Who Can Keep the Good Times Rolling?

The question not being asked during this campaign is: Which party is best placed to improve the country's economic prospects over the long term? Issues such as interest rates and tax cuts - basically housekeeping and creative accounting - are easy for politicians. In a materially rich, "live now, pay later" culture, Australia's voters are not thinking too far ahead or demanding solutions to developing problems like the aging population, rising health-care costs, workforce skills, immigration, retirement savings and the like. Occasionally, prominent voices are heard. Treasury secretary Ken Henry has argued that meeting the fiscal needs of an aging population requires sustained productivty growth and increased workforce participation - basically, a high-growth road to close a forecast gap between revenue and spending in 2040. Reserve Bank chief Ian Macfarlane has warned that unless governments improve the quality of higher education and maintain a flexible economy, future generations could be burdened with higher taxes to meet the health and welfare costs of retiring baby boomers.

How does the Howard-Costello partnership measure up on these points? Is it looking beyond the three-year election cycle? Although some may grumble about the 10% goods and services tax introduced in 2000, it was a necessary adjustment and modernization of the tax system that required bureaucratic toil and a willingness to take political risks, but not great courage or imagination. Reforming wage bargaining and introducing user-pays for education and health across the board have been done gradually. A fairly benign, mainly symbolic, deal such as the Free Trade Agreement with the U.S. is a metaphor for the Howard-Costello way: a second-order reform is sold with five-star trimmings as a "once in a generation" windfall. Costello talks up an agenda for solving the intergenerational crisis that lies ahead, but it is the bureaucrats who are showing leadership and doing the heavy thinking; the Treasurer needs to find his mojo if the government wins a fourth term.

Howard and Latham speak often about the future and ten-year plans. But their obsession is with the present. In truth, there is a great deal left to do. Too often, the government has chosen the low, quiet road to reform; the Opposition has trimmed its radical urges in hopes of creeping back into power. The tax system remains a mess; it's neither fair nor simple nor good for the economy. Investment in the future is miserly. Students should be getting better teaching and facilities for their $A100,000 university degrees. The spread of broadband - which will be a dynamic tool in the new economy - is woefully slow. But it's not that kind of election. Perhaps next time the economic ideas contest will be more inspiring. It certainly will be more urgent.