Ahead of next week’s mid-year economic and fiscal outlook, the government has been hit with the sobering news that real GDP shrank in the September quarter. Deloitte Access Economics’ Chris Richardson offers some context to the gloomy figures.

“Perhaps a better way to describe it is the numbers have been artificially good for a while and now they’re looking artificially bad. The bottom line is that for four years now, Australia’s economy has been growing just a little bit below trend and that’s partly because the boom in China has peaked. China has slowed and that is throwing some challenges our way.”

Richardson tells Michelle Grattan he sees a lot that is missing from the debate about how to strengthen the economy and the budget.

“If you asked the person in the street - they’re aware that there are challenges but they don’t really know what they are and that worries me because getting good policies requires a good understanding from the electorate,” Richardson says.

Richardson foresees minimal immediate consequences if credit ratings agencies downgrade Australia’s triple A credit rating in the near future.

“In the short term, it is absolutely not a big deal. … Part of the reason why interest rates are very, very low is that investors are very, very scared and they want to put their money in super safe places and lending your money to the Australian government is still a remarkably safe thing to do right now.

"So yes, there would be a minor impact on the borrowing costs of the Australian government. I cannot get excited about that in the near term.”