It is the benefit of being in opposition that you don't really have to make sense - you can't do any of the stuff you rave about and it's pretty safe to assume the electorate will only remember the simplistic slogans and most outrageous claims, not the boring detail and more mundane realities. Same mistakes? But it provides no confidence for the nation if the alternative government proposes to repeat the same mistakes of Peter Costello's last few budgets. What if Hockey and Abbott really were silly enough to believe they were the good old days? Sure, there were surpluses, but fiscal policy was neutral, providing no fiscal drag while showering voters with tax cuts and throwing economic management responsibilities back on the Reserve Bank. Consequently the headline variable home mortgage rate hit 9.6 per cent in 2008 before the GFC intervened and probably saved us from something worse. While the government bumbles implementation and lets a jerking knee get in front of thinking (cattle exports just the latest example), the opposition promises damaging macro policies. Oh dear. Even the “deficit bad, surplus good” chant is itself dangerous. As the RBA governor underlined earlier this month, the present pace of return to surplus is already taking 2 per cent off the nation's GDP in the new financial year. Hockeynomics might have fun explaining to the retailers and “Australian families doing it tough” that he'd like to reduce economic growth further. The current rate movement towards surplus is a finely balanced thing on the assumption that the commodities and capex booms will continue as planned.

Adjusting to reality As it is, much of Australian business is having difficulty adjusting to reality instead of listening to politicians' promises and scare campaigns. Apparently it has become accepted wisdom that the retail industry is in dire straits as a result of higher electricity charges and more costly bananas allegedly overwhelming households. The hard numbers are a little different. Reprinted above is a graph of retail sales volumes back to 1985 circulated by Morgan Stanley's Gerard Minack. The graph indicates Australian retailers are having trouble adjusting to more normal sales volume growth after being spoilt by the 2003-08 boom – a boom that was getting out of control with consumption built upon a blowout in household debt. In any boom, money becomes easier to make as the good times roll. Standards and disciplines fall. When harder times, even more normal times return, there is pain readjusting. We very quickly get used to those good times. The retailing readjustment has been made harder by deflation of traded goods – while volumes are up, prices aren't, meaning retailers have to run twice as hard to stand still. But that's business. The number of customers in Australia with higher disposable incomes continues to grow – there are many more now than there were in that 2003-8 boom period, they just need the right offer to be convinced to part with their money.

There could be few easier examples of how pedestrian much of the retail offer is than the immediate success of the Zara chain's launch in Sydney and Melbourne. Zara is a well-run Spanish version of Sportsgirl. They're not even trying very hard with the Sydney and Melbourne stores compared with some of their most recent European shops simply because they don't have to – the local competition isn't much good. So don't be taken in by politicians and tabloid media furiously trying to convince us that things are crook. Some industries and regions inevitably do it much harder than others when faced by a major disruption such as the rise and rise of the Australian dollar. Some good businesses fail, but many more adapt and get better. That's what is making us a more wealthy country – as long as silly macro policies don't stuff it up. Michael Pascoe is a BusinessDay contributing editor.