None of the economic indicators released during the course of this interminable election campaign inspires confidence that Australia is making a smooth transition from the end of the mining boom. To the contrary, they tell a story of an economy struggling to adjust, of weak non-mining investment and of high-paying full-time jobs being lost and replaced by low-paying, part-time, insecure jobs. The new Australian government elected on July 2 will have a big job on its hands steering the economy through the most difficult period since the Global Financial Crisis and the ensuing global recession.

A company tax rate cut offers a $40+ billion retrospective gift to multinationals on the income streams from investments they have already made at the 30 per cent rate. An investment allowance, by applying only to future investments, not past ones, does not. When governments seek to boost R&D they offer an R&D tax concession, not a general company tax rate cut. When they seek to boost investment, they should offer an investment allowance and not squander tens of billions of dollars on a retrospective gift to multinationals.

Both major political parties agree on the need for the next Australian government to facilitate the smoothest possible transition from the mining boom's end to a more diversified economy offering well-paid jobs. They differ, however, on how best to achieve it. The centrepiece of the Coalition's plan for jobs and growth is a corporate tax cut designed to attract more foreign investment. Labor's plan involves investing in the skills and creativity of young people through a new, needs-based school funding system.

Only a miserable pessimist could quibble with this week’s strong economic growth figures - or someone who understands the national accounts. Wednesday’s data deal a further blow to the already damaged credibility of the official budget forecasts. Inflation was much lower in the March quarter than the budget forecasts assume for the coming financial year. And wages are flat. This matters for the budget bottom line, since income tax receipts rely on a reasonable level of price inflation together with rising real wages. Neither is present. 

What if, for the global economy, this is as good as it gets?

A funny thing happened on the way to the 21st Century – the budget papers were utterly corrupted. They are useless, so politically compromised that their authors are able wilfully to mislead the public. Last Friday’s pre-election fiscal and economic outlook contained a two-page confession from the heads of treasury and the department of finance: while the economic forecasts are unchanged they are not believable.

In politics everything is exaggerated, observed my friend and ministerial colleague, Lindsay Tanner.

He was right. Especially during election campaigns the major parties highlight their differences in the hope of presenting undecided voters with a stark choice. Yet the Coalition and the Labor Party are centrist parties.

Putting aside the political trivia of which party's candidate said what to whom and when in departing from official policy, the first week of the election campaign was dominated by arguments over growth versus fairness. Purportedly, the respective vehicles of growth and fairness are the Coalition's company tax rate cut and Labor's needs-based school funding. It's a false dichotomy.

Last week's Reserve Bank decision to cut the cash rate to a record low 1.75 per cent on the back of a quarter of consumer price deflation is a symptom of a deeper malaise afflicting the global economy as it spreads to Australia. Whichever party wins the federal election will face a grim reality – it will be governing in an era of weak global growth that is certain to drag down the Australian economy. The global economy has failed to achieve a sustainable recovery from the Great Recession of 2009. Worse, an array of formidable forces is preventing any prospect of a recovery in the foreseeable future. A profound shift in federal government policy-making will be needed if Australia is to be shielded from the most severe effects of global economic torpor.

Last week's budget is like no other budget – it is a plan. We know that because the Treasurer mentioned the word plan 29 times in his 30-minute budget speech. But like its predecessors, the 2016 budget provides no credible path back to surplus. Its rosy assumptions about commodity prices, inflation, productivity growth and economic growth have been selected to position a surplus as a shimmering light, like the Hotel California, on a dark desert highway of ongoing deficits.

In this election year the Government has taken a journey on tax reform that has led it up one dry gully after another. Meanwhile, the Opposition has set the policy agenda. Yet neither tax reform nor extra spending on health and education – as worthy as they are – will determine the election outcome. Rather, Australia’s debt trajectory under the two parties will: rising government debt will be the number one issue in the election campaign. 

Tax reform is out but the government could still reform by issuing Infrastructure bonds and even splitting the budget into two parts.

Governments which win while promising not to do unpopular things frustrate themselves, and voters too.

If Barnaby Joyce supports an effects test you know it's anti-competitive. Small-business organisations also support the government's effects test because they want protection from competition. That's understandable from their perspective. But the objective of competition law should be to benefit consumers by protecting competition – not competitors.

You can tell an airline is in trouble when its management says it can't afford to buy a fleet of modern new jets that are more fuel efficient and comfortable for passengers. The company will quickly lose competitiveness against forward-looking rivals that are willing to invest money to make money. So it is with education. Australians are being told the federal government cannot afford the cost of a needs-based school funding system and of a demand-driven higher education system – ensuring as a nation we lose competitiveness against our forward-looking rivals in Asia and beyond. Yet the government seems willing to spare no expense in keeping almost all existing tax shelters wide open. 

In embarking upon the twin tasks of tax reform and budget repair, the Turnbull government’s insistence that tax revenue cannot rise from its current proportion of GDP has placed it into a straightjacket from which there is no escape. In a clash between ideology and the laws of arithmetic, the latter will win every time.

Day by day, political reality is ambushing the great tax debate of 2016. It will inexorably herd the government into a place where for policy reasons it should have been all along – sealing off holes in the income tax base to help fund reductions in the budget’s structural deficit without cutting social programs to pieces.

In the post-war era, Australia has held 49 royal commissions, including one into Aboriginal land rights, two into drugs, several into our national security agencies, five into trade unions and none into tax avoidance – well, not a planned one, anyway. One of the five trade union royal commissions – into the Painters and Dockers Union in the early 1980s – uncovered rampant tax avoidance implemented through the notorious bottom of the harbour schemes. More than three decades later, community trust in the tax system has again broken down.

The guiding principle should be that competition is good and more competition is better. For anyone wanting to participate in that debate, here's a piece of gratuitous advice from a former MP: conduct it without seeking to anticipate which way the cabinet and Senate might jump and leave the politics to the politicians. 

Evidence is mounting to support the proposition that the global economy has entered a period of secular stagnation.