Why the economy should be the issue that decides this election

As we enter the final stretch and look over the campaign that was election 2013, we see a period of political and social debate brimming with rich economic thinking as politicians plan their way forward for Australia, right?

Er, no actually.

The election has been remarkably light on any serious effort to debate economics at a time when the economy should have been the cornerstone of the whole campaign.

Economics figured solidly as the firing pistol sounded. Prime minister Kevin Rudd provided a rather downbeat assessment of the economy in transition, coupled with a series of political clichés about improving productivity and replacing the mining boom.

In response, the Coalition locked into the portrayal of Labor as a party of spendthrifts, frittering away the Howard era but perhaps forgetting the global financial crisis that came in between.

However, both parties were aware that the world had changed, and in some respects the macroeconomy was now in the hands of the gods. This suggested that the campaign would unfold in line with this starting point – a global macroeconomic context and a focus on smart microeconomic policy to promote better distributive outcomes for society.

Labor would flesh out their ideas to promote workforce flexibility while also promoting workplace protection. They would finally begin to join up the dots on their education policy to promote enhanced productivity. The Coalition would look to promote less waste, less regulation.

This has just not evolved.

What actually followed has been a whirlwind tour-de-force presentation of clientalist politics of the worst kind – a dollop here, a dollop there, the prime minister and prime minister-in-waiting hanging out in fluoro vests and hard hats at manufacturing facilities, talking up a sector which has shrunk as a contributor to the Australian economy over the past decade.

Neither side has delivered a serious policy option that is remotely close to being inspiring. To some extent, Labor doesn’t have to. They came into the campaign with a suite of policy options on the table and with no real reason to change them.

The Coalition, on the other hand (or rather their leader), unleashed a fanciful paid parental leave (PPL) policy. This, it must be said, is just plain old vanilla bad policy. It costs a fortune, and while paid parental leave is in general a policy that promotes many economic benefits, the PPL policy proposed by Tony Abbott will be riddled with what economists call “deadweight”.

Higher earning, higher educated women – the main beneficiaries – will have as many children and be as likely to return to work under either the Labor or Coalition policy – but for massive extra costs under the Coalition plan. Lower-income women will be no more likely to return to work because of PPL, as that is not the pinch point – childcare is. It is a total mess of an idea and regrettably ill-thought out.

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