From S&P:
Bulletin: Ratings On Australia Not Immediately Affected By The Government’s Fiscal 2016 Budget
MELBOURNE (Standard & Poor’s) May 12, 2015–Standard & Poor’s Ratings Services said today that its unsolicited ratings and outlook on the Commonwealth of Australia (AAA/Stable/A-1+) are not immediately affected by the government’s budget for the year ending June 30, 2016.
The Australian government’s fiscal 2016 budget, released today, projects moderate budget deficits that are likely to gradually decline over the four-year forecast period ending June 30, 2019. These deficits are somewhat larger than projected in the government’s May 2014 budget and the December 2014 budget update, primarily reflecting further sharp falls in Australia’s key export commodity prices and the flow-on impact on government revenues.
Nonetheless, Australia’s budget performance over the next few years appears likely to improve, underpinned by spending restraint. While weaker, these revised budget forecasts remain broadly consistent with our base-case assumptions that deficits will be moderate and declining. We continue to anticipate that net general government debt will remain low relative to GDP.
Revenue write-downs have been the main driver of budget deficit revisions over the past year, and continue to present a source of downside risk to the budget. The government’s budget projections are, of course, also contingent on legislation being passed by Parliament. We note that a number of policy measures announced in the May 2014 budget are yet to be passed by Parliament.
We continue to assume, though, that Australia’s long-standing political consensus for prudent public finances will persist, and will ultimately lead to the passage of policy measures that support improving budget outcomes over the medium term.
In addition to low fiscal deficits and debt, the ratings on Australia benefit from the country’s strong institutional settings, high-income and resilient economy, and the credibility of monetary policy.
In short, you need more austerity and if you want to keep your rating.
