In its Long Term Forecasts, 2010-2025 report, the industry analyst and forecaster predicted economic growth will come in at around 3.8% per annum over the next three years while the unemployment rate is expected to be pushed below 4% by early to mid-2013.

However, on the flip side, the analyst warned tightening labour markets and accelerating household spending would lead to higher consumer price inflation, forcing cash rates up towards 6.5% and housing rates up towards 9%.

“While the no-policy election might drag on into next week, it is important to get back to the day-to-day running of the economy,” BIS Shrapnel senior economist Richard Robinson said.

“Mining profits, the budget deficit, immigration and a ‘sustainable’ level of population were the key areas of debate, but the real policy issues for the economy were either given only cursory consideration or put in the too hard basket.”

Robinson said a number of key policy issues needed to be addressed by the incoming government, including the housing shortage, ongoing infrastructure concerns and the shortage of skilled workers.

“These capacity constraints will remain a problem for the economy while the mining investment boom continues,” Robinson said.

“This boom, when it really ramps up in one to two years, will leave little room for governments and businesses to address these chronic shortages, and the miners themselves will struggle to get through their projects.”

BIS Shrapnel has also warned that while mining investment continued to run at or above the current high levels, there was little room for other investment cycles, particularly given the labour shortages.

“The economy is starting from a position of minimal spare capacity in labour and product markets,” the report said.

“Although the next round of mining projects is now largely locked in, with oil and gas activity leading the way, it will take time for activity to gain momentum.

The report also said financial conditions were not yet strong enough to justify a further round of commercial and industrial building, which was still two to three years away from gaining momentum.

“This means there is now a limited opportunity for the public sector to fast-track much needed infrastructure spending at a time when there is little risk of crowding out private sector activity,” Robinson said.

“However, the election has been partly fought around which party can most swiftly bring the budget back to surplus, which will see investment weaken.”

Robinson added that the lack of spending on infrastructure, skills and education over the past 15 years would constrain the pick-up in long-term productivity and ultimately constrain the economy.