Queensland’s credit rating downgraded for the first time since 2009
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Queensland has had its credit rating downgraded for the first time in 17 years, putting more pressure on the state’s mounting debt and the cost to build its Olympics infrastructure.
S&P Global announced on Friday the state’s credit grading had fallen from AA+ to to AA, the first time Queensland has had that ranking since 2009.
Queensland Treasurer David Janetzki and Premier David Crisafulli handed down a budget with a significant debt earlier this year. Jamila Filippone
The ratings agency said while the state’s long-term outlook was positive, it said it predicted more difficult times in the immediate future.
“The stable outlook on the long-term rating reflects our view that Queensland’s budgetary performance will remain weak over the next few years as the state ramps up its infrastructure spending, resulting in debt being structurally higher than in the past,” the agency said.
“Persistent inflation, rising interest rates, higher wages, and softening property market sentiment will likely weigh on Queensland’s budgetary outcomes and fiscal recovery over the next two to three years.”
The decision comes as the state grapples with an enormous debt bill, listed at nearly $200 billion in the latest budget, which could balloon to $216.4 billion by 2029.
As well as dealing with increased spending to prepare for the 2032 Brisbane Olympics, Queensland will also have to grapple with high interest rates on its debt payment.
Interest will double from $3.3 billion this financial year to $7.7 billion just before the Olympic Games begin.
S&P Global admitted there could be further ratings pain to come if the state’s “financial management weakens”.
Queensland Treasurer David Janetzki laid much of the blame on the federal government for his state’s downgrade. Jamila Filippone
"Weaker management could drive persistent operating deficits and wider deficits after capital accounts, and substantially higher debt,” it said.
However, it also said the door would be open to Queensland’s credit rating being raised if it narrowed deficits and started operating with more budget surpluses.
The budget is not expected to see a surplus until 2029-30.
Speaking on Thursday before the rating downgrade, Treasurer David Janetzki admitted he was expecting the decision but shifted responsibility from the incumbent government, which has been in power since late 2024, to the previous state and current Labor governments.
“The Labor government’s fiscal vandalism has led us towards an inevitable credit rating downgrade,” he claimed.
Janetzki doubled down on Friday when the news was confirmed: “You know, treasuries keep receipts, and I’ve got plenty of Labor receipts, and that is what we are facing here today. We’ve been really clear about that targeting of budget improvements.”
The federal government has also absolved itself of blame, with Treasurer Jim Chalmers claiming on ABC Radio on Thursday that Queensland had received “billions and billions of dollars” in funding.
Treasurer Jim Chalmers admitted the news was concerning. Alex Ellinghausen
"Every budget around Australia, including certainly the Commonwealth budget, is under pressure for one reason or another," he said on Friday.
“But the Queensland budget is not under pressure because of the Commonwealth.”
He doubled down and accused Janetzki of “lying” that the commonwealth was responsible for the downgraded credit rating.
Janetzki took issue with this on Friday.
“We’ve also had these Canberra headwinds, right? This morning Jim Chalmers called me a liar, and Jim Chalmers can call me names. I’m going to be calling out facts, and the facts are clear, and they are confirmed by S&P [Global],” he said.
“We’ve been calm and methodical about how we’re going about those budget improvements, and that is what we’ve been delivering … which is a responsible thing to be doing in the face of what we have seen.
“The Canberra headwinds, the cost shifting, the GST distribution away from us, the legacy of the former Labor government.”
Chalmers, whose electorate is in Queensland, addressed the impending credit rating downgrade in question time on Thursday, where he admitted the development was “very troubling”.
Economist Gene Tunny said the news was especially disappointing for the government, considering the state hast historically had a positive track record of managing its budget.
“It will have real consequences because what it means is that the cost of government borrowing will be higher,” he told 9News.
“And a state like Queensland, which was historically very well governed and very well managed, this is a bit of an embarrassment.”
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