Coalition treasury spokesman Joe Hockey says volatile dollar is hitting confidence, fuel prices

Ben Packham
July 04, 2013
The Australian

OPPOSITION treasury spokesman Joe Hockey says the rapidly falling Australian dollar is having an “immediate negative impact” on business confidence and fuel prices, despite being good for exporters.

Mr Hockey said falling interest rates and the 10 per cent fall in the dollar since May, to $US0.91, was evidence of the volatility in the economy under Labor.

“That …dramatic movement of the Australian dollar is going to have an impact – an immediate negative impact – on fuel prices. It’s going to have an immediate negative impact on business confidence.

“Because whilst it is good that the Australian dollar comes down for business, particularly for business that is involved in exports, the speed with which it comes down adds to the volatility of the Australian economy. There is no doubt about that.”

Mr Hockey said economic stability could not be delivered when there was political instability in Canberra.

The Coalition attack runs contrary to the broad consensus among economists that the falling dollar is unambiguously good for the economy.

The tumbling Australian dollar is set to deliver a surprise budget boost, wiping out some of the $10.9 billion deficit that is forecast for next financial year.

The head of consultancy Macroeconomics, Stephen Anthony, calculates that the currency’s fall since May should reduce the budget deficit by between $3bn and $5bn, before allowing for the export price changes.

Mr Hockey’s comments come a day after Reserve Bank governor Glenn Stevens warned both major parties not to deviate from their commitment to return the budget to surplus.

Mr Stevens said “principled and consistent” policy-making was needed to help revive business and consumer confidence.