Moody’s: Property bust credit negative for states

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Moody’s Investors Service has released a report on the fiscal position of Australia’s state governments. It notes that the soft state of the economy has the potential to reduce the amount of revenue that the states receive from the goods and services tax, while increased debt is regarded as “credit negative” for their fiscal status. Victoria and New South Wales both have credit ratings of ‘AAA stable’, while the other states have various ‘AA’ credit ratings. The most recent budgets of the five mainland states reveal that their debt will triple to $170 billion within four years in order to fund new infrastructure:

  • Property-related revenues will remain soft in 2020 in the larger eastern states
  • States are also vulnerable to unbudgeted health and education costs and to slippage in major infrastructure spending programs

Moody’s Investors Service says in a new report that the fiscal 2020 budgets for states in Australia (Aaa stable) reveal revenue pressures from the housing market correction and a softer domestic economy, along with elevated debt levels.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.