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     SYDNEY (MNI) - Standard & Poor's has upgraded the outlook on Australia's
AAA rating to stable from negative, citing expectations of a return to surplus
by early 2020 and an orderly decline in housing prices that won't weigh heavily
on consumer spending.
     Below are key excerpts from S&P's statement Friday:
     --"We expect the general government fiscal position to return to surplus by
the early 2020s, as the central government's continued focus on fiscal prudence
turns higher revenue collection into better budget performance. We view the
government as having significant revenue flexibility to achieve this based on
its track record of raising general government revenue faster than the growth of
nominal GDP."  
     --"We are revising our outlook on Australia to stable from negative and
affirming our 'AAA' long-term and 'A-1+' short-term ratings." 
     --"The stable outlook reflects our expectations that the general government
fiscal balance will return to surplus by the early 2020s. We expect steady
government revenue growth supported by the strong labor market and relatively
robust commodity prices, to be accompanied by expenditure restraint. We also
expect property prices to continue their orderly unwind, and that this slowdown
won't weigh heavily on consumer spending and the financial system's asset
     --"We could lower our ratings if we consider that it is unlikely for the
general government balance to return to surplus over the next five years.
Australia's weak external position means that its other sovereign credit
factors, including the fiscal factors, need to be strong to keep the sovereign
rating at the highest level on our scale. A stronger fiscal position would also
be a strong buffer to absorb the consequences of an abrupt weakening of the
housing market and the vulnerabilities that event could bring to financial
     --"While our base case is for a soft landing, our ratings could come under
pressure if house prices fall sharply and increase risks to fiscal accounts,
real economic growth, and financial stability."
--MNI Sydney Bureau; tel: +61 2-9716-5467; email:
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