There is little substantial economic policy debate going on in the current campaign. What goes for economic policy is a set of generalized commitments that do little to differentiate the parties. The two parties agree that:

• higher GDP growth is good;
• higher productivity is better than lower productivity;
• skill building will help productivity;
• spending on infrastructure helps growth;
• a national broadband network would be beneficial;
• the government's budget should be returned to surplus in three years; and,
• there should be no new taxes.

Meanwhile, any specific initiatives should be targeted squarely at individuals who can be clearly identified as gaining from the new policies.

Of course, Australian politicians are not alone in the way campaigns are conducted. In the USA, for example, the distinction between Main Street and Wall Street is a constant campaign refrain. Political success supposedly comes from policies favouring Main Street; failure comes from anything construed as favouring Wall Street.

Even a candidate who had worked as an investment banker 20 years ago and has since been a successful small businessman in a local community is being subjected to attack for his suspect past in the mid term elections due in a few months.

Whether here or in the USA, macroeconomic policy is being viewed through the prism of local politics. A policy which directs money to build a local library will more surely curry favour than a policy reducing payroll taxes.

The conventional wisdom about the conduct of election campaigns has evolved to a point where policy is unacceptable unless it can be shown to apply directly to Aunt Sally or her neighbours or her immediate family.

Aunt Sally may show great wisdom in many matters and, often, will come up with more sensible ideas than our political leaders. Her judgments are not to be ignored. However, her judgments will be biased towards what affects her most directly.

Spending on the local library and reducing payroll taxes will both impact employment but can we trust Aunt Sally's judgment about the transmission mechanisms at work and how much better one alternative will work than the other?

Treasury Secretary Henry's tax review was an opening that might have allowed us to look at how to adjust policy with an eye to the overall economic outcomes. Unfortunately, Messrs Rudd, Gillard and Swan ducked this opportunity and, even then, could not resist going for Aunt Sally's vote using the mining tax as a wedge between the Australian equivalent of Wall Street and Main Street.

Almost inevitably, talk of reform today is about directing more funds to specific groups. This is in marked contrast to the economic debates in the 1980s and 1990s when reform was about scene setting. The big reforms dealing with labour markets, foreign exchange, interest rate setting and manufacturing protection were designed to offer environments in which businesses could more easily thrive. That is no longer the criterion.

The difference in approach to the national broadband network is a topical example. It could have precipitated a timely debate about how policy is best delivered - by government intervention and ownership or by a private sector pursuing profit based incentives. We could be debating whether a government decision today reduces longer term flexibility; whether it might deliver the initial funding but be unable in future years to fund an infrastructure that requires periodic updating to cope with new technologies or currently unanticipated uses.

Rather than dealing with issues such as these, the government is more likely to argue about the number of jobs being created in Tasmania from laying new cabling. The opposition, meanwhile, is recalling the home insulation program debacle to frighten people away from accepting the government's involvement.

Setting macroeconomic policies to deliver identifiably local benefits has become so widespread that television satirist Stephen Colbert recently felt he could admonish Nobel prize winner Paul Krugman about how macroeconomic policy benefits should be directed. In soliciting his views about how to avoid another recession, Colbert urged Krugman to "try to make your argument without appealing to our humanity", without much success.

- John Robertson