This leaves the denizens of Canberra with an inclination to exaggerate the role of fiscal policy in management of the economy. One way the Liberals do this (so far it hasn't suited Labor to run this line) is to exaggerate the effect of the budget on interest rates. This involves several arguments, the best of which is that changes in the budget balance affect the strength of ''aggregate'' (total) demand in the economy and so affect the Reserve Bank's decisions about whether rising inflation pressure requires it to raise interest rates to discourage borrowing and spending. A fall in the budget deficit or a rise in the budget surplus could in this sense reduce upward pressure on rates. But though this is true in principle, remember - as the denizens of Canberra keep forgetting - the federal government's budget balance is only one factor influencing the strength of aggregate demand. Other factors include the volume of exports versus imports, the terms of trade (the price of exports and imports), the exchange rate and the strength of business and consumer confidence. So, in practice, the effect of changes in the budget balance on the Reserve Bank's decisions about interest rates is usually pretty limited, as its governor makes clear.

But the whole Canberra obsession with (budget) deficits and debt, particularly in this campaign, can leave the unwary with an exaggerated impression of the federal budget's place in the scheme of things. You see that when journalists ask politicians when they plan to get ''the economy'' (or even ''the country'') out of deficit or out of debt. Sorry, the economy isn't in deficit, now or ever. It's just the budget that's in deficit, and there's a world of difference between the two. Federal government spending is equivalent to only about a quarter of the economy as measured by gross domestic product (GDP), and even this exaggerates the budget's importance because much government spending merely involves transferring money between taxpayers and welfare recipients rather than producing goods and services (which is what GDP measures). No, it's important to understand that, apart from being a device for managing its own incomings and outgoings, the federal government's budget is an instrument that has effects on the economy without being the economy. That's important because it helps you see the budget is merely a means to an end, not an end in itself. It's there to serve the economy; the economy isn't there to serve the budget. It's the economy that matters because the economy is us. There's been such an extraordinary fuss about the budget and its balance in this campaign that the uninitiated could be forgiven for concluding economic management is all about balancing the budget and avoiding debt.

Rubbish. Economic management is about keeping unemployment and inflation low (fortunately, this is the bit for which the Reserve Bank takes primary responsibility). In conventional terms, it's about pursuing economic growth to keep raising our standard of living. To the more enlightened, it's about ensuring economic activity doesn't lead to the malfunctioning of the ecosystem, the most pressing instance of which is global warming. Both sides are running from their responsibility to combat climate change; their obsession with deficits and debt is a diversionary tactic. It will be a long time before they face up to the deeper question of whether endless economic growth is compatible with preserving an ecosystem that doesn't grow. Economic management is about reforming government interventions that reduce resource-use efficiency without sufficient social justification. It's also about correcting market failures - instances where, left to its own devices, the market fails to maximise our well-being. That is, the federal government is responsible for micro-economic reform. Government - state as well as federal - is responsible for ensuring the provision of certain vital services and infrastructure. To overcome deficiencies and assure our future, we need a lot more investment in economic and social infrastructure, particularly in transport and telecommunications. If it is to happen, government will have to finance much of this investment.

But the obeisance to Costelloism - the idea that all public debt is bad - suggests neither side would do much to deliver the infrastructure we need.