Latest news with #JaclynSymes
Herald Sun
18 hours ago
- Business
- Herald Sun
What a downgraded credit rating would mean for Victoria
Victoria has been repeatedly warned its credit rating is at risk of a further downgrade amid a ballooning debt pile on track to hit $194bn. Treasurer Jaclyn Symes flew to New York on Wednesday to meet with the heads of major ratings agencies to defend the state's AA rating — already the lowest in the nation. But what is a credit rating and, more importantly, what does it mean for you and me if it is again downgraded. What is a credit rating? A credit rating assesses the creditworthiness of a borrower, such as the Victorian government or a company. This credit grade is expressed as a letter. The three main ratings agencies, Standard & Poor's, Moody's and Fitch, operate a scale running from AAA — the highest grade dubbed 'prime' — all the way down to C for Standard & Poor's and Moody's, and D for Fitch. The grade indicates a borrower's ability to repay debt and helps investors evaluate the risk of lending money to a government — by buying bonds which show up as government debt — or a company. What is Victoria's current rating? Victoria holds a AA rating from Standard & Poor's. It was downgraded by two notches from AAA in December 2020, falling to AA+ and then AA, in December 2020 due to ballooning debt. Moody's stripped Victoria of its AAA status in February 2021, before downgrading it from AA1 to AA2 in 2022. The state holds a AA+ from Fitch. None of these rating are prime but are 'high grade' and represent a 'stable outlook'. That said, Victoria's credit rating is lower than any other state in the nation. Why does the rating matter? Credit ratings affect the government's borrowing costs — governments with a AAA rating can issue bonds with the lowest interest rate possible. As a rating falls, the interest payments investors will demand in order to buy Victorian bonds rise as the bonds are viewed as being of higher risk. Those interest payments are an expense to the Victorian government and paid by every taxpayer. So a lower credit rating means a higher interest expense bill on the state's debt for Victorian taxpayers. What does it mean if it falls below a certain rating? Another downgrade would be a massive hit to the Victorian government. Victoria's net debt is tracking to weigh in at $194b by 2028-29, during which the state will be spending close to 10c of every dollar in taxation revenue on servicing it. The government can ill afford to be paying more on its debt, especially as it looks to raise funds to plough into its Big Build agenda and its signature pet project, the $34.5b Suburban Rail Loop. A further downgrade would heap pressure on Victoria's ability to finance major projects, a well as on the government to maintain services. What have the credit rating agencies said? The two main rating agencies have both warned the Allan-government over the handling of the state's finances. Standard & Poor's has said: 'Reining in growth in public spending, including the government's wages bill, and achieving promised operating savings are key to strengthening the financial outcomes. 'However, these goals have proven to be difficult to achieve in recent years. Fiscal discipline is important, especially in the lead-up to the 2026 state election, because we have seen many Australian state governments lose control of their budget in the lead-up to an election.' Moody's has said: 'Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile.' What has the government said? Treasurer Jaclyn Symes has defended the state's finances, arguing the 'major credit rating agencies continue to project a stable outlook for Victoria's credit rating'. 'Those that want to talk down the state will choose to do so,' she has said. 'I will continue to talk up the Victorian economy.' On Tuesday it emerged Victorian treasury officials have done no modelling on the impact of a credit downgrade on the state's economy. 'The five step fiscal strategy is aimed at retaining the current credit rating and improving it over time,' Department of Treasury and Finance secretary Chris Barrett told a Public Accounts and Estimates Committee hearing.
9 News
2 days ago
- Business
- 9 News
Victorian treasurer grilled over budget estimate details
Victorian Treasurer Jaclyn Symes has appeared before a committee inquiry into this year's state budget estimates.
Sydney Morning Herald
2 days ago
- Business
- Sydney Morning Herald
Victorian treasurer grilled over budget estimate details
Victorian Treasurer Jaclyn Symes has appeared before a committee inquiry into this year's state budget estimates.
The Age
2 days ago
- Business
- The Age
Victorian treasurer grilled over budget estimate details
Victorian Treasurer Jaclyn Symes has appeared before a committee inquiry into this year's state budget estimates.
The Advertiser
2 days ago
- Business
- The Advertiser
Credit rating downgrade cost unknown for debt-hit state
Treasury boffins have not considered the fallout of another credit rating downgrade on paying down ballooning state debt. As parliamentary hearings into the Victorian state budget got underway on Tuesday, Department of Treasury and Finance secretary Chris Barrett admitted the threat of a credit rating downgrade was not modelled. The department has only assessed the budgetary impact of a 100 basis points rise in interest rates. Credit rating downgrades make it more expensive for governments to service debt, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools. Victoria's net debt is forecast to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day. S&P Global Ratings downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest of any Australian state or territory. Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022. Treasurer Jaclyn Symes is travelling to the US to meet with ratings agencies, including representatives from Moody's on Friday. Moody's post-budget report said Victoria's economic outlook remains positive, with the improving economic backdrop expected to ease risks from high and rising debt. But it warned Victoria wasn't completely out of the woods for a credit ratings downgrade. "Global economic uncertainties and geopolitical tensions pose risks to the fiscal outlook," the report said. "Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile." Ms Symes also defended the use of treasurer's advances for major project milestones and sparred with Nationals MP Jade Benham over the government's controversial emergency services levy. All Victorian farmers will be spared from paying the increased tax on their land for 2025/26 after the entire state was declared drought-affected on Friday. The one year reprieve, along with carve-outs for Country Fire Authority and State Emergency Service volunteers and life members, means the expanded levy is expected to raise $73 million less than expected. But the treasurer remained adamant it won't compromise the Allan Labor government's funding commitments for emergency services. Treasury boffins have not considered the fallout of another credit rating downgrade on paying down ballooning state debt. As parliamentary hearings into the Victorian state budget got underway on Tuesday, Department of Treasury and Finance secretary Chris Barrett admitted the threat of a credit rating downgrade was not modelled. The department has only assessed the budgetary impact of a 100 basis points rise in interest rates. Credit rating downgrades make it more expensive for governments to service debt, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools. Victoria's net debt is forecast to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day. S&P Global Ratings downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest of any Australian state or territory. Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022. Treasurer Jaclyn Symes is travelling to the US to meet with ratings agencies, including representatives from Moody's on Friday. Moody's post-budget report said Victoria's economic outlook remains positive, with the improving economic backdrop expected to ease risks from high and rising debt. But it warned Victoria wasn't completely out of the woods for a credit ratings downgrade. "Global economic uncertainties and geopolitical tensions pose risks to the fiscal outlook," the report said. "Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile." Ms Symes also defended the use of treasurer's advances for major project milestones and sparred with Nationals MP Jade Benham over the government's controversial emergency services levy. All Victorian farmers will be spared from paying the increased tax on their land for 2025/26 after the entire state was declared drought-affected on Friday. The one year reprieve, along with carve-outs for Country Fire Authority and State Emergency Service volunteers and life members, means the expanded levy is expected to raise $73 million less than expected. But the treasurer remained adamant it won't compromise the Allan Labor government's funding commitments for emergency services. Treasury boffins have not considered the fallout of another credit rating downgrade on paying down ballooning state debt. As parliamentary hearings into the Victorian state budget got underway on Tuesday, Department of Treasury and Finance secretary Chris Barrett admitted the threat of a credit rating downgrade was not modelled. The department has only assessed the budgetary impact of a 100 basis points rise in interest rates. Credit rating downgrades make it more expensive for governments to service debt, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools. Victoria's net debt is forecast to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day. S&P Global Ratings downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest of any Australian state or territory. Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022. Treasurer Jaclyn Symes is travelling to the US to meet with ratings agencies, including representatives from Moody's on Friday. Moody's post-budget report said Victoria's economic outlook remains positive, with the improving economic backdrop expected to ease risks from high and rising debt. But it warned Victoria wasn't completely out of the woods for a credit ratings downgrade. "Global economic uncertainties and geopolitical tensions pose risks to the fiscal outlook," the report said. "Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile." Ms Symes also defended the use of treasurer's advances for major project milestones and sparred with Nationals MP Jade Benham over the government's controversial emergency services levy. All Victorian farmers will be spared from paying the increased tax on their land for 2025/26 after the entire state was declared drought-affected on Friday. The one year reprieve, along with carve-outs for Country Fire Authority and State Emergency Service volunteers and life members, means the expanded levy is expected to raise $73 million less than expected. But the treasurer remained adamant it won't compromise the Allan Labor government's funding commitments for emergency services. Treasury boffins have not considered the fallout of another credit rating downgrade on paying down ballooning state debt. As parliamentary hearings into the Victorian state budget got underway on Tuesday, Department of Treasury and Finance secretary Chris Barrett admitted the threat of a credit rating downgrade was not modelled. The department has only assessed the budgetary impact of a 100 basis points rise in interest rates. Credit rating downgrades make it more expensive for governments to service debt, leaving less money to spend on critical services and infrastructure such as hospitals, roads and schools. Victoria's net debt is forecast to reach $194 billion by mid-2029, sending interest repayments soaring close to $29 million a day. S&P Global Ratings downgraded Victoria's credit rating two notches in 2020 from AAA to AA, the lowest of any Australian state or territory. Fellow ratings agency Moody's followed suit, stripping the state of its AAA status in February 2021 and downgrading it from AA1 to AA2 in 2022. Treasurer Jaclyn Symes is travelling to the US to meet with ratings agencies, including representatives from Moody's on Friday. Moody's post-budget report said Victoria's economic outlook remains positive, with the improving economic backdrop expected to ease risks from high and rising debt. But it warned Victoria wasn't completely out of the woods for a credit ratings downgrade. "Global economic uncertainties and geopolitical tensions pose risks to the fiscal outlook," the report said. "Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile." Ms Symes also defended the use of treasurer's advances for major project milestones and sparred with Nationals MP Jade Benham over the government's controversial emergency services levy. All Victorian farmers will be spared from paying the increased tax on their land for 2025/26 after the entire state was declared drought-affected on Friday. The one year reprieve, along with carve-outs for Country Fire Authority and State Emergency Service volunteers and life members, means the expanded levy is expected to raise $73 million less than expected. But the treasurer remained adamant it won't compromise the Allan Labor government's funding commitments for emergency services.
