Prime Minister Tony Abbott this morning
"If these necessary measures don’t pass the Senate our AAA credit rating is at risk, and if we lose our AAA credit rating we pay higher rates of interest on our debt, and that means it’s more than $1 billion a month, every single month, just to pay the interest on the borrowings."
Hang on a minute.
For a start, ratings agency S&P was backing away from "warnings" reported in The Australian Financial Review
today that Australia's rating is at risk. As one financial wire reported:
"... new headlines on the subject are now crossing the wires, indicating that 'there is no immediate risk to Australia's AAA rating', adding that 'stable aust. rating means less than 1-in-3 odds of change'."
And as Bernard Keane and Glenn Dyer argue today
, maybe a ratings downgrade wouldn't be so bad?
"The Reserve Bank doesn't particularly respect Standard & Poor's and its incorporation of politics into their ratings. If you look at the US, its position has improved immeasurably in the past year, despite S&P's downgrade. Moody's and Fitch didn't change the US rating, and later this year a very chastened S&P will lift the US rating back to AAA -- it has changed its US outlook from negative to positive, which says an upgrade is on the way."
Not to mention (which Keane and Dyer do in making a compelling case) the impact on forcing down the value of the Australian dollar -- a godsend for local business.
Too much of Australia's economic debate is built on mythology. The truth is inconvenient for a government trying to sell the most unnecessary budget levers.