Australian PM warns of AAA rating loss if budget not passed

Australian Prime Minister Tony Abbott warned Tuesday the country could lose its coveted AAA credit rating if the tough measures in his government's maiden budget are not adopted. The conservative leader, who has suffered a plunge in voter support over the massive spending cuts outlined in last week's budget, said Australia's "fundamental economic standing" would be damaged if it lost the confidence of the global ratings agencies. "If these measures are blocked by the Labor Party in the Senate, our AAA credit rating is at risk and if that goes, well, that does all sorts of damage to our country's fundamental economic standing," Abbott said. His comments follow top Standard and Poor's sovereign analyst Craig Michaels telling the Australian Financial Review that the agency could reassess its current outlook if "sizeable budget deficits were considered acceptable at the political and the community level". "We're looking to see the government improve budget performance over the next few years," Michaels said. Standard and Poor told AFP that the country's AAA rating was not immediately at risk and that it maintained a stable outlook for Australia, which means there is a less than one-in-three chance of a rating change in the next two years. Australia is one of only a handful of nations to hold the top rating, which indicates that the country has "an extremely strong capacity" to meet its financial commitments. By losing it, the nation would be forced to pay higher interest on its debt. Abbott accused Labor -- which has vowed to oppose some of the budget cuts and tax hikes, including a Aus$7 payment to see the doctor and raising the pension age to 70 -- of leaving the country's finances in a mess. "Labor were vandals in government and it looks like they want to continue to be vandals in opposition," he said. The government is seeking to narrow the deficit from its current Aus$49.9 billion to Aus$29.8 billion next year and to reach a surplus around the end of the decade by slashing federal health and education spending by Aus$80 billion. Other budget measures include a new temporary tax on high earners, tightened welfare and family benefits and a reduction in foreign aid by Aus$7.9 billion over five years.