The sharemarket's recent gyrations are a testament to the long and thorny transition the Australian economy is making in the wake of the mining boom. Economic growth has already been below par for two years and unemployment is close to a 12-year high. But the shift to non-resource growth still has a way to go.

And that raises an important question: how well are policymakers managing the post-boom transition? The boffins at the International Monetary Fund, one of the world's most important financial institutions, think we could be doing better.

Prime Minister Malcolm Turnbull should be emboldened to invest in infrastructure projects including public transport. Credit:Twitter

The IMF of course is renowned for the stern economic discipline it proscribes for nations worldwide. You might expect its tough-minded technocrats to frown on anything that would make Australia's budget deficit bigger. But that's not the case. The fund's staff economists think Australian governments should be spending more to bolster the sluggish economy.

The IMF's annual assessment of the Australian economy, released on Thursday, said fiscal policy is "imparting a substantial negative impulse" and warned the Coalition government's budget consolidation is "more front-loaded than desirable". While a small surplus should remain a long-term "anchor" of budget policy, the fund's economists said increased public investment was needed to "support demand, take the pressure off monetary policy, and insure against downside growth risks".