Australia rejects currency action

SYDNEY: Australian Treasurer Wayne Swan refused Tuesday to intervene to prevent the local dollar's surge and help ailing manufacturers but said he would examine claims top miners were opting for Chinese products.

He said Canberra was "committed to a floating Australian dollar" and would resist calls to interfere in forex markets, where the currency has traded near or above parity with the greenback for almost a year, hurting local industry.

BlueScope Steel, Australia's largest steelmaker by output announced Monday it would axe 1,000 jobs and abandon its export business, warning of the worst crisis to hit manufacturing in decades due to the strong Aussie dollar.

Swan said the dollar, fetching about US$1.04 on Tuesday, was a reflection of Australia's mining boom, and intervening would contradict Canberra's own calls for nations such as China to move towards more market-based currencies.

He also dismissed calls from the opposition to establish a sovereign wealth fund from the spoils of the resources boom, saying it "wouldn't do anything in our current situation", and revenues would be not be significant enough.

But Swan flagged an investigation into steelmakers' claims that major resources companies such as Woodside Petroleum, BHP Billiton, Rio Tinto and Chevron had imported cheaper Chinese steel for most of their recent projects.

"I'm a bit disturbed by that, so I'm going to examine these claims closely with the industry," he told ABC radio.

Analysts at Bank of America Merrill Lynch have forecast another 100,000 jobs will be lost in Australia by next March, with unemployment -- currently at 5.1 percent -- to hit six percent over the next six months.

Prime Minister Julia Gillard would not be drawn on the forecasts but acknowledged some regions and industries may feel "left behind" as Australia's economy modernises toward a more high-tech, low-emissions model.

She rejected suggestions that Australia impose a tariff on imported steel to protect local producers, saying it would encourage other countries to follow suit.

"If we start building up trade walls then other countries do the same, and our great exporting industries, whether it's resources, or whether it's agriculture, or whether it's manufacturing ... pay the price as other countries retaliate and start building up their tariff walls as well," she said.

Gillard flagged further "modest" help to the ailing manufacturing industry in coming days, following a Aus$30 million cash injection Monday and early access to a Aus$100 million lifeline designed to accompany next year's pollution tax.

It came amid revelations BlueScope bosses had pocketed about Aus$3 million in bonuses this year, which was slammed by independent Senator Nick Xenophon as "out of touch."

"This company is laying off 1,000 workers and it has its hand out for taxpayer support to the tune of Aus$100 million, yet it still has the gall to pay its executives these obscene bonuses," said Xenophon.

"I would like BlueScope's executives to explain to their sacked workers why the bosses need the money more than the sacked workers do."

Gillard said Australia would continue to press developing economies including China to ensure "balanced global growth" through appropriate currency action.

The latest manufacturing figures paint a grim picture of the once-thriving sector, with exports slumping for the 10th straight month in July and prices and production also in decline.

Copyright AFP (Agence France-Presse), 2011