A lower dollar means increased cost of international debt, and imports, lower profits for exporters. Flow of money theory- standard Milton Friedman Macro-Economics- I think there was some Ricardo thrown in too.

Anyway- too much Australian reliance on the International Markets appears to expose it to International Instability. Some call this "Fortress Australia"- we call it "common sense".

Borrowing can be useful if the activity it finances brings a greater return than the InterestRate + Effort.

It's also interesting to draw circles around Australia and look at the net exports. Immigration is interesting in this regard- let us suppose that immigrants bring money from outside Australia to buy a house (not saying that this happens but- just suppose) this looks like a net export on paper but there are hidden costs. Some would choose to label these costs as insignificant but others would not.

To me this sort of example seems to indicate it's not just the money that is important- it's important to look at the Micro-Economics / Micro-Culture to see where the money is coming from as well as the costs.

Anecdotal reports seem to indicate that the Australian property market diverts capital away from the rest of the economy.

http://en.wikipedia.org/wiki/Australian_property_bubble
http://www.investopedia.com/ask/answers/correlation-inflation-houses.asp
http://en.wikipedia.org/wiki/Economy_of_Australia

Perhaps if the money is earned and borrowed in Australia- property inflation could perhaps be seen as a zero sum. There are some interesting effects when there is exposure to international markets such as lending, etc. This is one reason why an "Economic Fortress Australia" attitude is necessary to protect Australia.

Thanks for the link on exports Aiden... see below...

# Trade Item Value (A$ million) % share of 2016
1 Iron ore & concentrates 53,757 16.3
2 Coal 42,270 12.8
3 Tourism Satellite Account 34,222 11.0
4 Education[a] 22,404 6.8
5 Gold 18,857 5.7
6 Natural gas 17,912 5.4

I find the comparison between Pre/ Post-Industrialization illuminating on how economies function under different regimes. I believe there are advantages and disadvantages in both- but neither has all the answers- despite what some might say. Both Capitalism and Communism are Post- Industrialization systems. Perhaps hybridization might give much of the answer. Perhaps the same is true of Social Systems.

Canem,
>A lower dollar means increased cost of international debt,
True but largely irrelevant. Australia's Federal government has a policy of only borrowing in Australian dollars. That's mostly also the case with state governments - and the exceptions are well hedged with CFDs. Commercial banks, which do have significant foreign currency debt, are also careful to hedge it against currency fluctuations.

>and imports,
That much is true.

>lower profits for exporters.
How so?

>Borrowing can be useful if the activity it finances brings a greater return than the InterestRate + Effort.

That's true, but what counts as "return" for the public sector is more complicated than it is for the private sector.

I accept that our economy is too reliant on the property market, but I don't think Fortress Australia is a good solution. Instead I think we should take a leaf out of Ricardo's book and put a significant tax on unimproved land value.
IIRC Ricardo wanted to set it at a rate which kept land values stable, with the objective of replacing all other taxes. I'd prefer it to be phased in gradually (over several decades) to an ultimate rate of between 2% and 5% – enough to dampen property speculation but not kill it off completely; not enough to replace all taxes, but enough to replace GST and Stamp Duty.

Aiden-

>lower profits for exporters.
How so?

Answer- Sorry you are correct on this item - I missed the second order effect

The problem with Macro-Economics and Global-Economics is it is dealing with the Economic issues at the wrong scale and so disenfranchises the public. It contradicts self determination. This cannot be understood from within Economic theory- it needs an understanding of the history of pre/ post industrialism. But if all you have is a hammer everything is a nail. Economists would be wise to learn history.

Fair days pay for a fair days work
Belly,
Where does the bulk of tax money go ? The Public Service & it's Superannuations.. Is that what you call a fair day's pay for a fair day's work ?