[SYDNEY] Australian Federal Treasurer Scott Morrison said in a statement on Saturday that a ratings agency's assessment of the quality of Australia's debt reiterated the risks posed by a fractious senate in the wake of the double dissolution election.
Fitch Ratings has affirmed Australia's AAA sovereign credit rating with a stable outlook but it and its rivals have expressed concerns about the consequences for critical fiscal reform following the result of the nation's July 2 election - which was called in an unsuccessful attempt to produce a more harmonious upper house.
"While Fitch has maintained a stable outlook on Australia's triple-A rating ... it and the other two major agencies - Moody's and S&P - have expressed concerns that the composition of the Parliament following the election will make implementing fiscal consolidation difficult," Morrison said.
In the first week after the election Standard & Poors (S&P) announced it had placed Australia's AAA rating on credit watch negative, saying there was a one in three chance it would strip Australia of the coveted rating in the next two to three years.
On July 14, ratings agency Moody's also expressed concerns about a weakened government's ability to drive critically needed reforms through both houses of parliament.
"Despite broad political consensus around the desirability of returning the budget balance to surplus, authorities have had difficulty implementing specific measures to achieve this," Moody's said in a statement.
Mr Morrison said it was imperative that Australia rein in its debt so as to maintain the existing ratings. "Any negative change to the nation's credit rating would have flow-on effects for state and territory governments and our financial sector," he said.
"We must ensure the Government continues to underpin confidence in the economy by living within our means and avoiding higher debt and deficits that will hurt our economy and threaten our triple-A credit rating."