Treasurer Daniel Mookhey has signalled the NSW government is prepared to lose its top-tier credit rating, arguing its impact on the cost of debt is falling.
NSW retains top-tier AAA ratings with Fitch and Moody’s and a lower-tier AA+ rating from SP, which downgraded the state in December 2020 on the back of pandemic and infrastructure spending.
But Mr Mookhey has refused to outline the impact of a signature election promise to scrap a public sector wage cap of 2.5 per cent, removing a lid on an outgoing that accounts for almost 45 per cent of total government expenses.This week, Mr Mookhey reiterated that the state’s ratings were under pressure and, for the first time, denied that retaining them was a central focus of his budget..
But at a time when federal Treasurer Jim Chalmers has repeatedly emphasised the value of Australia’s AAA sovereign credit rating, Mr Thomson said ratings remained an important signal of the state’s economic health and long-term commitment to restoring a balanced budget. Spending commitments so far include $10 billion in new initiatives across schools, hospitals and energy, while analysis completed on the new wages plan compiled by the NSW opposition estimates it could add another $4 billion to government expenses over the next four years.
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