To adapt a famous line from Paul Keating, this was the budget deficit we had to have.

It’s ironic that it will be delivered by a political party that built an election campaign on the promise of a budget surplus.

But thank God it spent big when it mattered.

For while massive deficits make for great headlines, today’s problems render them almost irrelevant.

The federal government can borrow money for five years at an interest rate of just 0.4 per cent per annum, and for 10 years at just 0.9 per cent.

Even after hundreds of billions of dollars have flown out the door, Australia’s net government debt, as a percentage of GDP, is forecast to end the financial year at just 35.7 per cent.

According to the International Monetary Fund’s Fiscal Monitor, the average across advanced nations was 94.6 per cent in April.

So, yes: The $164 billion of coronavirus spending makes previous stimulus look like chicken feed.

But while approaching $1 trillion, Australia’s government debt still pales in comparison to other countries.

So it will be no surprise to hear, then, that the Reserve Bank is more than comfortable with the government’s ability to service its debt.

Nor uncontroversial to state that most economists believe the government should keep on spending to create jobs and support the recovery.

And, as Finance Minister Mathias Cormann said during Thursday’s press conference, “what is the alternative” to massive spending and eye-watering deficits?

Another 700,000 unemployed Australians, based on numbers from Treasury.

The more important issue at hand is: What comes next?

After a brief period in which politicians put aside their differences and the government committed to doing “whatever it takes”, income supports for households and businesses are already being scaled back.

Prime Minister Scott Morrison has said there will always be an argument for spending more, “but it is not a wise or responsible course”. (Try telling that to the extra 240,000 Australians expected to lose their jobs between now and Christmas.)

Mr Morrison wants the private sector to stand on its own two feet as soon as possible.

But Reserve Bank governor Philip Lowe, who cannot cut interest rates any lower, says withdrawing fiscal support too quickly will derail the economic recovery.

The governor nonetheless praised the government for extending JobKeeper and JobSeeker beyond September – a move AMP Capital chief economist Shane Oliver said softened the dreaded “fiscal cliff” into a more manageable “fiscal slope”.

But the changes on Tuesday will cause hardship for many – with the cut to JobSeeker expected to push an extra 370,000 people into poverty, according to updated analysis from the Australia Institute.

The extensions were paired with an initial $300 cut to both fortnightly payments – at a time when unemployment is continuing to climb.

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Some economists believe that was a mistake – with several think tanks arguing in recent weeks that government spending will be crucial to the recovery, as economic conditions are so dire that the private sector will only grow with a helping hand from government.

The Grattan Institute, for example, has said the federal government will need to spend another $70 to $90 billion over the next two years to drive the unemployment rate below 5 per cent by mid-2022.

Since that report came out, the Morrison government has announced roughly $22 billion of extra stimulus, if you include the extension of pre-existing apprenticeship subsidies and the promised $500 million towards vocational education.

What comes next will likely remain a mystery until the full budget is handed down on October 6.

More business investment incentives are likely. As are fast-tracked income tax cuts and more industrial relations reform.

Dr Lowe has urged “the government to spend money directly itself on activities that create jobs”.

“I can tell you the first cab off the rank will be labour market flexibility,” the Treasurer teased on Thursday. 

Not quite what the governor ordered then.