The past two years have been a very good demonstration of the importance of the public sector in keeping the economy growing when the private sector is weak. Since the start of 2016, the public sector has almost been as vital to the economy as during the global financial crisis, and demonstrates yet again that governments do create jobs and economic growth.

Something odd happened to the narrative of the Australian economy over the past year. After the end of the investment phase of the mining boom, the story was that the switch had clearly been made towards more export-oriented growth.

Growth with a grain of salt: it's the same old story as households miss out | Greg Jericho Read more

It made sense. Once we got through the wild swing of the GFC years, the contribution of exports to our economic growth continued to rise. By September 2016 it was contributing 1.3% pts to GDP growth – the highest recorded for over 15 years.

But since then, rather surprisingly, it has fallen:

Now this doesn’t mean that the export phase is over – indeed the expectation is that export growth will pick up. But it highlights how little our economic growth is dependent upon exports, and how subject our exports are to weather (cyclones are not good for our exports) and international economics winds.

Historically the biggest driver of our economy has been domestic demand – spending by households and the public sector and investments by the private and public sector.

Through 2015 and 2016 the contribution of exports to our economic growth was almost on a par with that of domestic demand, but that was as much a reflection of how weak domestic demand was as it was about how strong export growth was:

So in some ways, while decline in importance of exports is counter to the narrative of the export boom, it fits with the historical picture of our economy.

In many ways this is good – if only for our nerves. GDP figures are mostly reported in the media in seasonally adjusted terms (for no good reason), but the chart of seasonally adjusted exports can look a bit like a heart monitor, so it is probably good that we are not overly reliant on them to gauge every three months how we are tracking:

But while it is not unusual that we are once again reliant mostly on domestic demand, the makeup of that demand is not typical.

When we look at the breakdown of how domestic demand is contributing to our economic growth we see that through 2016 and 2017 public spending – both consumption and investment has become more important than in the three years beforehand.

Household consumption remains the biggest factor (not surprising given it accounts for 60% of the economy) but its importance remains relatively flat and subdued.

Similarly during 2016 and 2017 the private sector side of investment was actually detracting from economic growth – because of the sharp fall in mining investment:

The importance of the public sector spending – mostly in health, aged care, the NDIS and infrastructure – is apparent when we take away the contribution of the public sector from GDP growth. This doesn’t give us precisely the “private sector” GDP, but it is a good proxy.

Currently our GDP is growing in trend terms at 2.7% – nicely in line with the peaks of growth over the past six years. But once we take away the public sector’s contribution, the economy is only growing at 1.7% - below the peak periods of growth of the past half dozen years:

Now there is nothing wrong with this – in fact it is a prime example of how you would want public spending to work. It is essentially just a longer and less urgent version of the stimulus spending the Rudd government did during the GFC, done this time not because the world economy was going down the drain, but because mining companies had finished building a lot of their mines.

From September 2012 to September 2016, the level of private sector capital expenditure on buildings and structure, and machinery and equipment fell 35%:

That is a massive chunk to take out of the economy – and had the government not reacted with increased spending and investment, we wouldn’t be arguing about why things are so middling given generally stable unemployment rate, but instead why the economy is so utterly stuffed.

As it is however, the contribution of the public sector does explain some of the weak wages growth given public health and social care jobs are generally lower paying, and even the income in construction work is less for public infrastructure than it is for work to build a mine.

Australia's GDP growth jumps to 3.1% on back of mining exports Read more

One very good thing however is that we do seem to have reached the bottom of the mining investment fall. There has been now five quarters straight of rising private sector investment, and the latest estimate for investment in 2018-19 suggests a slight improvement over this year, driven mostly by the non-mining sector:

A large part of the non-mining investment growth has been in building and structures, especially in the electricity, gas and water industry:

It all adds up to a picture where the economy is still pretty weak, but there are some signs that the weakest is behind us. Certainly the anchor on growth that has been falling mining investment looks to be finally unshackled. But the private sector growth remains well below historical average growth – especially when it comes to household spending.

It must be rather ironic for those free marketeers in the government who raved and ranted against stimulus spending during the GFC to have to admit that their government’s own spending and that of state governments is very much ensuring that the economy is continuing to tick along.

• Greg Jericho is a Guardian Australia columnist