Did they really just mention the ‘R’ word?

That is, only half of those of voting age at this year’s federal election will have experienced a recession during their working lives.

A whole generation of Australians has never known a recession.

It is so long ago – just more than 27 years – some of our politicians and many voters might have forgotten what devastating impact a recession has on businesses and families.

But not everyone sees recession on their radar screens.

The Reserve Bank Governor Philip Lowe delivered a more sober assessment for the outlook last week but not one that suggests the economy is about to fall off a cliff. 

And a recent survey of 19 academic economists by The Conversation put a 25 per cent chance of the economy falling into recession over the next two years.

In other words, there is a 75 per cent chance the economy will continue to grow.

I’d take those odds most days, and particularly in the current global economic climate. But that doesn’t mean we can be complacent. Australia needs to get its government finances in order and build its defences against future economic shocks.

We welcome the government’s ambition to deliver sustainable surpluses from 2019-20 and beyond. But we are worried that this improvement - after a decade of deficits - has largely been driven by higher than expected revenues resulting from short-term economic factors.

We want to see spending restraint to fix structural challenges to the Commonwealth’s finances. That’s a big ask in an election year but one we need to make.

There is still a way to go before government debt will get down to more comfortable levels.

For this financial year alone (2018-19) the interest bill on government debt will be a staggering $18.4 billion. That’s taxpayers’ money that could be better spent on productivity-enhancing skills training and infrastructure, or supporting better health outcomes. We’re calling for a wholesale review of the tax and transfer system to ensure it is fit for the future.

We can’t rely on one that first hit the road decades ago and is constantly being chopped and changed to fit the fashion - and the deficit - of the day.

Tax reform is not just cutting taxes, however welcome that may be. 

The latest Newspoll found voters put increased funding for government services (31 per cent) and paying down government debt (30 per cent) just ahead of cuts to personal income taxes (27 per cent) as priorities. The big parties will want to talk about boats and banks, but we think support for businesses, particularly smaller businesses, and sound management of the economy are important issues for the Federal election.

Like any election, it will be a time of uncertainty for families and businesses.

There will be a lot of political noise to endure over the next few months, but we will encourage the major parties and cross-benchers to put forward sound policies. Dr Lowe laid out the challenges facing the economy, not just domestically but also internationally.

The global economy is growing at a solid rate, but the risk of something going wrong keeps rising.

Global trade tensions are hurting, economic growth in China - our number one trading partner - has slowed and who knows what the outcome of Brexit will be. 

At home, the outlook for household spending is not helped by falling house prices. And a declining housing market raises risks for other parts of the economy.

Despite downgrades to annual economic growth, we can cheer an unemployment rate heading below five per cent next year and prospects for a gradual pick-up in wages growth.

And while Dr Lowe and his board have been advocating over the past year that the next move in interest rates will be up rather than down, now the ‘probabilities appear to be more evenly balanced’.

If the Reserve Bank has to lower interest rates to stimulate the economy, we would expect banks and other financial institutions to pass on the reduction in full to mortgage holders and to businesses, particularly small businesses.

In light of the troubling findings in the final report of Hayne Royal Commission the community would expect nothing less.

James Pearson is chief executive of the Australian Chamber of Commerce and Industry.