Australia's triple A credit rating at risk, warn analysts

The Reserve Bank will meet Tuesday for the first time to discuss interest rates since the election and the shock Brexit vote. Australia's credit rating may be lowered if the new government doesn't improve the budget.

Warnings Australia risks losing its triple-A ratings. (AAP)

Australia is among just a handful of countries with a triple-A credit rating.

It means the nation can borrow money at cheap prices, fuelling projects which grow the economy, while banks can pass this on in the form of lower interest rates for borrowers.

But IG Markets Analyst Evan Lucas says credit rating agencies were already reassessing that rating before the election.

"S&P already stated that we needed to see some form of fiscal consolidation or at least some form of change with regards to the fiscal spending in this country. The level of spending to income is clearly a problem," Mr Lucas said.

Any hold up in parliament which slows budget repair, can impact our triple-A rating.

While there's no immediate threat, agencies Moody's and Fitch have put Canberra on notice.

Standard and Poor's rang the loudest alarm, saying irrespective of the government's composition, it may lower the rating if budget measures cannot pass the parliament.

New South Wales Business Chamber CEO Stephen Cartwright says both sides of politics need to think long-term.

"What we're seeing is that governments are having to become responsive to short term populous demands, to increasingly rack up more debt, to run biggest deficits and that's going to put pressure on our credit rating."

Australian Industry Group chief executive Innes Willox  said business groups are trying to look at the bright side, given pre-election bipartisan support for tax cuts for small businesses.

"Businesses with a turnover of less than $10-million are able to get some tax relief which was proposed in this budget, you would hope for that but I think after that everything is up for grabs."

A reduction in the corporate tax rate for larger business may be a harder sell.

Stephen Cartwright said business groups aren't happy about the current uncertainty.

"Uncertainty has a detrimental effect on business activity, consumer sentiment, investment sentiment, and I think it's a shame we are facing that prospect."

Commsec analyst Tom Piotrowski said it's a prospect likely to be discussed by the Reserve Bank tomorrow.

"The Reserve Bank will definitely leave rates on hold but they will reasonably put the context of uncertainty definitely front of mind as far as their conversation is concerned. Brexit and the inability to get a clear result in the election will an important feature of the conversation."