Thursday, 12 April 2012

Paul Howes - somebody IS benefiting from the higher dollar

Today Paul Howes has come out criticising the Reserve Bank's charter, and claiming that "One of the real issues that our country has to come to terms with is that a high Australian dollar is good for nobody."

Sorry, but that's just plain wrong.  Here is some proof that the Australian dollar is good for somebody.

Overseas travellers have benefited

Since the appreciation of the Australian dollar, overseas travel has boomed.  There are nearly an extra 200,000 people a month travelling overseas now compared to 2008.

ABS: Short term resident departures

People buying televisions and computers have benefited

According to the latest ABS data, Audio, visual and computing equipment is down 18.8% in the last year (to Dec 2011).  That means major savings for anyone who wants to purchase these products.  It means that equipment that may have been too expensive for some people, has fallen into an affordable range.  It means that the rise in the Australian dollar has been good for somebody.

Australians buying property overseas

With the higher Australian dollar, that means that Australians can buy property overseas at a much lower price than previously.  It is now in the realm of the middle class income earner, with properties in Europe now attainable for $100,000. Property buyers lured to foreign affairs

Whether it is a lifestyle choice, or an investment, this means that Australians are owning real assets in other countries.  This means that the higher dollar is benefiting those buyers.  Those people are somebody.

Paul Howes - are the Unions as economically inept as Katter

The calls from Paul Howes to review the charter of the Reserve Bank are echoes of Bob Katter's crazy claims to sack the RBA board.  The well managed Australian economy through the Hawke/Keating, Howard/Costello and Rudd/Gillard/Swan years has been nothing short of stellar.  And the independence of the Reserve Bank with its charter and formal agreement with the Treasurer to maintain underlying inflation in a target range of 2-3% PLUS achieve full employment has been a critically stable influence throughout.

Whenever radical statements are made by any side of politics, people listen and get confused between the nonsense and the sensible.  We must remain economically rational.

Let me know what you think

Mark S


  1. There needs to be a law against outrageous and uneducated remarks by public personalities. I draw the Libertarian line at allowing the likes of Howes and Katter the freedom to comment on anything of consequence.

    p.s. I think you mean "inflation" not "interest rates" in a target range of 2-3%. Incidentally, the 'charter' is actually silent on any inflation range. The range is more an outcome of 2 objectives of stable currency (which is pretty much is at the moment) and economic prosperity (no significant argument from me on that).

  2. Thanks for the corrections. Duly noted, and updated in the post.