High dollar drilling a $15b-a-year hole in Australia's rural exports
IF IT were not for the high dollar, Australia's rural exports would be bringing in an extra $15 billion a year, a study says.
The Australia Institute has calculated the extra income that would have been earned by rural exporters if the dollar had stayed at about US70¢ - its average before the mining boom - rather than climbing above $US1.
It says that in every year since 2003 rural exporters would have been better off, with the gains totalling $43.5 billion.
''It's the elephant in the room,'' said Australia Institute executive director Richard Denniss. ''The carbon price is more of a mosquito bite than a cobra strike, the exchange rate is the elephant the Nationals just don't want to talk about.''
Titled Beating Around the Bush, the study finds the beef and veal industry would be $2 billion a year better off with the lower dollar and the sugar industry $566 million better off.
''The mining boom has not been managed well. It has been allowed to expand with little consideration for the collateral damage it causes to other sectors of the economy,'' the study says.
''The idea that any growth in the mining sector will serve to enhance Australia's income is simply untrue. The macro economy is far more complex, with unintended consequences like the high exchange rate negatively impacting on sectors such as the rural sector."
Challenged as to whether the exchange rate would have climbed above US70¢ even without the mining boom, Dr Denniss said no one could say for certain but it certainly would not have climbed above $US1.
If the exchange rate was US80¢, Australian rural exporters would be $8.5 billion a year better off. If it was US90¢, rural exporters would be $3.5 billion a year better off.