Mr GEORGIOU (3:07 PM) —My question is addressed to the Treasurer. Would the Treasurer advise the House of the results of Moody's latest review of Australia's credit rating and provide the House with an update on the Australian economy?

Mr COSTELLO (Treasurer) —I thank the honourable member for Kooyong for his question. I can advise the House that Moody's rating agency today upgraded Australia to a AAA credit rating on Australia's foreign currency debt and deposits. The Commonwealth credit rating was downgraded by Moody's on two occasions: once in 1986 to AA1 and a second time in 1989 to AA2. The upgrading to a AAA credit rating today upgraded Australia's rating by two positions to the AAA mark. Standard and Poor's credit rating also downgraded Australia twice: once in 1986 to AA+ and once in 1989 to AA. It upgraded Australia back to AA+ in 1999, but Australia is still not at the top rating by Standard and Poor's.

We welcome the fact that Moody's has upgraded Australia today to a AAA credit rating. This not only affects the Commonwealth but increases the rating ceiling that can be applied to other domestic residents, including state governments and private sector companies—that is, state governments and private sector companies cannot go higher than the Commonwealth rating. Now that the Commonwealth has been re-rated up, the states and private companies can be accordingly. Moody's today, as a consequence of this upgrading, also upgraded the Commonwealth Bank of Australia, the Commonwealth Development Bank of Australia, the AIDC, EFIC, the New South Wales Treasury Corporation, the Queensland Treasury Corporation, the Western Australian Treasury Corporation and the Treasury Corporation of Victoria.

Upgrading Australia to a AAA credit rating was the result of a reassessment and, in part, a methodology change adopted by Moody's. It indicates that Australia is now at the very top of Moody's credit rating, bringing us into line with the advanced OECD country grouping, including the United States, the United Kingdom, France and Germany. Today, New Zealand and Iceland were also upgraded. The consequence of that is that those states and companies which have followed the Commonwealth up with a higher credit rating will be able to borrow at a lower risk premium, and their financial position accordingly will be strengthened. For those governments that are borrowing, being able to borrow at lower interest rates means that taxpayers will get better value. Australia returns to the top credit rating that Moody's allows in relation to bonds and deposits on foreign currency—the AAA credit rating.