The start of a tax and spend turnaround?

The 2010 Australian Election Study is now available at the Australian Social Science Data Archive, so we can see the latest results in a long series of similarly-worded questions on tax and spend.

Question: If the government had a choice between reducing taxes or spending more on social services, which do you think it should do?

For the first time since 2001, more people say they want reduced taxes than more spending on social services. However the proportion of respondents wanting less tax is up only 3 percentage points. The main thing that has happened is a move from clear support for more spending on social services to a ‘depends’ option.

There are problems with this question. It omits the status quo, which is always popular if presented. It doesn’t make completely clear the options it is presenting, reducing taxes AND reducing social services (at least compared to what they might otherwise be) or spending more on social services AND paying higher taxes (at least compared to what they might otherwise be). But I think the consistent question lets us track broad sentiment over time. Maybe here there are some small signs of some changing views on this issue.

6 Responses to “The start of a tax and spend turnaround?

  • 1
    Geoff Robinson
    April 7th, 2011 09:17

    Isn’t this driven by the preoccupation with living standards that dominated the 2010 election? But people become more left-wing under Lib govts and right-wing under Lab govts. Simple bivariate analysis suggests those who felt living standards declining voted for Libs. More interesting was increase in those thinking unions too powerful-backlash against Rudd’s downfall?

  • 2
    Andrew Norton
    April 7th, 2011 09:49

    Geoff – I haven’t done any analysis of this survey yet, but my previous work on this issue has argued that living standards are a major driver. Essentially, my argument is that when money is tight the focus is on protecting the household budget against tax costs, and opinon swings towards lower tax. When money is less tight, people want to consume more, including of health and education services in which government is a major producer. Though there will always be some people doing it tough, overall this is still a period in which relative to earlier periods most people are prosperous on objective (eg employment and income) and subjective measures (eg consumer confidence). Therefore I would not predict major anti-tax swings.

    However I agree it is not independent of what is happening in politics, and with the government proposing a raft of new or increased taxes this is inciting opposition.

    I did look at the union power question – I’d suggest that this reflects the fact that unions were handed a lot of additional power in the workplace more than that union heavies were part of the anti-Rudd conspiracy.

  • 3
    April 8th, 2011 12:30

    I think your argument is right, maybe you just need more ‘objective measures’ to support it – what about retail spending? In almost every shop I go into I hear how terrible retail has been for the past 18 months.

  • 4
    April 8th, 2011 14:30

    “In almost every shop I go into I hear how terrible retail has been for the past 18 months.”

    You need to go into ebay more :).

  • 5
    Andrew Norton
    April 9th, 2011 05:46

    Russell asking me for more data! Things are looking up. Real wages increasing is one sign that people are doing relatively well. Employment as a % of population is at 62.5%, only just below the record levels achieved in 2008. Retail sales are slow, but this is because saving has returned, a sign that households are not squeezed financially. The correlation between spend more and the Roy Morgan consumer confidence index is .64 over the 1974-2010 period, a moderately strong relationship.

  • 6
    Andrew Norton » Blog Archive » When might big-spending campaigns work?
    April 19th, 2011 06:44

    […] the issue could have headed in several directions if it had continued – we are generally in a pro-tax part of the political cycle if consequent spending the public approves of is emphasised, but opinion is also highly sensitive […]