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Monday, 24 May 1999
Page: 5146

Senator CALVERT —My question is to the Assistant Treasurer, Senator Kemp. What is the significance of Standard and Poors' upgrading of Australia's credit rating from AA to AA plus?

Senator KEMP (Assistant Treasurer) —Thank you, Senator Calvert, for that most important question. Senator Calvert reminds us of a very important announcement that was made last week.

Senator Faulkner —Kempy, lift your game.

The PRESIDENT —Senator Faulkner, you should not be shouting in that fashion.

Senator KEMP —It has taken this country 10 years to recover part of the way from Labor's economic mismanagement which cost this country not just one but two credit rating downgrades. The ratings agency Standard and Poors first downgraded our foreign currency debt rating to AA plus in August 1986 under the Hawke Labor government. Confirming the then major external imbalances in the Australian economy, Australia was further downgraded to a AA credit rating in October 1989.

However, just last week Standard and Poors announced that Australia had been upgraded back to a AA plus credit rating, the second highest international credit rating. This is a very important independent objective endorsement of the quality of Australia's fiscal management and performance prospects. It was a decision made for four main reasons: the rapidly decreasing net foreign debt of the public sector, falling from 87 per cent of annual exports in 1994 to 35 per cent now; the wide consensus of continued fiscal restraint; Australia's prudent monetary policy and low inflation; and favourably, of course, the very good performance of the Australian economy.

History will note as fact that the last Labor government, at the stage when of course the current Leader of the Opposition was finance minister, presided over a downgrading of Australia's credit rating. Australia's credit rating upgrade is a recognition that the economic course the Australian government is currently following is right for the times. The policies of the Howard government are bringing their own rewards: low interest rates, the lowest in memory; low inflation, running at substantially lower levels than in the OECD; rising real wages; more jobs—the unemployment rate now, of course, is around a nine-year low; and a strong and growing economy. The Australian economy is growing faster than the economies in Europe and even faster than the high-performing US economy.

The coalition delivered a surplus budget this year, last year and the year before that, and has repaid debt shamelessly accumulated by the last government who ran Australia into the red by close to $80 billion. Credit ratings are an indication of the economic performance of this government, and it is fitting to recall that when Labor was in government it presided over two downgrades. The coalition has the runs on the board. We have a strong record and we are facing an opposition which is determined to block reform and change at every opportunity.