More than $300 billion of debt-funded stimulus has pushed down the unemployment rate to just 4 per cent and the jobless rate is poised to fall to its lowest since the 1970s.
Another resources boom, pumped up by insatiable Chinese demand and the war between energy-rich Russia and Ukraine, is delivering a national income boost.
But short-term cyclical success has masked long-term structural vulnerabilities and exacerbated political complacency.
Inflation is back. Interest rates will soon rise – probably in June, shortly after the election.
Voters are agitated about cost of living pressures.
Labour shortages are worsening, with both major parties promising spending on skills but eschewing a return to pre-pandemic immigration levels.
Productivity growth – the key determinant of living standards and real wages – has been weak for a decade.
But entering the election, neither side is offering a comprehensive vision on tax, workplace relations, competition and regulation reform to revive stagnant productivity.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg represent the status quo, urging people to “vote for what you know” and not to risk the economic uncertainty of a Labor government.
Labor leader Anthony Albanese wants a referendum on Morrison’s character, integrity and trustworthiness.
Labor is burnt from its big-target, tax-and-spend agenda in 2019. It has dumped tax crackdowns on negative gearing, capital gains concessions, trusts and franking credits.
Labor now supports the Coalition’s stage three personal income tax cuts for higher earners, set to begin in July 2024.
Albanese has stripped out any areas of major contention, while promising to spend more on childcare, aged care, TAFE and the energy grid.
A crackdown on multinational tax avoidance is Labor’s main revenue raiser, with details still to be outlined.
The budget deficit is forecast to remain entrenched at $40 billion to $80 billion a year over the next four years. Neither side is canvassing spending cuts or tax rises to narrow the gap.
The government says growing the economy will shrink debt as share of GDP, while Labor insists the quality of spending matters at least as much as the quantity and size of budget deficits.
Climate change and the great energy transition will lead to a major transformation of the Australian economy over the decade ahead.
En route to a 2050 net-zero emissions target, Labor’s 2030 emission reduction target of 43 per cent is more ambitious than the Coalition’s projection of 35 per cent, but is still short of the Business Council of Australia’s 46-50 per cent goal.
Labor has some semblance of a credible policy. The so-called safeguard mechanism will stop big firms polluting above business-as-usual levels and allow the trading of permits between companies.
The Coalition labels it a secret carbon tax, but the truth is neither side of politics is goading for a rerun of the climate wars at this election.