Queensland faces downgrade risk as debt soars to unprecedented levels

In Australia, concerns have arisen regarding Queensland's financial stability as rising costs and government spending threaten its 15-year AA+ credit rating. S&P Global has warned that the state's rating could be further downgraded if its budget continues to be strained, which would increase borrowing costs for state projects, including preparations for the 2032 Brisbane Olympics. With a debt projection approaching $172 billion by 2027-28 and interest repayments surpassing $7.7 billion, taxpayers could face reduced public services as more funding is allocated to interest payments. The credit rating, which has been pegged at AA+ since 2009, reflects factors such as the state's economic structure, financial performance, liquidity, debt management, and fiscal strategy. Anthony Walker, an analyst at S&P Global, highlighted that additional spending, either from new initiatives or cost overruns, could weaken Queensland's fiscal position. He emphasized that without corresponding savings or revenue increases, the state could jeopardize its AA+ credit rating. Currently, Queensland shares this rating with South Australia but sits just below Western Australia, which holds the top AAA rating. Government officials, including Janetzki, have acknowledged the financial challenges facing the state, highlighting that previous policies implemented by the former nine-year Labor government have contributed to heightened risks of a credit rating downgrade. This situation has led to a prediction that Queensland is likely to face a rating downgrade outlook amid elevated spending levels. Economic analysts like John Humphreys have criticized government spending habits, stating that these unsustainable practices are responsible for the growing debt burden. Former Treasurer Cameron Dick defended the budget priorities focused on providing cost-of-living relief to Queenslanders, despite acknowledging the risks involved in running a deficit. He maintained that overspending would not be taken lightly as the government aims to support its citizens while navigating its financial difficulties. The recent data released by the Australian Bureau of Statistics also indicates that excessive state spending across Australia is a contributing factor to rising inflation, emphasizing the broader implications of Queensland's financial strategy.