❓ Mr. Wyatt questions the Treasurer about the impact of a negative watch and potential credit rating downgrade on WA's debt servicing costs. The Treasurer acknowledges the concern and states the WA Treasury Corporation is assessing the impact, referencing past downgrades and the Queensland experience.
AnsweredQoN 275Legislative Assembly
QuestionView source ↗
STATE FINANCES — CREDIT RATING
275. Mr B.S. WYATT to the Treasurer:
I refer to the fact that Western
Australia has been placed on negative watch by ratings agency Standards and PoorXXX ###XXXs Rating Services, which is the first step
towards a potential second credit rating downgrade for the Barnett government.
(1) What impact
does the imposed negative watch have on the cost of Western AustraliaXXX ###XXXs
debt servicing at current debt levels?
(2) What would be
the additional cost to service WA's current debt levels if Western
Australia is again downgraded?
275. Mr B.S. WYATT to the Treasurer:
I refer to the fact that Western
Australia has been placed on negative watch by ratings agency Standards and PoorXXX ###XXXs Rating Services, which is the first step
towards a potential second credit rating downgrade for the Barnett government.
(1) What impact
does the imposed negative watch have on the cost of Western AustraliaXXX ###XXXs
debt servicing at current debt levels?
(2) What would be
the additional cost to service WA's current debt levels if Western
Australia is again downgraded?
AnswerView source ↗
(1)–(2)
I have been by the told by the Western Australian Treasury Corporation that it
is still trying to determine what the impact will be. When downgrading has
happened in the past, the impact on new borrowings was 0.2 per cent at most; in
fact, there had been a large number of movements in the ratings, some of which
were not driven by credit ratings. The biggest change, of course, was the
significant increase in the cost of borrowings to the Queensland government
after the loss of the Newman government. QueenslandXXX ###XXXs
cost of debt shot up significantly. All sorts of impacts flow from that. I have
asked the WATC to monitor this and tell me whether there has been any impact.
As to what will happen, if it happens, I will not speculate.
I have been by the told by the Western Australian Treasury Corporation that it
is still trying to determine what the impact will be. When downgrading has
happened in the past, the impact on new borrowings was 0.2 per cent at most; in
fact, there had been a large number of movements in the ratings, some of which
were not driven by credit ratings. The biggest change, of course, was the
significant increase in the cost of borrowings to the Queensland government
after the loss of the Newman government. QueenslandXXX ###XXXs
cost of debt shot up significantly. All sorts of impacts flow from that. I have
asked the WATC to monitor this and tell me whether there has been any impact.
As to what will happen, if it happens, I will not speculate.
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