Queensland Credit Rating Downgraded for First Time in Nearly 20 Years

Queensland's credit rating has been downgraded for the first time in almost 20 years, putting pressure on the state's multi-billion-dollar debt and Olympic infrastructure.

S&P Global Ratings today confirmed it had lowered its "long-term issuer credit rating" on Queensland to AA from AA+. The state has had an AA+ rating since early 2009.

Rating downgrade and outlook

In a statement, S&P Global said the outlook on the long-term for the state remains stable. "The stable outlook on the long-term rating reflects our view that Queensland's budgetary performance will remain weak over the next few years as the state ramps up its infrastructure spending, resulting in debt being structurally higher than in the past," the statement said.

The statement provided an upside and downside scenario for the next few years for Queensland. "We could lower our long-term rating on Queensland if its financial management weakens," S&P Global said in reference to the downside scenario. "Weaker management could drive persistent operating deficits and wider deficits after capital accounts, and substantially higher debt."

For the upside, the statement said Queensland's credit rating could be raised if the state "runs sustained operating surpluses and narrower deficits after capital accounts on a continued basis".

Government response

Queensland Treasurer David Janetzki has consistently said a downgrade was likely since coming to government in 2024. "It has been an inevitability for a very long time in Queensland and S&P have now confirmed it," Mr Janetzki said.

Credit agencies expect Queensland to incur large deficits over the next two years. Addressing the media on Friday, he blamed the potential downgrade on the former Labor government and the impacts from the latest federal budget.

"S&P wanted us to raise taxes, reduce services and stop building. That's not going to happen," he said. "We've got a range of capital infrastructure that needs to be constructed and that's the key focus of a state government."

Opposition response

Opposition leader Steven Miles said the blame for the credit downgrade "sits squarely" with the Crisafulli government. "They were warned repeatedly that if they did not deliver on their own savings targets that Queensland would be downgraded," Mr Miles said.

Shadow treasurer Cameron Dick said the downgrade will "make life harder for Queenslanders". "David Crisafulli needs to explain to Queenslanders what the cost of this credit rating downgrade will be and what it will mean for everyday Queenslanders," he said.

Federal government response

Speaking on 612 Brisbane before the announcement, Federal Treasurer Jim Chalmers disagreed with Mr Janetzki's view that Queensland's budget was under pressure because of the Commonwealth. He said the federal government has been "piling billions and billions of extra dollars" into the state.

"Every budget around Australia, including certainly the Commonwealth budget, is under pressure for one reason or another," Mr Chalmers said on Friday morning. "But the Queensland budget is not under pressure because of the Commonwealth."

He alluded to the state's downgraded rating in federal parliament yesterday, where he said the risk of a downgrade was "very troubling".