The Australian economy is approaching boom-like levels of growth, making a mockery of all those critics on the conservative side of politics and economics who argued that the government debt and higher budget deficit taken on last year to soften the blow from the GFC, would leave the country enfeebled.

Far from it, growth accelerated to  a quarter-on-quarter rate of 1.2% in the three months to June, the strongest for three years, topping the 1.1% rate in the December quarter and more than twice the initially reported 0.5% rate in the March quarter. In fact the Australian Bureau of Statistics revised March’s growth rate to a strong 0.7% in today’s report.

That means unlike some of our major trading partners in China and Japan, our economy is expanding at a quickening pace, not seeing growth fade.

The ABS  figures showed that in the year to March, GDP grew 3.3% (not the 4.4% rate as Americans do by multiplying the quarter-on-quarter figure of 1.2% by four, for each quarter), from the 2.7% annual rate in the March quarter.

Tony Abbott, Joe Hockey and some sympathetic economists and media economics writers had suggested that the higher federal debt and deficit had not supported the economy to the extent the government claimed in 2009, and that the deficit and debt had left the country exposed to another downturn, and would mean a sluggish recovery as business was priced out borrowing by the government’s debt financing.

That was a crock as the sector of the economy — mining and resources — that has driven much of the recovery, has had ample access to credit here and offshore and has continued to invest, despite what the excitable commentators and others said about the dangers from the brawl over the Rudd government’s resource rent tax. That didn’t impact investment or demand at all, judging by today’s figures.

In fact, it’s quite clear that led by the mining industry and consumers, private demand has taken over from the government stimulus and is driving growth at a faster rate than forecasts had predicted. It is how the Federal Government, Treasury and the RBA envisaged how the stimulus would support the economy long enough for private demand to recover from the mauling it took from the GFC and global recession.

The outcome is well above what the market had been expected, most forecasts were around the 0.8% -0.9% quarter on quarter mark, or about 2.7% annual.

A 12.5% rise in our terms of trade in the June quarter (which jumped a massive 24.5% in the year to June), provided the impetus for the surge in growth, as we saw from the June quarter current account and trade figures when the trade balance moved heavily into the black and deficit contracted sharply. That was driven by soaring prices for iron ore and coal, followed by LNG and copper and nickel.

Coupled with solid unemployment data, retail sales and reasonable building approvals, there’s every sign the economy is continuing to expand strongly in the early months of the current third quarter.

Expressed as American analysts do, Australia’s annual growth rate of 4.8%, compares with America’s second quarter rate of 1.6%, Britain’s 4.4%, Germany’s 9%, Japan’s 0.4%, India’s 8.8% in the June quarter (and expanding) and China’s 10.3% rate.

The figures advance the timing on interest rate rises from the Reserve Bank. They won’t do anything next Tuesday at the September meeting, nor October, preferring to wait for the September quarter inflation figures — which will be out at the end of October — to see if there’s a need to boost the cash rate from the current 4.5%. That puts the next possible decision on Melbourne Cup day.

The rate of 1.2% rate for the quarter and 3.3% for the year is a bit stronger than the RBA had been expecting in its latest forecasts in its last Statement of Monetary Policy on August 6.

The ABS said that on the expenditure side the main positive contributors to expenditure on GDP were household final consumption expenditure (up 0.9 percentage points, in seasonally adjusted terms) and net exports (0.4 percentage points).

“The largest negative contributor was the change in inventories [-0.7 percentage points],” the ABS said.

On the income side, real net national income rose 5.1% in the quarter and 9.5% in the year to June, which are both fantastically strong figures, but can be explained by that near 25% jump in our terms of trade in the same time.

In terms of the contribution of industry value, the ABS said construction and not mining stood out: “In seasonally adjusted terms, construction contributed 0.3 percentage points to GDP growth while mining and professional, scientific and technical services each contributed 0.1 percentage points.”