Most Australians hadn't made their first tentative step into a Year 3 classroom the last time the country slipped into recession. That was 30 years ago, and the Australian economy has grown resolutely since, quarter after quarter, year after year - even through the global financial crisis. Now, despite Scott Morrison's massive front-loaded cash splash this week, recession, in the view of most economists, is the most likely scenario.
Recession is more than a word that obsesses economists and populates dry analyses. Recession hits the poorest hardest. In the last recession, the one that Paul Keating said we had to have that arrived in the September quarter of 1990, unemployment spiked. It was 6.1 per cent at the beginning of 1990 and by March 1992 peaked at 11.2 per cent. By that stage the year-long recession was well over, but unemployment has a much longer tail. It wasn't until 2000 that unemployment finally touched 6.1 per cent again.
This is the nightmare scenario Morrison wants to avoid. And as a leader who has staked so much on delivering a surplus, he is hugely focused on a spend that doesn't, as he put it, "bury the budget for a decade".
This week's stimulus spend costs $22.9 billion, actually less in total than Kevin Rudd's $53 billion to shore up the Australian economy in the global financial crisis. Of Morrison's total, $10.9 billion flows in the next 3.5 months, in a package he has deliberately front-loaded and devised to be short and sharp, with the longest-lasting measures finishing by mid 2021.
Morrison is giving $750 to 6.5 million people - everyone on benefits including the family tax benefit, veterans and people with health card cards, in other words, those mostly likely to spend it all.
Rudd gave cash to loads more people. He gave handouts of $1000-plus to pensions and lower-income families in a $10 billion package then followed soon after with a $950 to all workers earning up to $80,000, with lesser amounts for people earning up to $100,000 (8.7 million people in all), and to students and farmers, and extra to families.
But given indications that not all of Rudd's cash was spent, with some people banking it instead, Morrison's cash is more tightly aimed at people who are expected to spend. Morrison, also like Rudd, has a measure to encourage businesses to buy equipment, allowing them to write off decent-sized purchases - up to $150,000 - instantly. But Morrison has avoided the most troubled aspect of the Rudd stimulus - the poorly run home insulation scheme that saw the deaths of four young Australians, and the school-building scheme that was tied up in lengthy bureaucracy and dogged by mismanagement complaints. Instead, Morrison is pumping money into businesses, handing them up to $25,000 each over the coming four months, with the amount depending on how much a particular business spends on wages, and subsidising wages of apprentices by 50 per cent until September - that's up to $21,000 per apprentice per business. This is well-aimed at youth employment, and with young workers hit harder during the last recession all those years ago and during the global financial crisis. Both times, unemployment among 15 to 24 year olds rose faster, sharper and higher than for others.
Rudd's stimulus helped keep Australia out of recession, but it wasn't the only factor, with strong resources demand from China also credited with boosting Australia's economy.
And there were two other key differences. The Reserve Bank had room to move in 2009, and move it did, cutting interest rates dramatically and repeatedly, adding to 4.75 percentage points of rate cuts overall. This time, rates are already at a record and precipitously low 0.5 per cent. There is nothing left in the lockers of the world's central banks, as economist Chris Richardson puts it. The Reserve Bank has one cut left to its effective bottom level of 0.25 per cent and is expected to go there in April.
The other difference between now and 2008 is that was a financial crisis that lent itself to financial fixes. This is something entirely different and so far the only fix appears to be shutting things down. The coronavirus is stopped by eliminating economic activity, not boosting it. For this reason, there is nothing to be gained from political one upmanship. Morrison's levers are limited and he needs to resist seeing this as a competition with Rudd. Rudd's stimulus package was flawed, but successful in that Australia avoided recession. Morrison has taken the best of Rudd's measures and eschewed the worst. His stimulus plan has been widely greeted as bang on. But the virus is moving well out of his ability to predict, let alone control, and to say he's got it right so far is not to say he will avoid recession.