What significant economic issue was referred to as "the recession we had to have"?

The phrase "the recession we had to have" is commonly associated with the contractionary policies that were implemented in the early 1990s in Australia. This refers to a period where the government took deliberate actions to reduce inflation and manage the economy, often through higher interest rates and reduced public spending.

Contractionary policies are intended to slow down economic activity, especially when the economy is overheating and inflation is rising. In this context, policymakers believed that a recession or economic downturn was a necessary step to correct imbalances and set the stage for more sustainable long-term growth.

The concept emphasizes that while a recession causes short-term pain, it can lead to healthier economic conditions thereafter. Therefore, this phrase reflects the view that the difficult measures taken during that time, although painful, were essential for restoring economic stability and curbing inflationary pressures.

In contrast, high unemployment, an expanding economy, and inflationary pressures do not capture the essence of the explanation behind this statement. Rather, they indicate the conditions or outcomes that may arise from various economic policies, rather than the deliberate choice of contractionary measures designed to address specific economic issues.