Treasurer wont panic over rating
No panic: Treasurer Mike Nahan. Picture: Steve Ferrier/The West Australian

The Barnett Government will wait until the end of the year before revealing how it will deal with falling iron ore prices and the credit rating downgrade.

Treasurer Mike Nahan said the Government would not be panicked into rushed decisions despite Moody's decision to strip WA of its AAA rating and further signs the Budget is bleeding cash.

WA's rating is now the same as Queensland. NSW and Victoria have AAA stable ratings from both major rating agencies.

Spot iron ore prices fell to a year-low of $US89.10 a tonne, well short of the $US122/t forecast at Budget time. To match the full-year forecast, prices would have to average more than $US140/t until mid-next year.

Dr Nahan said the Government would not rule out any option as it dealt with the "fiscal challenges" identified by Moody's. But it will be at least four months before the Government's newest plan will be made clear.

"We will not panic and make rushed decisions," Dr Nahan said. "All options will be carefully considered and the Government's response will be detailed in the 2014-15 mid-year review, due for release in December, and the 2015-16 Budget."

The Government is under fire for changes it forecast iron ore prices. In answer to questions from shadow treasurer Ben Wyatt, Dr Nahan said current forecasts were higher because the Government had changed its calculation method.

It used to average future iron ore changes over four years but changed that to 10 years in December's mid-year review.

The change meant it would take longer for prices to fall back to Treasury's assumed 2022 price of $US85/t from its starting point of $US118/t when the State's accounts were drawn in December.

The low iron ore price will continue to hit revenues.

Chamber of Commerce and Industry chief economist John Nicolaou said non-core government services had to be reviewed and asset sales put on the agenda.

The West Australian

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