Tony Abbott accuses Labor’s Bill Shorten is putting AAA credit rating at risk

A CREDIT rating agency warns Australia could lose its AAA rating if the Budget doesn’t pass the Senate, prompting a new spat between Tony Abbott and Bill Shorten.

Scrabble "A" lettered tiles are displayed on December 15, 2011 in Paris. The Standard and Poor's ratings agency warned France, Germany and 13 other eurozone members that they faced a possible downgrade of their AAA credit ratings. AFP PHOTO THOMAS COEX

TONY Abbott has accused Labor of putting Australia’s AAA credit rating at risk, ramping up the pressure on the Opposition to help pass tough budget measures in the Senate.

“Labor were vandals in government and it looks like they want to continue to be vandals in Opposition,” the Prime Minister told reporters in Canberra.

Labor ‘vandals in government’ ... Prime Minister Tony Abbott.

His comments follow a warning from Ratings agency Standard & Poor’s, who claim Australia’s AAA rating might be reviewed unless savings measures can pass the Senate.

Sovereign analyst for S & P Craig Michaels told the Financial Review some of the government’s $37 billion in proposed savings need to get the Upper House’s tick of approval.

Already Labor has flagged it will not support more than $10 billion in measures outlined last Tuesday, including a $7 GP co-payment and the reintroduction of fuel excise indexation.

If it happen it’s is ‘on the Prime Minister’s head’ ... Opposition Leader Bill Shorten.

Treasurer Joe Hockey had a stark warning for Labor, claiming if the AAA credit rating was lost every household would feel it.

“If there were to be a downgrading of Australia’s sovereign credit rating it would have an impact on every household that borrows money, either through a mortgage or credit card,” he told reporters in Sydney.

“The sovereign rating, the Commonwealth Government rating flows through directly to the costs of borrowing by the banks and that flows directly through to every household and every business.

“It also flows through to the states.”

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Mr Hockey said Bill Shorten and the Independents would have to “think very carefully” about their actions.

“Ultimately if you decide to turn down savings and you offer no sensible or credible alternative, it will have an impact on every household in Australia through higher interest rates and higher taxes down the track.”

Mr Abbot urged the Opposition to rethink its stance, warning it will cost Australia more in the long run.

“If we lose our AAA credit rating we pay higher rates of interest on our debt and that means it’s even more than a $1 billion a month every single month just to pay the interest on the borrowing.”

Bill Shorten rejected the claim his party will be responsible if the AAA rating is lost.

“When Labor left office, Australia for the first time had a AAA credit rating, one of eight countries in the world,” the Opposition Leader told reporters in Brisbane, turning the tables on the Coalition.

“The Budget is unfair and if they lose us our AAA credit rating, we hold the Abbott Government squarely responsible. It has happened on their watch, their issue,” he said.

“If Tony Abbott squanders our AAA rating it is on his head. He is the man in charge.”

Mr Abbott, who is already facing a battle to get measures through, insisted he will sit down with the Greens and minor parties soon.

“Once the legislation is prepared and it is ready to go before the Parliament I’ll have discussions with all of the various participants in the parliamentary drama,” he said.

Originally published as Tony Abbott accuses Labor’s Bill Shorten is putting AAA credit rating at risk