If we look at the disparity in today's australian economy you could easily believe that we were dealing with different countries and different economies and that each could have their own currency. If we consider West Australia, frankly the powerhouse of the National economy, people there would be paying 1-2% more on their mortgages and the currency we may suggest would be termed the 'ore' and would be worth approximately 2 US dollars and be running close on parity with the british pound.
Over in Victoria the interest rates would be on the way down to aid the manufacturing and education sectors. The big V currency doesn't have strong mineral reserves to use as it's underlying strength so has to rely on more mundane financial stimulus which is sadly lacking in the Vics economy where their exports are too few and they can't compete on the open market when it comes to other commodities.

Across the ditch in Tasmania, mortgage interest are rock bottom, the cash rates being 3%, with barely a heart beat from the tassie economy and their currency, the Tiger, bumping along on par with Thailands Baht.

Up in Sydney, the financial hub would be taking advantage of all the currency and interest rate differentials and their currency, the Ranger, would try to 'piggy back' it's way on the back of the Ore, by way of association, and 'stand over' tactics!

This situation seems crazy doesn't it, but this sort of arrangement would be the naturla progression if the reserve bank tried to be everything to everyone. Fiscal policy would have to be radically different between the States to accomdate the economic differences foisted on Governments because of the different monetary policy settings.
Fortunatley that's not the world we live in, however it means the reserve bank has only one weapon at its disposal in the fight against inflation and when that weapon is fired, everyone feels it.

It seems Australia is suffering from an accute case of Dutch Disease. The term coined by the Economist magazine in the 1970's refers to a country that enjoys a mining boom. But when that boom ends (in the case of the Netherlands, because a fall in natural gas and oil prices) the country finds that many of its manufacturing and services industries have moved on.
The symptoms that accompany Dutch Disease - hihg interest rates and currency, can be accoomodated by Mining companies but they are financial poison to everyone else in the economy. These major issues need to be quickly addressed, as the boom can be all encompassing and stymie any push for reform that may draw us from the shirt tails of Mother China.

Mortgage holders missed an interest rate bullet this month largely because the reserve bank is unsure how the global economy will play out. In the reserve bank mind and most others, high commodity prices means higher inflation whihc means higher interest rates. With an Australian dollar over parity and likely to push higher, it means more pain across the non-mining sectors of the economy.

The Country cannot afford to ride on the back of the State-miners and must look at how we are going to continue to become a strong financial nation without the gleam of the mining boom.