Is Australia's triple, triple-A credit rating at risk, as today's Australian Financial Review article suggests
, with a "wake-up call for opponents of the budget" from Standard & Poor's?
No, in short, no matter how much the AFR
applies the eggbeater to the yarn to fit the fixation of editor-in-chief Michael Stutchbury that we have a debt and deficit crisis. Indeed, S&P appeared to back right away
from the Financial Review's
story this morning, saying "there is no immediate risk to Australia's AAA rating".
Moreover, it doesn't particularly matter if it did downgrade us. Standard & Poor's is the firm that downgraded the United States government from triple-A in 2011, with the rationale that the gridlock and brinkmanship in the US Congress over the budget had undermined "the effectiveness, stability, and predictability of American policymaking and political institutions". S&P also downgraded France and several other countries on a similar basis. S&P now appears to be laying the groundwork for a similar observation about Australia if the Senate blocks key elements of the Abbott government's budget.
We already know that Medicare co-payments, increases in higher education loan repayments and the government's targeting of Newstart recipients will be blocked -- Labor, the Greens and Clive Palmer have all said they'll oppose them. That will eat up more than $6 billion of the $22 billion improvement in the budget bottom line over forward estimates from December "budget crisis!" Mid Year Economic and Fiscal Outlook and last week's budget. And further blocks in the Senate will increase that: while petrol excise indexation and the deficit levy look safe, any other cuts will further reduce the actual improvement in the deficit.