Australia will weather global crisis: govt

Australia is well placed to weather heightened global uncertainty following Standard & Poor's downgrading of the US credit rating, with strong economic fundamentals and a secure gold-plated AAA ranking, the government says.
But the opposition says Australia is not as well positioned as it was in 2008 to deal with a deterioration in global financial markets and the government should act immediately to boost confidence by dumping the flood levy and the mining and carbon taxes.
Ratings agency Standard & Poor's overnight cut the US credit rating from AAA to AA+, warning it could be reduced further within two years.
Rival ratings agencies Moody's and Fitch, however, have left the US rating unchanged.
The move follows days of turmoil on global markets. In Australia, the stock market slumped around four per cent on Friday, matching similar falls in Europe and the US, in the worst sell-off since the depths of the global financial crisis (GFC) two years ago.
Prime Minister Julia Gillard and Treasurer Wayne Swan on Saturday both moved speedily to talk up the Australian economy.
Ms Gillard said Australia was not immune to global events but Australians should have confidence that economic credentials were among the best in the world.
"We should also have confidence of the strong fundamentals of our economy. We have low debt, low unemployment, the budget coming to surplus in 2012-13, a AAA credit rating, and we are looking to strong economic growth," she told reporters in Melbourne on Saturday.
"And we are in the right part of the world, a part of the world that continues to grow. That means we will continue to see economic growth in our region."
Mr Swan said Australia's fiscal situation couldn't be more different to the US.
He said Australia's gold-plated AAA credit rating was safe and secure.
"It's been recently affirmed and we are widely considered to be in the top-tier, even among the exclusive club of developed economies in the world to share the highest rating," he said.
Mr Swan said Australian net debt would peak at less than one-tenth of the major advanced economies and the budget would be back in the black in 2012/13.
"We're located in the right part of the world at the right time. The prospects for our region remain much stronger as the weight of global activity continues to shift from West to East."
Opposition treasury spokesman Joe Hockey said Australia was highly dependent on offshore capital markets with 73 per cent of federal government debt - more than $130 billion - now held by non-residents.
"Should there be a deterioration in global financial markets, the Australian government is not as well prepared as it was in 2008," he said in a statement.
"Labor inherited a budget surplus of $20 billion which is now a deficit of over $20 billion. Moreover, the coalition left net assets in the bank of around $45 billion which is now heading towards a net debt of approximately $110 billion."
Mr Hockey said the medium-term outlook for Australia remained strong, given links to Asia.
But, he said, the government should do all it could to maintain investor and household confidence. It should immediately boost confidence by repealing the flood levy and cancelling the introduction of the mining tax and carbon taxes, he said.
"It makes no sense to add to the financial struggle for households already under significant financial pressure," he said.