The Government welcomes the announcement today by Standard and Poors of its upgrading of Australias foreign currency debt from AA to AA+. The announcement constitutes a strong endorsement by an independent body of the Governments economic policy achievements over the last three years.
Standard and Poors pay tribute to Australias "favourable economic performance and prospects, as a result of economic reforms, reinforcing resilience, flexibility, diversity and competitiveness".
In announcing the upgrade Standard and Poors emphasise the importance of the Governments continued commitment to fiscal consolidation and debt reduction. We have now a transparent medium term policy framework that is delivering strong budget surpluses, narrowing the gap between domestic saving and investment and hence the current account deficit.
This announcement is a strong endorsement of the Budget that I delivered just a week ago.
Standard and Poors also emphasise the importance of Australias medium term framework for monetary policy which, they note, has established a low inflation environment in Australia.
And they pay tribute to the Governments strong record of structural reform in the labour market, in product markets and to the Governments privatisation program including the sale of the remaining two-thirds of Telstra.
The AA+ rating is the second highest rating that Standard and Poors apply to foreign currency debt. Australia last enjoyed this rating in 1989. Australias rating was downgraded then under the Hawke-Keating Government. The Labor Government also presided over the loss of Australias AAA rating in 1986.
Todays announcement was very well received by the fund managers and institutional investors with whom I have been meeting in Hong Kong.
This announcement should be welcomed by all Australians. It signals recognition by the international community of Australias ability to sustain strong, low inflationary, growth with continued low interest rates.