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No Answer from Treasurer on Cost to Tasmanians for Credit Rating Downgrade

Cassy O'Connor MP

Cassy O'Connor MP  -  Tuesday, 23 August 2016

Tags: Treasury


You are, in significant part, responsible for the Moody's credit rating agency decision last week to downgrade Tasmania's credit rating.  It is a damning indictment of your management of the state's finances.  Tascorp chairman Don Challen last year told GBE estimates that maintaining the state's strong credit rating is a number one concern, and that even a minor downgrading of our credit rating could have a significant impact on investment.  Can you confirm the downgrade will not only cost the state's reputation as a sound financial manager and a safe bet for lenders, but it will cost, in monetary terms, and we will no longer have access to cheaper loans and premium lending packages?  Has Treasury presented you with advice on the financial cost of this downgrading?  If so, what can you tell this House and Tasmanians about the price we will pay in dollar terms for your poor financial management?



Madam Speaker, I thank the member for the question.  You have opposed every measure we have taken to fix the budget.  That side of the House has opposed every single measure, yet we have been able to return the state to surplus four years ahead of our target.  It is the first surplus in six years, and the best surplus in 10 years - opposed by you every single step of the way.  That is the fact.

We were surprised by the downgrade.  The opinion provided a week earlier made no mention of the fact we could be facing a downgrading with our credit rating.  I find it surprising.  Our budget is in far better shape than it was under you.  The difference could not be starker.  If you contrast the mess left to us to fix, in the 2014-15 year, a $270 million better operating balance.  In the 2015-16 year, a return to surplus and $275 million better result than forecast in the risks reports.  People should not forget the mess we had to deal with was $1.1 billion worth of cumulative deficits across the forward Estimates and net debt rising to more than $400 million. 

Ms O'CONNOR - Point of order, Madam Speaker.  Standing order 115 on relevance.  I ask the Treasurer what the costings are on the price Tasmania will pay for the downgrade?

Madam SPEAKER - I will give the same ruling I give all members in this House on the issue of relevance.  If there has been a lengthy question containing a number of questions, or a lengthy preamble, I have allowed a lot of latitude in the asking of the question, so the Treasurer has the same latitude in answering it.

Mr GUTWEIN - Thank you, Madam Speaker.  As I was saying, $1.1 billion worth of cumulative deficits, net debt rising to more than $400 million - that was the mess we were left with and we turned it around.  We put the budget back on track and back in the black.  That is what we have been able to do, opposed every step of the way by those on the other side.  Whilst we have been doing that, the economy is now growing at the fastest rate in six years.  All opposed by that side of the House.

Opposition members interjecting.

Madam SPEAKER - Order.  Members will cease their constant interjections.  I will have to eject soon if this does not cease.

Mr GUTWEIN - Madam Speaker, under Labor and the Greens, net debt was rising to more to more than $400 million.  Looking at the bottom line outcomes we have achieved to our balance sheet, in the 2014-15 year we were $750 million better off.  We had over a $1 billion turnaround in the 2015-16 year.  We are forecasting we will hold net cash and investments across the forward Estimates. 

We will not be borrowing across the forward Estimates.  We hold net cash and investments.  The credit rating downgrade on the general government sector will have no immediate effect because we have been able to fix the mess that side of the House left us with.