Queensland faces looming AA+ downgrade as state and federal leaders trade blame
Queensland is on the verge of a credit rating downgrade, prompting a dispute between the state LNP government and the federal Treasury over responsibility.
Queensland's credit rating is expected to slip from AA+, a move that would increase borrowing costs and force either higher taxes or cuts to services. AMP chief economist Shane Oliver warned that the downgrade would tighten the state's budget, affecting everyday Queenslanders. In Canberra, Treasurer Jim Chalmers described the prospect as "very troubling" and pointed to a sharp fiscal decline despite increased Commonwealth support.
State treasurer David Janetzki, who has warned of a downgrade since taking office in 2024, placed blame on the former Labor government and the latest federal budget. Oliver added that a slump in stamp-duty revenue, rising bond yields and insufficient state-level austerity all play a role. Total state debt is projected to exceed $216 billion by 2029-30, with interest expenses climbing to nearly $11 billion, dwarfing the $7.1 billion infrastructure budget for the 2032 Olympics. S&P declined to comment on any imminent decision.
Why it matters
A downgrade would raise Queensland's borrowing costs, potentially leading to higher taxes or reduced public services.
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