Victoria and New South Wales have been stripped of their AAA credit rating by S&P Global Ratings as a result of pandemic induced business lockdowns and surging levels of government debt.

It’s the first time since 2003 that either state has not been issued a AAA rating, with New South Wales sliding to AA+ while Victoria was marked more harshly, falling to AA.

Leading economist and UTS Industry Professor Warren Hogan says he wasn’t really surprised by the credit rating downgrades.

“It doesn’t really matter right now,” Professor Hogan tells Brooke Corte.

“Ratings agencies are very strict, they have their metrics around debt and debt servicing, and we’ve had 100-year pandemic so I think a government that didn’t break that rating would be under criticism for not doing enough for the economy,”

“It’s going to increase their borrowing costs a fraction, we’re talking about a handful of basis points – or 0.05% – that is really nothing, they can borrow cheaply still, and this will have no implications in the short term,”

Click play to hear the full interview: