On Wednesday, we learned that the real GDP growth rate had halved in the December 2011 quarter (to 0.4 per cent) and business investment had contracted. Next day, we learned that the Australian labour market has deteriorated with employment contracting, unemployment rising and since November 2010, 140 odd thousand workers have left the labour force, presumably because employment growth had stalled. We already know that 2011 was a jobless year. Today, the Australian Bureau of Statistics released their International Trade in Goods and Services for January 2012, which shows that our trade balance went from a $A1325 million surplus to a $A673 million deficit (a “turnaround of $1,998m”). Unless that changes in the coming months, the contribution to growth from net exports will be solidly negative. All of these events have reduced the tax revenue for the government. But the response of the Government, which is pursuing a budget surplus this year at all costs, is that they will now have to cut their spending harder. Last year, the Treasurer claimed the authority for this pursuit was none other than John Maynard Keynes. More recently, the British Secretary of State for Business, Innovation and Skills claimed – Keynes would be on our side – in relation to the imposition of fiscal austerity. The reality is otherwise – Keynes would not support fiscal austerity under the current circumstances. The strategy is bereft of any credible authority and is being driven, variously, by politics and ideology.