Allan govt accused of shopping around after improved credit rating from new agency

Victoria has been given an AA+ credit score in its first ever rating by global ratings agency Fitch, but the Allan government has been accused of “trying to spin their way” out of an economic “mess”.

Victoria has been given an AA+ credit score in its first ever rating by global ratings agency Fitch, but the Allan government has been accused of shopping around to get a good report.

On Tuesday, Acting Premier and Treasurer Tim Pallas welcomed the first ever report from the agency saying it was a “very glowing report … and I’d encourage you to read it. It talks about a robust and strong economy. It talks about a well-managed budget position”.

However, the result has been bagged by the opposition amid concerns the Allan government approached the new agency for an informal rating after negative results from other agencies, and concerns the state could be downgraded if the government push ahead with the costly Suburban Rail loop.

Standard & Poors downgraded Victoria an unprecedented two notches to AA, from AAA, in December 2020.

And just last week a second global ratings agency, Moodys, warned Victoria’s credit rating could be slashed if the government couldn’t reverse the state’s current debt trajectory.

It said interest payments were forecast to be too high by 2028 – when net debt is projected to hit $188bn – while spending projections were also concerning.

Moody’s has previously provided official credit ratings for the state.

Treasurer Tim Pallas welcomed the first ever report from the agency. Picture: David Crosling

In August the Herald Sun revealed that S & P had hinted to the government that Victoria was at risk of a record low credit rating if it pushed ahead with the SRL.

S & P could drop the state’s credit rating from AA to A meaning Victoria would face increased borrowing costs of between 0.1 per cent and 0.5 per cent.

On Tuesday, shadow treasurer Brad Rowswell said the assessment made public was evidence the Allan government was “trying to spin their way out of the economic mess they have created over the last 10 years”.

“In an extraordinary step, Labor have used Victorian taxpayer dollars to seek — for the very first time — a third credit rating from an agency with no history in providing such ratings for Victoria,” he said.

It can also be revealed that Fitch is yet to release a second “private” ratings report, for which the results are not known.

Victorian shadow treasurer Brad Rowswell says the government is trying to ‘spin its way’ out of an economic mess. Picture: Supplied

Mr Pallas defended the move to approach a new agency saying he first contacted Fitch “some months ago” to request an informal rating of the state’s finance to “gauge their ratings as against the other two major ratings agencies”.

“All of the ratings agencies have slight nuance in the way they rate but I think it would be fair to say that Fitch just a notch above that at double A plus,” he said.

Mr Pallas said the government was “somewhat prohibited” in what details it can release from the informal rating delivered by Fitch but said there’s “nothing new or surprising in it” that differed to the agency’s public ruling.

“Those who were suspecting that there was something sinister in the private ruling that I’d got from Fitch, it effectively is consistent with the public ruling that’s now been released so that people can have some confidence that we’re not keeping anything secret from them,” he said.

In August, the Herald Sun revealed documents obtained by the state opposition showing treasurer Tim Pallas in April 2022 commissioned a private credit assessment from global credit rating agency, Fitch.

But details of the rating, including an assessment of Victoria’s financial position and economic outlook, are yet to be made public.