Is this as good as it's going to get? Credit:Andrew Meares The bottom line of KPMG's The Global Economy – Is This As Good As It Gets? paper is that our would-be leaders should be competing to offer the most credible boost to productivity-enhancing investment in infrastructure and education. Regular readers of this space would know that's also been the message from the Reserve Bank, and plenty of others. The only response from the government has been little more than the odd rhetorical flourish. The vaunted $50 billion federal "record" infrastructure spend is spread over six years and contains very little new money. And as Peter Martin has explained, there is less to Malcolm Turnbull's Smart Cities slogan than meets the campaign trail – it boils down to $50 million with which to think about it. What's instructive about the KPMG modelling is that it doesn't assume, as the budgets from both sides of politics have, that the world will be a happy place and economic growth will just magically return to normal or better in three years' time.

If, instead, you assume that the current global economy is about as good as it gets and we have to face up to the realities of our aging demographics, increasing inequality, plateauing education standards, digital disruption and the hollowing out of middle class wages – the political challenge suddenly looks very different. With monetary policy having pretty much done its dash, KPMG finds government borrowing to invest in improving productivity is about the only thing we have left. Says the report: "Since global interest rates are expected to remain low for the foreseeable future, government borrowing to finance productivity-raising investments is likely to be a sound form of fiscal stimulus ... In contrast with borrowing to finance current consumption, investing in education, innovation, transport, communications and urban redesign can lift an economy's growth capacity. Investment in renewable energy can reduce carbon emissions as a complement to putting a price on carbon, alleviating the pressure on household discretionary incomes from solely relying on carbon pricing." On investment in education, KPMG is unequivocal: "The OECD estimates the public benefits of higher education in Australia to be twice the size of the benefits to the graduate. Economic growth rates can be lifted by investing in schools in disadvantaged communities, in vocational education and in higher education. Improving the educational attainment of disadvantaged students boosts their income-earning capacity and, in time, overall consumer spending, while reducing inequality and strengthening social cohesion. The private and social returns from university degrees compared with completing high school are large." As for the role that tax reform could play is promoting economic growth, KPMG effectively points towards the holistic tax reform neither side of politics is offering. The worst taxes belong to the states and the feds are offering no leadership in reforming them: "Almost all taxes act as a drag on economic growth by restricting trade between buyers and sellers and reducing the incentives to work, invest and take risks. In a world of mobile capital and labour, it is argued that direct taxes, such as company tax and personal tax, slow growth more than indirect taxes, such as consumption taxes and land tax. Stamp duty on conveyances and insurance are especially costly to growth. There is no shortage of advice about what needs to be done, but this election is not being fought on those substantive issues.

"Estimates of the extent of the drag on growth of various taxes – known as the marginal excess burden – prepared by the Australian Treasury suggest that it is similar for personal tax and the GST, raising doubts about the growth dividend from increasing the GST to fund personal tax cuts. Reducing or eliminating inefficient taxes can increase economic growth rates but care needs to be taken to avoid outcomes that increase the overall tax burden on lower to middle income households." The KPMG paper makes for disheartening reading. There is no shortage of advice about what needs to be done, but this election is not being fought on those substantive issues. The outlook, without reform, is that this is as good as it gets, that the promises made by politicians about a better future are empty. And it's not a matter of offering to do part of the job, to perhaps invest more in education but continue to shy away from broad tax reform and greater infrastructure spending – it needs to be the full package to work. "Governments, businesses, trade unions and community organisations need to recognise that, at least for some time to come and maybe indefinitely, developed countries will continue to experience slow economic growth based on weak growth in multi-factor productivity," the report finds. "A breakdown in social cohesion can be averted only if governments are willing to invest in high-quality education and training to equip as much of the workforce as possible with the skills demanded in the Digital Age. And governments will need to ensure a basic standard of living for those who are made redundant or lack the necessary skills to participate continuously in the future world of work. "Business models will need to be modified and government policy prescriptions need to change. If they don't then this is, quite possibly, as good as it gets."

Neither side is saying that. They're still fighting the old wars.