WA loses triple-A credit rating

UPDATE 1pm: Premier Colin Barnett has flagged asset sales and delays to infrastructure projects after the State's coveted triple-A credit rating was downgraded.

In a stunning move, credit rating agency Standard and Poor's - which last year put WA on negative credit watch - said today it would downgrade WA debt to AA+ from AAA because the State Government was failing to show the necessary "political will" to bring down Government debt.

Mr Barnett said he was disappointed by the ratings downgrade, but not surprised.

Shadow treasurer spokesman Ben Wyatt said Mr Barnett and Treasurer Troy Buswell had thrown away the credit rating despite inheriting the best set of books in the State's history.

Mr Barnett said the Government would now look at asset sales and slowing down some infrastructure spending to deal with the downgrade.

He denied the downgrade was a reflection of his fiscal management.

“I think you can probably say maybe we tried to do too much too quickly. I’ll accept that. But I challenge people to say what shouldn’t we be doing,” he said.

“Debt is high and rising. Why? Because this state is growing. We’ve invested in hospitals, in schools, in improving our capital city, road projects, regional development and the like – and I don’t apologise for that. This is a transformational decade for WA.

“Falling GST payments, strongly rising population and overdependence on mining royalties makes our finances vulnerable. That is exactly what Troy Buswell and I have been saying month in month out for some time.

“They are issues that we have to deal with. That is why you are seeing, even with increased funding for education, belt tightening across the system.

“I’ve got to say, from this, the people of WA can expect further belt tightening probably across every area of government.

“We will also now have to look at asset sales.

“We have to respond to this, and we will, and that is going to put some pressure on the WA community. I regret that. But so long as the Commonwealth Government reduces our GST, so long as thousands of people a month come to this state, and so long as we depend on mining royalties, we have no choice but to tighten our belts.”

Mr Barnett would not go into detail about what sorts of asset sales would be considered.

“We are not talking about widespread privatisation at all. But there might be assets, individual assets that we may dispose of. We will look at that in a sensible, calm way," he said.

“This is not a Government that has squandered taxpayers’ money, this is a Government that is building assets for my children’s generation and their grandchildren.”

Opposition Leader Mark McGowan said the Government had inherited the “best set of books in Australia” when it came to power.

“It is an embarrassment that this premier has driven this state into this condition. It is an embarrassment, it is shameful,” he said.

“You have lost the triple-A credit rating in the best economic times the State has ever seen.”

The August Budget revealed net debt is expected to climb over coming years, reaching $28.4 billion by 2016-17.

The Government had previously pledged to bring down debt.

But since then, the Government, under pressure from voters, has abandoned revenue raising measures introduced in the Budget. That includes changes to the feed-in tariff change on solar rooftops that the Government abandoned within days of announcing them.

While supportive of the Government's efforts to control debt, Standard & Poor’s said there were signs of the troubles the Government was having meeting its commitments.

"The lowering of WA's long-term issuer credit rating reflects our view that while the fiscal action plan announced in WA's fiscal 2014 budget improves the State's path, in our view there is likely to be slippage, reflecting our view of limited political will, as evidenced by the early revision of some budget revenue and expenditure measures," it said in a statement.

"The ratings are constrained by our view of moderate budgetary flexibility and budgetary performance.

"WA's debt burden is now at the high end of the domestic peer group, and in our view is likely to continue rising."

Credit analyst Claire Curtin said while lowering the rating, the agency would now keep WA on a stable outlook.

But even this was at risk unless the Government came up with a more convincing plan to cut debt.

"The rating could be pressured if WA's consolidated cash operating balance looked likely to fall into deficit without a convincing plan to return to surplus," she said.

Ms Curtin said it was unlikely the rating could be upgraded within the next two years.