High dollar held responsible for Victoria’s economic decline

A report released recently has stated that the high Aussie dollar is to be blamed for the decline in Victoria’s economic growth, and the manufacturing and construction industry in the state will continue to be faced with challenges until next year.

The decline in Victoria’s manufacturing heart due to the high dollar and interest rates has resulted in lifting the state’s unemployment rate in manufacturing and the housing market to its highest level in 2012.

The Deloitte Access Economics September 2012 report, released yesterday, explains the current scenario of the sectors which have been affected by the high dollar and interest rates.

The report predicts that the state’s economy will have a partial recovery with low dollar and low interest rates in the coming years.

Economist and author of the report Chris Richardson said that the high dollar has encompassed everyone from carmakers to dairyfarmers, who have stated that the current conditions have been treating them cruelly, the Herald Sun reports.

The rate cuts by the RBA will encourage growth in the housing sector, but “such developments are unlikely to see manufacturers leaping off their sick beds and speaking of miracles”, Richardson stated.

He went on to say "and that essential outlook, better but not heaps better, would still see Victoria lose share within Australia in the next few years."

However, a recent quarterly labour figures released by the Australian Bureau of Statistics has stated that almost one million Australians are still working in manufacturing, with Victoria leading the way.

Despite recording the highest unemployment rate over the past six months, Victorian manufacturing has emerged as Australia’s strongest, with 10,000 full-time jobs created in the past year.

Victorian manufacturing minister Richard Dalla-Riva said that there had been a tendency in public debate to portray as inevitable the predictions about the demise of manufacturing in the state.

Dalla-Riva stated that there were now 308,200 Victorians in manufacturing jobs compared with 295,100 at the same time last year.

He also launched the Victorian Manufacturing Productivity Networks $7.5 million competitive grant program.

The program will help Victorian manufacturing networks assist members to improve productivity and competitiveness.

“The Victorian Coalition Government is committed to ensuring that Victoria’s manufacturing sector is supported with a policy framework that will enable it to remain competitive in a globalised marketplace,” Dalla-Riva said.

However, the Australian Manufacturing Workers Union pointed to the recent lay-offs in Victoria at Ford, Qantas, UGL Rail in Ballarat and car parts manufacturer CMI as evidence that serious problems were confronting the state's manufacturing sector.