A West Australian Currency

Western Australian  flag by Brendan Jones in the Australia Pale style

One of the issues arising out of the European Union is that states under recessionary pressure can't devalue their currency to export their way out of it because the powerful nations such as Germany and France are not experiencing the same economic issues. Greece and Spain apparently are good current examples of this.

It suggests that it is not in all the European nations interests to join the EU as it ties them directly to one currency and the strength of the German and French economies. Richard Green poses an interesting question about Western Australian Secession;

What if the rest of Australia would be better off without WA? Specifically, should Australia still have a single currency? If we keep worrying about the "two track economy" hypothesis maybe we should consider the idea that Australia is not a optimal currency area. The monetary policy and exchange rates we get from straddling divergent economies are optimal for neither East nor West.

One of the economic issues in Australia is that Western Australia, the Northern Territory and to an extent Queensland all have natural resources driven economies. They are based on mining and extraction. The east coast economies of Sydney, Melbourne and Brisbane are service driven.

The complaint of the east coast who have employment issues is that the buoyant nature of the minerals market since China and India started developing in the 1990s has meant the Australian dollar is over-priced for the service based industries of the east coast to export competitively.

Via economic theory we would expect that, seeing the booming west coast economies, people from Sydney and Melbourne would immigrate to Perth and Fremantle to take part in it. But that is not happening, most Sydneysiders and Melbournites immigrate to Queensland, not Perth. Half of the new arrivals in Western Australia are overseas immigrants the rest are new births.
Permalink, A West Australian Currency, May 2010, cam

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