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?
Australian states are losing their AAA ratings. Should we panic?
Don't worry about the AAA rating, writes economist and University of Queensland academic John Quiggin. It's of little consequence for the day-to-day running of a state.