Ratings agency Standard and Poor’s has reaffirmed Queensland’s AA+/A-1+’ credit rating

Queensland has retained its AA+ long-term and A-1+ short-term issuer credit ratings, despite the tough economic climate.

Treasurer Cameron Dick. Picture: Liam Kidston

Queensland’s two major parties have traded blows as the state’s credit rating held steady ahead of next month’s election.

Standard and Poors Global ratings reaffirmed the state’s AA+/A-1+ issuer credit ratings on Monday.

According to the agency, the rating is underpinned by several factors.

“Queensland’s exceptional liquidity coverage – holding liquid assets of more than $50bn, wealthy economy and Australia’s institutional settings underpinning the ratings,” an agency spokesperson said.

“The stable outlook reflects the expectation that Queensland’s weaker budgetary performance is balanced by debt levels that remain lower than most ‘AA+’ domestic peers.”

After the release of the 2024-25 budget, the rating agency expects Queensland’s operating margins to weaken and its after-capital account to move into large deficit.

“The 2024-25 budget revealed growing revenue headwinds for Queensland as coal royalties fall and goods and services taxes plateau,” an agency spokesperson said.

“The budget also delivered large cost-of-living spending in fiscal years 2024 and 2025 (ending June 30), and an upsizing of the state’s already large infrastructure pipeline.”

S&P said Queensland’s debt would rise as the state’s after-capital account moved into large deficits of more than 10 per cent of total revenues this year.

“The state’s ambitious infrastructure pipeline will aid the transition of its economy and government owned energy generators toward net-zero emissions, but drive deficits wider and debt higher,” an agency spokesperson said.

“The state will also gear up investment in preparation for the 2032 Olympics.”

The rating agency also expects coal royalties to fall as prices normalise, operating expenses to rise reflecting substantial cost-of-living measures in the lead-up to next month’s election, and capital expenditure to ramp up to address the state’s energy transition.

Treasurer Cameron Dick said the report showed how important the state’s “fairer” coal royalty tiers have been, and how important it was that all promises were fully funded, which was something Opposition Leader David Crisafulli and the LNP refusd to do.

“LNP leader David Crisafulli’s refusal to tell Queenslanders how he will pay for his promises means he must cut to keep the credit rating,” Mr Dick said.

Shadow treasurer David Janetzki said “never has a Queensland government taxed more, borrowed more or spent more than the decade-old Palaszczuk-Miles government”.

“Despite Labor collecting record revenue rivers of gold, Queensland has record numbers of the vulnerable sleeping in tents, victims of crime and hard-working families struggling to make ends meet,” he said.

“The only way to change Queensland for the better is to change the government next month.”