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Category: Business, Economics and Finance / Government and Politics

Tasmania's credit rating downgraded by Moody's

Thursday, 18 Aug 2016 13:45:51 | Rosemary Bolger

Hands put Australian currency into a wallet in April 2014. (AAP)

Credit ratings agency Moody's has downgraded the debt rating for Tasmania, predicting widening budget deficits.

While the state recorded a $60 million surplus for the 2015-16 financial year, its rating has fallen from AA2 to AA1.

In a statement, Moody's disputed the Treasurer's spending projections in the May budget.

"Moody's anticipates that Tasmania will record widening deficits due to a combination of slowing revenue growth and expectations that the state's forecast of nearly flat levels of spending are unlikely to be realised," the agency said.

Moody's noted the State Government's figures rely on ''virtually no growth in healthcare costs over four years".

"Moreover, upward pressures on public sector wages could emerge, particularly as relevant agreements expire over the next year and the number of full-time employees is beginning to rise again," the agency said.

Treasurer Peter Gutwein was taken by surprise, since Moody's offered more positive feedback only last week.

"The adjustment highlights that there is still more to be done," he said.

"And while the budget is back in surplus four years ahead of time there remains significant long-term challenges in the areas of health, education and the state's superannuation liability that need to be managed carefully."

Government's credibility in tatters: Opposition

Shadow treasurer Scott Bacon said Mr Gutwein's economic credentials were in tatters.

"It highlights the fundamental, damning lie behind Mr Gutwein's budget - a budget which is propped up by a dividend from the TT-Line that he cannot spend and his not-to-be-believed growth targets," he said.

"They need to explain to Tasmanians why they have been arrogantly talking up their so-called credentials when things were going so horrifically wrong and they knew about it at the same time."

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