This is an edited version of a lecture by economist and former Australian Treasury Secretary (2001–2011) Dr Ken Henry, delivered at a Colloquium in honour of Professor J.W. Nevile, held at the University of New South Wales on 10 October 2012. Taking a practitioner’s perspective, the article surveys the management of the Australian economy from the 1970s to the present, with a focus on the reasons Australia escaped the global financial crisis of 2008 and the lessons for macroeconomic policymakers to be drawn from that experience. The author concludes that macroeconomic policy practitioners have to think deeply about microeconomic connections and the potency of different instruments in addressing shocks with different sources. They also have to deal with considerable uncertainty. The global financial crisis demonstrated forcefully that there is no separation between macroeconomics, financial system stability, prudential regulation, micro-level incentive structures and market efficiency.
