Moody’s Investors Service has published new analysis warning that state government budgets are exposed to a stamp duty bust combined with growing financial commitments to support the population ponzi:
Australian states’ mid-year reviews (MYRs) reveal that revenue pressures from the housing market correction will partly offset gains from the Government of Australia’s (the Commonwealth, Aaa stable) Goods and Services Tax (GST) funding reform – all while debt levels remain elevated. At the same time, we expect higher-than-budgeted capital spending to become a major challenge for states as most embark on record capital spending programs, causing debt to rise more rapidly than revenue. While for some states, debt will start rising from a lower level than in earlier budget projections, overall debt burdens will remain elevated over the next four years, increasing vulnerability to risks such as unbudgeted health and education reform costs.
