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South Australian downgrading adds to Labor's woes

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Senator J t m Short Shadow M inister for Finance and Shadow Minister Assisting the Leader on Commonwealth/State Relations



Australian Ratings' downgrading of the South Australian Government's long-term credit rating from AAA to AA+ comes as no surprise in light of the extent of the problems revealed recently; iv ' about the State Bank. 1 : " ' '

It is a vindication of the State Opposition , , , · who had continuously questioned Premier Bannon about the Bank's position and voiced its concerns well before the belated public , announcement of the Bank' s problems. ■ ; ; ;

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The difficulties now faced by the South Australian Government, come on top of the disasters in other Labor States which have led to similar downgradings over the last year.

Now, only New South Wales, Queensland and Western Australia retain their AAA rating. South Australia has joined Victoria with its AA+ rating, with Tasmania at the bottom of the list with AA-.

The downgradings mean increased borrowing costs for the States (ie. taxpayers) and greater difficulty in attracting investment.

The ratings performance of these Labor States indicates clearly they have lost control of their finances. This will add to the deterioration in the stance of the public sector's fiscal position. This has already come under great pressure from the Commonwealth's massive shortfall on its Budget surplus prediction.

In light of the continuing bad news from Labor at the

Commonwealth and State levels, the public sector borrowing requirement is now likely to be up to 3 per cent of GDP for 1990­ 91. It is a far cry from the position of balance forecast at Budget time, and has major economic policy implications.

This heavy drain by the public sector on our national savings provides further overwhelming evidence of the need for the Hawke Government to use the 12 March Industry Statement as the last opportunity to correct its disastrous economic policy errors.

Melbourne 26 February 1991

Contact: Senator Jim Short (03) 387 4177