/ 08 June 2021

Australia’s outlook lifted

Australia’s economy yesterday received a boost when S&P Global Ratings upgraded its outlook on our AAA debt rating from ‘negative’ to ‘stable’. “The government’s swift and decisive fiscal and health response to contain the pandemic and limit long-term economic scarring has seen the economy recover quicker and stronger than we previously expected,” S&P said yesterday. The influential report card sees Australia join 8 other economies to have the highest tick of approval from the world’s 3 largest credit rating agencies.

In practical terms, it’s an opinion about creditworthiness, and it’s something capital markets use when assessing whether and how much to lend, at what rate, and under what conditions. Like when it comes to your own finances – the better your credit rating, the more options you have if you need to borrow money. But if you’re PM Scott Morrison, it means a lot more than that… He’s looking forward to lobbing up to the G7 meeting at the end of the week as the leader of  “one of just a handful of developed countries with economies that are bigger now than before the pandemic”. And he lauded the development as “an endorsement for our model of economic recovery”.

And at an individual level, new figures out this morning from the Australian Tax Office have shown who is winning the income-earning race… In the 2018-19 financial year, 14.7 million individual taxpayers paid a combined $213 billion in income tax. Four in 5 Australians earned less than $100,000. Meanwhile, the top 1% of earners with incomes of more than $750,000 paid about $84 billion in income tax. The best-paid people in the country – our 180 neurosurgeons. Because some things in life are as complicated as brain surgery…

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