Colin Barnett

The recent downgrading of Western Australian state government debt by ratings agency Moody’s (following a similar step by Standard and Poor’s last year) leaves New South Wales and Victoria as the only Australian states with a AAA credit rating. The responses have been predictable. The WA opposition called on the Treasurer to resign, while business groups called for a program of asset sales to restore the "prized" AAA rating. But what does a AAA rating mean, and is it a sensible goal for governments to pursue?