The Western Australian Government has described its economy as “nation-leading” after Moody’s Investor Service again reaffirmed the state’s AAA credit rating.
The system ranks the creditworthiness of companies, governments, and fixed income debt securities. Its ratings go from AAA, which is the highest grade for top-quality issuers believed to pose the lowest risk, down to C; a grade usually given to securities that are already in default with little chance of recovery.
Based in New York, the firm highlights WA’s “strong financial position has been driven by its excellent governance, including strong expenditure controls and conservative budgeting protocols.”
It also notes that “sustained fiscal discipline and strong debt management over the past few years has enabled the state to apply windfall revenue gains to pay down debt as well as setting aside surpluses for future capital expenditure, including investment in climate action initiatives, social housing, as well as providing cost of living relief.”
Overall, Moody’s found that WA’s credit profile has “materially strengthened” over the last six years, with high debt affordability and a substantial easing in the state’s debt burden.
WA’s AAA rating was reinstated in July last year after it was lost under previous governments in 2013 and 2014.
The Moody’s rating follows a similar announcement from S&P Global in August that it had also reaffirmed WA’s AAA standing.
“Our strong financial management credentials are clear for all to see, with six consecutive general government operating surpluses since 2018‑19 and surpluses forecast across each year of the Budget period to 2027‑28,” WA Treasurer Rita Saffioti says.
“As Moody’s has noted, Western Australia is the only state or territory to achieve consecutive operating surpluses since 2018‑19.
“We have reduced net debt from a projected $43.7 billion when the previous Liberal-National Government left office, to an estimated $28.6 billion at 30 June 2024, which relative to the size of our economy, is the most affordable in the nation.”
With AAA ratings from both Moody’s and S&P Global, WA remains the only Australian state and one of only a few jurisdictions globally to hold AAA ratings from two of the big three credit rating agencies.
A survey-based analysis by WA’s Chamber of Minerals and Energy (CME) in June 2023 found that the state’s mining, energy, and contractor sectors contributed just under $99 billion to Australia’s economy in 2021-22, and directly employed more than 69,000 full-time workers.
More than $47 billion was spent by CME member companies on purchasing goods and services from around 14,000 businesses across Australia, while $10.7 billion went to wages for workers.
In terms of government payments, mining companies generated $11.7 billion for WA and more than $28.9 billion in federal taxes.
“It’s remarkable to see the efforts of an entire industry over a year boiled down to just the raw numbers. Whichever way you look at the figures, the contribution that our industry makes to both WA and the nation is enormous,” CME chief Rebecca Tomkinson said at the time.
“The results of this survey capture about 83% of our members’ direct contribution, however, the ‘total’ sector-wide figure to the broader economy is likely to be well in excess of the $99 billion figure.”
Write to Oliver Gray at Mining.com.au
Images: iStock
