In describing the inevitability of a disastrous ending to the insertion of an effects test into the competition laws, it is wise to be mindful of George Orwell’s advice never to use a cliché that commonly appears in print. But he didn’t say not to mangle two clichés into one, so here goes: the effects test is the elephant in the trainwreck. A Coalition government, knowing the effects test will not live up to the promises made to small business supporters, will amend it when it fails to protect them from competition. But it will take a decade for this trainwreck to come to its screeching end. 

It's hard not to feel that the new parliament will be defined by four Ps: political posturing and policy paralysis.

Australia's Reserve Bank is fast running out of monetary ammunition as it follows other central banks in lowering official interest rates towards zero. What happens, then, if our economy is hit by a new external shock of the magnitude of the Global Financial Crisis? What tools are available in the macroeconomic kitbag to help save us from recession? We should be designing them now instead of waiting for a crisis.

Now that the last votes have been counted, leaving the Coalition with the thinnest of majorities, it’s time for the Turnbull government to confront the budget’s structural deficit in earnest. Few independent economists consider the forecast pathway back to surplus laid out in this year’s budget papers to be credible. But with the new Senate likely to be at least as unruly as the last, how will the government get the necessary budget repair measures through the parliament? 

Greetings from Birmingham, Alabama, where few residents have heard of the Trans-Pacific Partnership and even fewer would consider it beneficial to their livelihoods. Yet their congressional representatives will be asked to pass a bill to bring it into law. Herein lies the problem for the agreement’s architects and advocates. The World Bank estimates that by 2030 the total effect of the Trans-Pacific Partnership on US gross domestic product will be just 0.4 per cent. Not 0.4 per cent per annum but a total of 0.4 per cent after 15 years. It’s a rounding error and the American people instinctively know it. The estimated benefit for Australia is a tiny 0.7 per cent of gross domestic product.

A government of national unity might be too ambitious, but if Malcolm Turnbull is eventually sworn in again as prime minister he could do a lot worse than negotiate with Labor on the passage of important legislation. The alternative is to seek the agreement of up to six cross-benchers in the House of Representatives and 13 in the Senate, including the Greens on the left and One Nation on the nationalist right.

On these pages on election eve I warned soft voters were so disenchanted with ‘big politics’ that they would prefer a third candidate, and when voters rage against the machine, the incumbent is in the greater danger. That’s how the election panned out. Voters resoundingly rejected Malcolm Turnbull’s plea for the stability of a decisive Coalition victory, judging that neither the Coalition nor Labor had done enough to earn their trust.

In this last week of the election campaign, when the picture should be clearer, I have been asked by numerous inquisitors who I think will win on Saturday: Malcolm Turnbull or Bill Shorten. Having been directly involved in more than 10 federal and state election campaigns, my considered response after examining the polls and the betting is: I don't know. While the sheer size of the Coalition's majority makes it favourite, in all walks of life and in all sports, favourites get beaten.

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.