CREDIBLE economic policy is not born of populist sound bites and uncosted opportunism.

Regrettably, as the level of political discourse in this country continues to deteriorate to one of sloganeering and extravagant half-truths, the federal Coalition risks trashing its credibility in the area of economic management - a policy suite where (at least in terms of public perception) it has tended historically to have the upper hand.

Certainly more than a decade of sound economic stewardship during the Howard-Costello years (albeit with some caveats about lavish recurrent expenditure commitments made on boom-time revenues) left Australia well placed to tackle the global financial crisis.

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Now that the world teeters on the brink of GFC Mark II, Australia must again help ensure that international bodies have the necessary financial firepower to stave off what would be a cataclysmic series of sovereign debt defaults and bank collapses.

One of the keys to this is a strong and well-resourced International Monetary Fund - the body that in broad terms acts as a global stability mechanism.

For Opposition Leader Tony Abbott and shadow treasurer Joe Hockey to seek to make cheap political capital out of Australia's international obligations in this instance is simply extraordinary.

According to Abbott, "the risk is that the Australian taxpayer will end up contributing another $5 billion to the IMF so that Greeks can continue to retire at 50".

Wrong. Australia is not - and has never proposed - contributing to the European Financial Stability Fund (the eurozone's bail-out mechanism).

Secondly, Australia's share of IMF funding is minuscule (about 1.3 per cent of the fund's total capital) and the bulk of the money we pledge under the IMF's "quota" system is a commitment that the dollars are there if needed, not a cash payment.

Furthermore, any cash contribution we do make (it's about $400 million at the moment) actually earns interest.

As Business Council of Australia chief executive Jennifer Westacott put it: "Australia has acted in such a way as a global citizen in the past by agreeing to contribute through the IMF during the Asian financial crisis and should be prepared to do so again if necessary to support global and ultimately our own economic interests."

Abbott should also note that it is the IMF and its teams of inspectors that oversee the very austerity measures in debt-stricken countries in Europe that are aimed at carving back government waste and cutting back unfunded welfare entitlements such as generous Greek retirement packages.

Which brings us to retirement schemes in Australia and another worrying example of thought-bubble economics from the Opposition.

Late last week, the Opposition was vowing that as part of its pledge to rescind the mining tax, it would also scrap Labor's phased increase in the compulsory superannuation contribution from 9 to 12 per cent.

By Sunday, they appeared to have backed away from killing the super increase, realising that the more Australians who can fund their own retirement the better, but were still vowing to abolish the mining tax.

The catch is the mining tax was (in part) going to be used to fund the retirement income reform which will cost an estimated $12 billion by 2020.

Black hole is an overly used term, but the funding gap here is looking damnably dark.

There is similarly questionable logic at work with the Opposition's stance on the package of tax cuts and other assistance that form part of Labor's carbon pricing scheme.

The Abbott-Hockey position at this point is to scrap the carbon pricing scheme (and thus forgo the associated revenue), but to press ahead with the tax cuts.

As with the superannuation position, there is no suggestion beyond a vague promise of spending cuts elsewhere as to how this will be funded.

Hockey and Abbott should be mindful that amid warnings the global downturn will make it very difficult for the Government to achieve its Budget surplus target in 2013, Treasurer Wayne Swan has said "tough decisions" (read spending cuts) will be taken to ensure the goal is reached.

If the world doesn't spin off its economic axis in the coming weeks or months and the Government sticks to its word here, Hockey may find there is not that much in the way of fat left to trim without cutting into politically sensitive portfolio areas, such as health, defence or education.

A popular refrain from the Opposition benches is Labor's alleged propensity to "tax and spend", but the Coalition, with its string of what appear to be ad hoc responses, risks painting itself into a policy corner of "big spending, little taxing" - ironically just the sort of policy that got the likes of Greece into trouble in the first place.

Originally published as Abbott's economic logic in a black hole