Queensland Credit Rating Outlook Downgraded to Negative

An image of Australian $50 banknotes. A. Ming/ The Epoch Times

Queensland’s credit rating outlook has been downgraded from AA+ stable to AA+ negative by ratings agency S&P Global.

This outlook could risk pushing up borrowing costs for the sunshine state ahead of the Brisbane 2032 Olympics.

It comes after the Liberal-National Party (LNP) won office from Labor just months ago at the October 2024 election.

Treasurer David Janetzki blamed the result on Labor’s failures in its last budget, as well as cost blowouts, unfunded promises, and service delivery black holes.

The Liberal-National government said the full financial impact of this downgrade was uncertain, but confirmed Queensland’s borrowing costs would be higher.

They also noted that the LNP had warned Queenslanders of the “dire financial legacy” of the previous government back in early December.

“Labor was warned repeatedly about their reckless fiscal management, but they repeatedly ignored it, leaving Queenslanders to pay a high price for their expensive failures,” Janetzki said.

“Labor’s last budget update revealed their $218 billion path of debt, deficit and deception. After a decade of lies, debt and deficit, Labor can never be trusted to manage the budget again.”

The LNP government highlighted that S&P Global had released two bulletins before the election that warned about the negative outlook.

“In June 2024, S&P released a bulletin titled ‘Queensland’s Budget erodes rating headroom.’ In September, S&P reported on Labor’s 2024-25 Budget, noting multibillion-dollar one-off spending and ‘an upsizing of the state’s already large infrastructure pipeline,’” it said.

Janetzki said the LNP would improve the budget with a calm and considered approach.

“Our challenge is clear and we are up for it, we are delivering a fresh start for Queensland which includes restoring respect for Queensland taxpayers’ money,” he said.

Negative Credit Rating

In addition to downgrading the state’s credit rating outlook, S&P Global provided an AA+ long term and a A-1+ short term issuer credit rating on the Queensland Treasury Corp (QTC). QTC is the state’s central financing authority.

The outlook revision mirrors the one made on Queensland, which owns QTC. The ratings were equalized to reflect S&P’s expectation that the state will almost certainly provide it support in a distress scenario.

“The negative outlook on QTC reflects that on the state of Queensland. We would lower our ratings on QTC in the next two years if we were to downgrade Queensland. We could also lower the ratings on QTC in the unlikely event we consider its role for, or link to, the state to be weakening,” S&P said.

In the June 2024-25 state budget, Labor predicted net debt in Queensland would reach $103.2 billion (US$63.4 billion) by the 2026-2027 financial year.

However, the LNP released a mid-year fiscal and economic review on Jan. 23, which elevated this debt projection to $218 billion by 2027.

Labor Blame Recent ‘Budget Update’

Shadow Treasurer Shannon Fentiman argued S&P had changed their outlook on Queensland’s economy due to the LNP government’s “exaggerated budget update.”

“The LNP juiced the numbers to try and score cheap political points and the consequences will now be borne by Queenslanders through higher borrowing costs,” she said.

“When you play stupid games, you win stupid prizes. This is a huge failure from the LNP.”

Meanwhile, Opposition Leader Steven Miles continued to advocate for more spending, promoting a petition to lock in 50-cent public transport in Queensland.

“The Queensland Labor team is taking strong action—locking in 50 Cent Fares forever! This policy has driven major behaviour change and reduced congestion on our busy roads,” he said.