Australia’s Treasury secretary John Fraser has warned that the nation’s prized AAA credit rating could be at risk.

Speaking at the Sydney Institute on Thursday night, Mr Fraser warned that the Federal Government should not be complacent about maintaining the rating and that urgent efforts were needed to cut spending.

“I know it’s self-evident, but it’s important that Australia maintain its top credit rating which helps contain the costs associated with servicing public debt,” Mr Fraser said.

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“But this rating is dependent on credible fiscal consolidation and a smooth transition to a more diverse economy.”

Australia is one of just 10 countries around the world with a “rolled gold” AAA credit rating from all three of the major ratings agencies – Standard & Poor’s, Moody’s and Fitch.

The global agencies maintained Australia’s AAA status during the global financial crisis, unlike Britain and France which were downgraded a notch when the fallout from the eurozone debt crisis damaged their risk profiles.

Mr Fraser did not say Australia’s AAA rating was in jeopardy or at imminent risk of a downgrade, but that complacency was dangerous.

“We should not be complacent about this. I know from personal experience during the financial crisis how important a strong credit rating is to investor confidence,” he added.

Speaking on Melbourne radio station 3AW on Friday morning, Prime Minister Malcolm Turnbull said some media outlets had exaggerated Mr Fraser’s comments.

“He didn’t say that our AAA rating was at risk, the media have written that up perhaps a little bit more sensationally than it warranted,” he said.

“At the time of MYEFO … which is the halfway review of where the budget’s tracking, the ratings agencies were very impressed and gave a very positive review of the Government’s strategy to move back into fiscal balance.”

Mr Fraser said there needed to be a major effort to cut spending and that tough decisions were required.

He said the problems arose well before the global financial crisis and that, since 2007, federal spending had ramped up by an average 3.5 per cent compared to 3 per cent in the 1990s.

Mr Fraser’s comments came amid debate over tax reform, in particular the level of the GST, the looming May budget and with economic management to be a key issue in this year’s election.

The Prime Minister was not giving away the timing of an announcement about tax changes but confirmed it would be “in the lead-up to the election”.

“Changes to the GST are certainly part of the tax debate and certainly being actively considered by the Government, as it should be – it is a relatively efficient tax,” Mr Turnbull said.

– ABC