QUEENSLAND'S CREDIT RATING IN DANGER

QUEENSLAND’S AA1 credit rating is in danger, with ratings agency Moody’s changing the state’s outlook from stable to negative.

Despite the downgrade Queensland Treasurer Tim Nicholls (pictured) says Moody’s analysis backs the government’s tough budget.

“Moody's recognises the value of the Newman Government’s most important Budget in a generation that starts the job of repairing Queensland’s finances,” says Nicholls.

It notes the Government’s plan to fix the budget is a "more prudent fiscal approach" and "is a positive development".

“Importantly the report also noted the necessity to maintain a prudent fiscal approach is necessary to avoid a further downgrade.”

Moody’s says Queensland financial performance deteriorated over the past five years, with pressures increased by a lack of spending discipline.

Net direct and indirect debt increased from a moderate 58 per cent of revenues, or 9 per cent of GSP in 2006/7, to 126 per cent of revenues, or 21 per cent of GSP, in 2011/12.

“The Government’s real concern was, given the power of debt and the number of deficits incurred over the last five years of a reckless Labor government, we would have suffered yet another downgrade,” says Nicholls.