Consumer demand fuelled demand for SA wine

    THE loss of South Australia's cherished AAA credit rating would not be the end of the world, a top economist says.

    Treasurer Kevin Foley, however, would need to prove the state's rising debt improved our ability to build for the future, SA Centre for Economics director Michael O'Neil said.

    "A small downgrade (from AAA to AA) may not be that costly but is likely to occur," he said.

    "SA is well placed overall, in my view, but it will be important any borrowings add to our productive or export capacity in the near to medium term."

    Mr O'Neil said changes to China's currency and increasing Chinese demand gave the state a golden opportunity. "In terms of food, seafood, wine, clothing, some household goods and with a stronger currency, more Chinese will travel," he said. "How will SA capture our share of tourism growth?"

    Mr Foley admitted this month the state's credit rating was "at serious risk" through a $1 billion slump in revenue.

    "To maintain it (the credit rating) we would have to abandon most of our capital works projects," he said.

    "That would be economically devastating. We will focus on creating productive capacity."

    Mr Foley said SA stood to gain as Chinese consumer demand fuelled demand for SA minerals and consumer manufactured goods.

    Opposition Leader Martin Hamilton-Smith said the Government must provide the electorate with an infrastructure plan: "Rann and Foley have been crowing about the AAA credit rating for years but its loss will mean there is less to spend on hospitals, schools and law and order."