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 enormous blowout in budget deficits revealed in the federal government’s mid-year update surely represent a Rubicon of sorts.

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 is the worst – with one exception – since Keating’s “recession we had to have” in 1990-91 and that GDP per person has now fallen by 2.2 per cent, or $1660, over the past year, were an unmistakable call to action.

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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 everywhere, our government and its econocrats decided it would be safer to do too much than too little”.

The second was then Reserve Bank governor Philip Lowe’s decision in February 2021 to state publicly that interest rates were unlikely to rise until 2024.

Each of these decisions plays into the difficulties currently facing the Albanese government. In August, Chalmers rejected the idea of increasing government spending ahead of the election, telling our Inside Politics podcast: “What we’ve shown is a willingness to make the right economic decisions for the right economic reasons, and the politics, I believe, will take care of themselves if you get those big calls right.”

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Yet this week’s MYEFO numbers show billions of dollars in extra spending, with the tax burden still carried mainly by wage-earning individuals, with the money government collects from tobacco, petrol and diesel excise set to dwindle even further in the future.

In his interview with the Herald this week, Chalmers insisted that progress was being made. The question is whether the Treasurer’s talk of a “soft landing” will convince voters that the government is doing enough to alleviate the hardship they are experiencing. While interest rates are still not coming down, it’s difficult to see the politics taking care of themselves.