory’s finances like Mr Barr (or S&P) does.

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