It could be worse But it could be worse – it could be Scott Morrison and Mathais Cormann squirming over the Reserve Bank's negative opinion of negative gearing. Or, more accurately, the RBA's negative opinion on the interaction between negative gearing and the 50 per cent capital gains tax discount. "This is an old document, it is an internal document, it is a document that outlines historical perspectives. It is not an official position of the RBA and it shouldn't be misrepresented that way," Senator Cormann said on ABC Radio. But as they twist and prevaricate as much as they can over the RBA memo, the treasurer and finance minister are, er, fibbing.

And they know they're fibbing but don't care. Even their own examination of negative gearing found it needed curtailing. They have had the RBA's concurring advice before. It was only the opportunistic politics of wedging Labor with a misleading "housing tax" slogan that turned ScoMo and his Prime Minister from would-be trimmers of negative gearing into defenders of babies' rights to tax-driven investment properties. If anything, the RBA memo pulls up short of the bank's published official position on negative gearing. It's all there in the bank's July submission to a parliamentary housing inquiry. CGT was red-flagged more than negative gearing. The APRA-led tightening up on investor loans hasn't changed a thing. Meanwhile Labor and the Coalition maintain their bipartisan lack of an active plan to grow the economy at an above-trend rate for five years to produce the surplus and downturn in debt they "project".

RBA's other message They both ignore that other message the RBA has been serving up: responsibly stimulate the economy with "good" debt that will pay for itself, because cutting interest rates just isn't cutting it. The RBA has a single tool to apply to the underperforming economic engine. Unfortunately, it's the wrong tool for the present job. With excess global capacity, cutting already-cheap interest rates isn't enough to convince business to invest. Friday's statement on monetary policy alluded to that problem: "Non-mining investment has been little changed for several years in real terms, notwithstanding a pick-up in profits in the non-mining sector in 2015 and above-average business conditions. "Indicators of investment intentions suggest that non-mining investment will remain subdued for at least the next few quarters. The latest Capex survey continues to imply that a recovery in non-mining investment will not occur in either 2015/16 or 2016/17. Consistent with this, non-residential building approvals remain at relatively low levels, in part reflecting weak underlying conditions in the commercial property market."

The statement carries the usual caveat that the Australian Bureau of Statistics' capex survey doesn't cover much of the non-mining sector, where there is promising growth. And there was a reminder of how well the services sector is travelling, especially on a relative basis: net service exports contributed more to GDP growth in 2015 than bulk commodities – the first time that had happened since 2008. But the overall outlook has become less clear. It wasn't just the inflation rate that had the RBA cutting rates last week. "After particularly strong outcomes in late 2015, employment growth has moderated over the past few months, and forward-looking indicators provide mixed signals about the underlying pace of improvement in the labour market," the statement observed. Extreme malaise At the extreme of the global central banks' malaise is Japan. Despite negative interest rates and Abeconomics, major corporations are sitting on $3 trillion of cash, the equivalent of 50 per cent of the nation's GDP.

Australia is nowhere near that sorry state, but the persistent lack of private sector animal spirits willing to invest in anything other than real estate is also our problem. Contrary to the coalition's slogan, trimming small business company tax rates won't make enough difference to matter. I addressed an SME audience on Friday, the audience drawn from an industry that is doing better than most. I put it to the room: would a company tax rate of 27.5 or 25 per cent instead of 30 mean they would employ an extra person or decide to make an extra investment? The reaction was a general shaking of heads. Corporate tax rates have to be reasonably competitive, but it is a merely ideological assertion that trimming rates will magically spur growth of the magnitude that will make the budget's fairy tale projections come true. And neither will cutting company tax.

If it wasn't a dispiriting election campaign before it started, it is after three days.