Deputy Prime Minister and Treasurer Wayne Swan has told a CEDA's State of the Nation 2013 the falling Australian dollar is a good thing for the nation's economy.
"It's good to see the Australian dollar depreciating, as it should as our terms of trade weaken and as the US begins the very long journey back to normal monetary policy settings," he said.
Mr Swan said the high dollar damaged the growth of service export industries, farming and mining.
"There's no doubt the high Australian dollar has checked the growth of manufacturing in Australia as well as important service export industries such as tourism," he said.
Despite having a negative impact on export industries, Mr Swan said the high dollar had a positive effect on the domestic economy.
"We can also acknowledge that the higher dollar has increased the real incomes of Australians and helped keep inflation contained, helping the RBA to take interest rates down to record low levels," he said.
Mr Swan also downplayed claims investment will end when mining construction projects are finished and said it is close to its highest levels in 40 years.
"There is no indication of 'capital strike' which one sometimes hears about on the fringe of the business commentariat. In fact, total investment, private and public is close to 30 per cent of GDP," he said.
"We should also remember that the recent surge in mining investment is already starting to generate a very big increase in mining export."
Mr Swan also focused on the high amount of investment in non-mining industries which are significant contributors to Australia's GDP.
"Non-mining investment is around 1 ½ times as large as mining investment. If we add in dwelling construction and public investment … then the total of non-mining investment is nearly four times the size of mining investment," he said.
It is expected LNG will become a key export industry if new facilities such as Woodside Petroleum's Browse project proceed. Mr Swan said according to forecasts, LNG exports will grow by nearly 120 per cent in the next three years.
"On these forecasts, Australia should become the world's largest LNG exporter by the end of the decade," he said.
Mr Swan said Australia's economic outlook is strong and construction and service industries can expect continued growth.
"If we look at the structure of the economy today we can see that we are very well placed to continue that expansion for quite a while," he said.
"We'll depend on services growth for our increasing living standards, and to grow our imports without an unsustainable trade deficit."