The Reserve Bank of Australia will cut interest rates when it meets tomorrow (Tuesday) but the Australian dollar won't fall solely on the back of it and any fall will be short lived, a QUT economist says.

Dr David Willis, from QUT Business School, said the RBA was attempting to instil a fall in the Australian dollar to "what is perceived as a fair value level of 72 cents to 75 cents to the US dollar."

The RBA cut rates to a record low of 2.25 percent at its February board meeting but kept the cash rate on hold in March and April.

"Despite this cut to an historic low, the currency stands at 79 cents, and, against the cross rates, hardly changed," Dr Willis said.

"Therefore the market seems to have a different view of what is fair value than the RBA.

"The market sees the US economy and monetary policy clearly outweighing any attempt by the RBA to devalue the AUD, so we are becoming a price taker in a fee currency environment rather than a price maker.

"We have to wait until the US economy is strong enough for the US Federal Reserve to start increasing interest rates before our currency falls in any meaningful way towards the 72 cents the RBA wishes."

Dr Willis said the lack of movement on the Australian dollar following the previous rate cut was a "failure of monetary policy" by the RBA as it attempts to lean into the US currency wind.

"We are clearly now not masters of our own destiny when it comes to currency rates," he said.

"Therefore the RBA now needs to stop spending precious monetary support given the policy is having little or only a very marginal effect on either the domestic economy or currency.

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VECCI Chief Executive Mark Stone said it was a big positive that the State Government’s announced $257 million investment in new regional rail carriages and infrastructure will create nearly 200 Victorian jobs and boost skills in the Geelong region.

"VECCI welcomes the fact that the new carriages will be built by Bombardier in Victoria, securing 64 jobs," Mr Stone said.

"In addition, the new maintenance and stabling yard in Geelong will create 100 jobs during construction, 30 ongoing jobs and include apprenticeship and education opportunities.

"The 21 new VLocity carriages adding an additional 1,500 passengers to the daily capacity of the V/Line system will be welcomed by commuters and leisure travellers.

"We welcome the State Government’s announced budgetary commitments to Victoria’s transport network and look forward to further job creating infrastructure commitments in Tuesday’s budget."

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

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THE Victoria Tourism Industry Council (VTIC), in association with the Victorian Events Industry Council (VEIC), welcomes the State Government's announced additional $20 million annually for the next four years in funding to support the growth of major events throughout Victoria.

"Victoria is the major events capital of Australia and we're delighted this funding will enable us to further bolster our standing, by delivering more events to Melbourne and regional places throughout Victoria," said VTIC Chief Executive Dianne Smith.

"We have consistently urged policy makers to further leverage our strength in major events and we are thrilled that the Andrews Government is using its first budget to recognise the important contribution tourism and events make to our economy and community."

The measure will be provided through a significant boost to the Victorian Major Events Company, lifting its annual budget from $42 million to $62 million.

The tourism and events industry contributes $20 billion annually to the Victorian economy and employs 200,000 people.

"As the Premier has highlighted today, major events draw tourism and create great opportunity for local operators such as restaurants and hotels. VTIC will continue to work with government and operators throughout Victoria to make sure we leverage the job creation possibilites that this measure brings," said Ms Smith.

The Victoria Tourism Industry Council (VTIC) is the peak body for Victoria’s tourism and events industry, providing one united industry voice.

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VECCI recognises that the focus of this year’s State Budget is going to be on delivering the Andrews Government’s pre-election commitments.

These commitments have a strong focus on jobs and are closely aligned to the priorities for reform VECCI championed through its 2014 pre-state election campaign Taking Care of Business. 

With this in mind, the budget must fund important productivity enhancing, job creating infrastructure projects.

“We have already welcomed the recently announced funding to progress Melbourne Metro Rail, the Transurban proposal for the Western Distributor project and the agreement to deliver the CityLink / Tullamarine Freeway Widening Project,” said VECCI Chief Executive Mark Stone.

“The Andrews Government must build on these announcements by funding and progressing its level crossings removal project and the establishment of Infrastructure Victoria.”

A commitment to expand the Melbourne Convention and Exhibition Centre, to be completed by 2018, would also be of great benefit to Victoria’s major events and tourism sectors.

A budget allocation from the Regional Jobs and Infrastructure Fund will be important to ensure the delivery of a number of regional infrastructure projects committed to pre-election including:
- The Ballarat Station Redevelopment
- Geelong Performing Arts Centre
- Eureka Stadium, Ballarat
- Grampians Peak Trail

Business is also looking forward to the budget funding a range of other pledged initiatives including:
- The Back to Work Act
- The Premier’s Jobs and Investment Panel
- The Future Industries Fund
- Start-Up Victoria
- Projects Victoria
- Inbound trade missions and new Victorian Government Business Offices

“If not contained in this year’s budget, future budgets must continue to work towards encouraging jobs by lifting the payroll tax threshold and strengthening Victoria’s international engagement capabilities,” said Mr Stone.

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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