The former head of the International Monetary Fund has praised the role the Reserve Bank has played in managing the Australian economy, saying the Aussie dollar is likely to stay high but a stable currency is more important than protecting local manufacturers from the impact of a rising dollar.
Speaking on the sidelines of the annual Diggers and Dealers conference in Kalgoorlie-Boulder yesterday, Rodrigo de Rato, IMF managing director between 2004 and 2007, said the Reserve Bank had been an "anchor of stability" for the Australian economy during the turbulence of the past few years.
Although Mr de Rato would not comment directly on whether the Reserve Bank should intervene to lower the Australian dollar to help keep local manufacturers competitive, he said currency stability - even at high levels - was a net benefit for Australia.
"A stable currency is a very good thing for a country. It allows the absorption of external shocks, and if you don't have the ability to absorb external shocks you suffer much more," Mr de Rato said.
In welcome news for a mining industry struggling under the twin burden of rising costs and falling commodity prices, Mr de Rato said China, not crisis-ridden Europe, would continue to drive demand for Australia's mineral exports. "The weak market sentiment contrasts with the strong figures from Chinese commodity imports, which have been on the upside," he said.
While the pubs were packed, the mood at the annual mining-fest was pensive, as exploration companies face the prospect that risk-averse bankers and investors will refuse to fund projects.
Falling commodities have played their role in those difficulties, though Diggers and Dealers chairman Barry Eldridge blamed the Federal Government, too.
Responding to recent criticism by Treasurer Wayne Swan of Andrew Forrest, Gina Rinehart and Clive Palmer, Mr Eldridge described the Government as "incompetent, inconsistent, dishonest and frankly delusional" in its dealings with the mining industry.
"Apparently if you disagree with this current Government, you are a rogue and a public enemy," he said.
Mr Eldridge said he would rather have a government led by mining billionaires than the current one.