State Budget initiatives behind ratings improvement

Queensland Treasurer Curtis Pitt says analysis by ratings agency Moody’s Investor Services shows budget initiatives taken by the Palaszczuk Government were factors in the agency’s decision to lift the negative outlook it applied to Queensland in the wake of the LNP’s first disastrous 2012 State Budget.

“Last week Moody’s affirmed its Aa1 rating for Queensland — equivalent to AA+ — and replaced the ‘negative’ outlook it imposed after Tim Nicholls’s first Budget with a ‘stable’ outlook,” Mr Pitt said.

“The supporting analysis released by Moody’s today shows its decision took into account, among other things, our fiscal principles including the new fiscal principle to contain public sector costs, as well as initiatives taken under our debt action plan.

“These initiatives taken since the January 2015 state election have all been key elements in our economic plan that is seeing growth and confidence return to our state after three disastrous years under the LNP when Tim Nicholls was Campbell Newman’s right-hand man.

“The Moody’s publication also reflects other analysis pointing to the fundamental strength of our state economy including its diversity and strong export performance, but recognises — as does the government — that more needs to be done in terms of job creation.”

Mr Pitt said the Moody’s analysis of the state’s economic strengths was in line with the latest

Queensland State Accounts prepared by Queensland Treasury showing the positive outcomes of the government’s economic plan. 

“The Queensland State Accounts for the December 2016 quarter highlight the strong fundamentals of our state economy and the strong growth we are experiencing and will continue to experience,” he said. 

“They confirm Queensland’s economy is growing strongly and conditions are on the rise thanks to our economic plan. 

“The State Accountsshow strong growth in Gross State Product, and a continuing upturn in our state’s domestic economy as shown by positive growth in State Final Demand for the fourth consecutive quarter.” 

Mr Pitt said the latest State Accounts showed: 

• trend Gross State product rose 2.6 per cent in the December quarter 2016 compared with the same previous corresponding quarter, 
• the annual growth figure for Queensland was higher than the trend result in the rest of Australia of 1.8 per cent, 
• the annual rise in GSP strengthened from 1.9 per cent growth in September quarter 2016, 
• in real terms trend GSP rose by 0.9 per cent in the December quarter 2016 — well ahead of trend growth in the rest of Australia of 0.2 per cent, 
• the strong December quarter result followed a similar 0.9 per cent growth in the September quarter, 
• a key measure of the domestic economy State Final Demand — which excludes trade results — increased 0.3 per cent in the December quarter to be 1.6 per cent higher over the year, 
• State Final Demand recorded its fourth consecutive quarter of positive growth following eight negative quarters, 

“The figures show domestic demand conditions in Queensland have improved following a period of weakness caused by the winding down of the past massive upfront investments in resources projects such as export LNG construction,” Mr Pitt said. 

“Household consumption, the largest component of our GSP, was up 0.6 per cent while there was also 0.5 per cent growth in business investment, which recorded its second consecutive rise following 11 consecutive quarterly falls.” 

Mr Pitt said increases in household consumption and business investment supported the good State Final Demand results – a key indicator of domestic conditions – to achieve a fourth consecutive quarter of growth. 

“While dwelling investment fell 0.6 per cent in the December quarter 2016, it was still 3.3 per cent higher over the year, reflecting the strong growth in construction work done on medium-to-high density dwellings,” he said. 

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