Abstract: The recession that Australia faced in 2009 must have been the most anticipated economic crisis in Australian history. Although the worst global economic downturn since the Great Depression caused problems for the Australian economy, it appeared by late 2009 that Australia had avoided a severe downturn and outperformed the rest of the developed world.2 One year earlier, it seemed certain that the Rudd Labor government had inherited an unfortunate Labor tradition of coming into office just as good times were replaced by bad. James Scullin had to deal with the Great Depression; Gough Whitlam tried to spread the luck of the post-war boom just at the point the luck ran out; and Bob Hawke took over at a time when it was increasingly obvious that Australia’s problems were structural, rather than just cyclical. Determined to replicate the excellent record of the Hawke government, rather than the ignominy of Scullin’s or Whitlam’s, the Rudd government quickly embarked on a resolute program of government spending to stimulate the economy. The Reserve Bank of Australia (RBA) added monetary easing to this fiscal stimulus by cutting interest rates by 4.25 per cent between September 2008 and April 2009. This prescient action helped Australia to avoid a technical recession, which is two quarters of GDP contraction in a row. Australia also benefitted from the Chinese government’s huge fiscal stimulus, which helped to underpin continuing Chinese demand for Australian resources. Indeed, government actions throughout the world probably helped the world economy avoid a severe depression. Despite Australia’s relatively good fortune, the global downturn was the world’s worst crisis since the Great Depression of the 1930s.