Strong Australian dollar poses economic danger

Its a country that appears to have defied the global financial crisis, enjoying years of consecutive growth and a soaring currency.

But its not all "wonder down under" for Australias economy, and as the government prepares to deliver its budget, there could be tougher times ahead.

Despite a commodities-fuelled boom, high government spending, the cost of widespread flooding and a drop in corporation taxes ,mean cuts are likely.

But out of direct control of the government is Australias soaring currency. For the first time since it floated, recent weeks have seen the Australian dollar worth considerably more than its American equivalent: and thats hurting exporters.

Andrew Thomas reports from Sydney.