For Treasurer Jim Chalmers, a man who wrote his PhD thesis on how Paul Keating held power having risen from treasurer to prime minister, the recent dismal news on the economy and the blowout in budget deficits revealed in the federal government’s mid-year update surely represent a Rubicon of sorts.

Treasurer Jim Chalmers at a press conference on the MYEFO data this week in Canberra.Credit: Alex Ellinghausen

The figures from the Australian Bureau of Statistics showing that growth in the September quarter was an anaemic 0.3 per cent, that annual growth was the worst – with one exception – since Keating’s “recession we had to have” in 1990-91, and that GDP per person had fallen by 2.2 per cent, or $1660, over the past year, were an unmistakable call to action.

The exception on annual growth is an important one: the recession that hit Australia during the COVID-19 pandemic. That once-in-a-century event led to two decisions – one fiscal, one monetary – that haunt our politicians now.

The first was the decision to throw government money at people to combat the feared impact of lockdowns. As our economics editor, Ross Gittins, wrote, “the medicos had no idea how bad [the pandemic] would be or how long it would take to develop a vaccine, and like all governments........

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