Moody's Credit Rating Decision Wed 3 October 2012 Lara Giddings Premier Moody's announcement today that it has lowered Tasmania's credit rating from the highest Aaa rating to Aa1 reflects national economic pressures including the high Australian dollar and falling revenues. The Premier, Lara Giddings, said Aa1 is still a high quality investment grade rating and matches that of Queensland, South Australia and the Northern Territory. It comes on the back of yesterday's announcement that Standard & Poor's was maintaining the State's Aa+ rating. "As I said yesterday, we have been concerned that it would be very difficult to hold the State's Aaa rating with Moody's given that it is the highest grade possible under their rating methodology. "It reflects what we have been saying for some time - Tasmania is not immune from the economic pressures affecting developed nations around the world and we have to adjust our spending accordingly. "The Tasmanian community can be assured that the Government remains committed to returning the State's finances to a sustainable position, so that we can continue to deliver the essential services needed by the Tasmanian community into the future." Moody's has confirmed that its outlook for Tasmania is stable due to the State Government's strong budget plan and demonstrated fiscal responsibility. The agency stated: "The government appears committed to implementing savings measures under its budgetary redress plan, as evidenced by its success in limiting salary increases for teachers and other groups in line with its 2% wages policy." Moody's has indicated that its assessment is based on the deficits arising from the slowdown in revenue, particularly in relation to GST and duties revenue as well as the relatively high levels of debt relating to Government businesses compared with other jurisdictions. "That is exactly why the State Government is taking strong action to get our finances back on track." Ms Giddings said unlike the State Government, the Liberal Opposition had no credible plan to deal with a $1.8 billion decline in revenues. "The pressure is on Will Hodgman to explain how he would avoid further credit rating downgrades under his paper-thin alternative plan, which has absolutely no credibility. "The Liberal Opposition has repeatedly failed to outline where their alternative cuts would come from so any commentary they offer on this issue should be viewed with extreme scepticism." Future information updates, such as the upcoming 2012-13 Mid-Year Financial Report, will provide opportunities to present the Government's progress against the Fiscal Strategy and the Budget forecasts. Ms Giddings said the Government will continue to work towards achieving its Fiscal Strategy targets and would work towards restoring its Aaa rating in the future. Current Ratings for Australian States and Territories State/Territory Moody's S&P New South Wales Aaa AAA Queensland Aa1 AA+ Western Australia Aaa AAA Australian Capital Territory n.a. AAA Victoria Aaa AAA Tasmania Aa1 AA+ South Australia Aa1 AA Northern Territory Aa1 n.a.