‘Sharp deterioration': Queensland budget sparks S&P Global credit warning
Queensland's finances are on shaky ground after a reduced slice of the GST, credit ratings agency S&P Global Ratings says.
The updated rating comes as the state government released its budget Tuesday, showing next year's deficit will rise by $1.7bn to $8.6bn.
'Today's Queensland budget highlights a sharp deterioration in the state's finances,' S&P's government ratings director Anthony Walker said in a note.
'The negative outlook on the credit rating highlights the size and pace of the state's fiscal decline, rising debt levels and potentially weaker liquidity coverage.
'The new government has refreshed, rather than redesigned, the state's fiscal strategy, with a greater emphasis on stabilising its ratio of non-financial public sector debt to revenue. Debt continues to rise to fund operating deficits and a growing infrastructure budget.'
S&P points to falling coal royalties, the reduced GST allocation and the previous Labor government's decisions for the state's fiscal deterioration.
On Tuesday, Treasurer David Janetzki delivered the first Liberal National budget in more than a decade.
The LNP administration has trimmed net debt to $205.7bn by 2028-29.
Mr Janetzki promised the electorate Queensland was 'on a path to surplus', with the budget papers showing a healthier deficit of $1.1bn by 2029.
'We are front-loading investment into jobs and services that will bring long-term benefits to the Queensland people,' he said.
But S&P points to elevated risks for the state's credit rating 'if fiscal and debt ratios are structurally weaker than in the past with little prospect of improvement within the next two years'.
'It shows debt is increasing to cover the state's weak operating position and fund its large infrastructure pipeline,' Mr Walker said.
'We don't believe Queensland is overly exposed to ongoing global uncertainties compared with other Australian states.'
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