Usually, Treasurers will go to great lengths to avoid the word "recession" passing their lips.
But Treasurer Scott Morrison dropped the "r" bomb four times in a speech last week warning of the risks of budget complacency.
While he didn't say it explicitly, the lingering impression of his speech was that Australia's budgetary position of debt and deficits is a threat to growth.
Such an argument is music, of course, to a conservative audience's ears. Yes, they will think, big government will strangle the economy, as we always suspected.
To a more interventionist, Keynesian ear, it's entirely odd. Increased government spending adds to demand in an economy, boosting growth.
So, which is right? Does high government debt cause recessions?
While the ideologues duke it out, economists have been running the numbers.
In a 2010 paper published in the American Economic Review titled "Growth in a Time of Debt", American economists Carman Reinhart and Kenneth Rogoff looked at the relationship between debt and growth for 44 countries spanning two hundred years.
They found that, for countries with debt to GDP ratios below a threshold of 90 per cent, there was little link between debt and growth. But "above 90 per cent, median growth rates fall by one per cent, and average growth falls considerably more".
Their paper lobbed just as major economies were grappling with the fallout of the global financial crisis, with stagnating growth and ballooning debts. It gave ammunition to austerity advocates who seized upon it as evidence that high debt is not the answer to low growth – in fact it causes it.
But the results are hotly contested. In perhaps the biggest kerfuffle in the economics profession in recent history, Reinhart and Rogoff were later forced to admit a basic spreadsheet error – they forgot to include five countries in a calculation of averages – had seen them underestimate growth in high debt countries.
Other economists have since used bigger data sets to disprove the link between high debt and low growth.
But even Reinhart and Rogoff don't claim a direction of causation for their finding. Yes, while they still insist higher levels of debt are associated with lower levels of growth, it may well be that low growth causes the high debt, not the other way around.
A 2014 paper by the International Monetary Fund titled "Debt and Growth: Is There a Magic Threshold?" found "no evidence of any particular debt threshold above which medium-term growth prospects are dramatically compromised". That paper found it's the trajectory of debt that is more important. More concerning than high debt, is debt that's climbing fast, as it has been in Australia recently.
So, is Morrison right to ring the recession bell in his mission to balance the books?
In these days of scare campaigns, you can understand Morrison's desire for a simple argument to support the case for needed budget repair.
But empirically, no: high government debt does not by itself cause recessions.
And it would be concerning indeed if, confronted with another external shock – such as a Chinese economic slowdown – our government could not respond with further stimulus – or dithered in delivering such stimulus – because punters and pollies now believed higher debt would only increase the chances of recession.
Morrison wants a bogeyman to spook his troops into action to fix the budget.
But he wants to be careful he does not unleash a bogeyman so scary it undermines our ability to respond to the next crisis.
