The latest construction figures, released yesterday by the bureau of statistics, provide yet more evidence of the weakness in the economy over the past year. They also are a solid support to comments by the governor of the Reserve Bank who has again subtly called for more action from the public sector.

On Tuesday night the head of the RBA, Philip Lowe, spoke on unconventional monetary policy. It was the type of speech that had investors watching closely for some sign of whether the RBA was contemplating measures such as negative interest rates or quantitative easing (QE).

The upshot was that the RBA has been contemplating it, but only in thought, not deed. Lowe suggested “the threshold for undertaking QE in Australia has not been reached, and I don’t expect it to be reached in the near future”.

He suggested that due to bank margins the effective lower bound of the cash rate is 0.25%, and with the current rate at 0.75%, Lowe gave the strongest indication he could that he does not see two cuts in the cash rate about to occur.

And yet the market still predicts at least one more cut, to 0.50%, to occur by May next year:

And so there is a very strong likelihood that we will soon be just one rate cut from the Reserve Bank having no more ability to cut rates.

That is a pretty slim margin of error.

Lowe’s speech also contained yet another reminder to everyone, and particularly the government, that monetary policy is not the only way to stimulate the economy.

He noted that one problem with engaging in unconventional measures is that it “might create an inaction bias by other policymakers, either the prudential regulators or the fiscal authorities. If this were the case, it could lead to an over-reliance on monetary policy.”

And certainly it is clear from the latest construction figures that we have been over-reliant on monetary policy.

For the fifth quarter in a row, the volume of construction work in Australia fell:

The level of engineering construction that occurred in the September quarter was as low as it has been any time in the past 12 years, and building construction was the lowest it has been for over a year.

The 8.1% annual fall of total construction is the biggest annual fall since the middle of 2016:

One thing that is quite clear is that the residential building boom that occurred off the back of the interest rate cuts from November 2010 onwards is now over.

That boom, which was primarily about apartment buildings in NSW and Victoria, saw residential construction in those two states far outpace the rest of the country:

Only in Victoria is residential construction higher now than it was a year ago and yet its 1.5% growth is well below the average of the past five years:

And yet while the private sector has shrunk, the public sector has failed over the past year to fill the gap.

Lowe noted “we need to remember that monetary policy cannot drive longer-term growth, but that there are other arms of public policy than can sustainably promote both investment and growth”.

Clearly that was forgotten in the past 12 years.

Over the past year, while private sector construction work has fallen, so too has public-sector work:

This is counter to standard economics as occurred during the GFC and in the period after, where the public sector acts to counter to private sector – when the private sector is struggling, public sector work increases and vice versa.

Little wonder that the government is now madly going around bringing forward projects.

Yesterday however, global ratings agency S&P warned against a fiscal stimulus program which “involves substantial spending initiatives and changes the trajectory of the budget”. S&P suggested such a move “could increase downward pressure on our rating and outlook for Australia”.

Given Australia is just one of 11 nations with a AAA credit rating by S&P, the government would be loathe to lose this status. And yet the reasoning behind the advice is pretty flimsy.

S&P argued that “while spending initiatives are likely to support the economy, they’re also likely to weaken Australia’s fiscal flexibility to respond to future unforeseen economic shocks”.

In effect, S&P argue for a reduced fiscal response to our current weak economy for fear of lessening the ability to respond in the future.

And yet such a path means greater pressure is put on monetary policy, thus weakening the RBA’s ability to respond to any unforeseen future shocks.

Global ratings agencies, like the government, care more about the budget balance than providing a balanced response to the current weak economy.

The main consequence of a downgrade of our credit rating would be that the interest rate paid by the government for its borrowing may rise (and yet even this is uncertain). With the government currently being able to borrow at record lows, and well below inflation, it is rather curious to be worried about rising interest rates:

One of the most common reasons given for a budget surplus is to provide room for future fiscal spending, should the economy weaken. And yet what is clear from the speech by the head of the Reserve Bank is that the government’s surplus mania has reduced the ability for the RBA to respond to any future shocks.

And what is clear from the construction figures is that the low interest rates are failing to have the impact required to spur the strong economic activity needed to get wages and incomes rising.

• Greg Jericho writes on economics for Guardian Australia