I’ve posted regularly on the Howard government’s big spending habits. While I think much of this spending is unwarranted on policy grounds, it’s going to be hard to resist while Liberals still believe that it works politically. In this morning’s Weekend Australian I outline an argument as to why big-government conservatism isn’t a viable long-term strategy for the centre-right (there’s more detail in my Policy article).
The argument has parallels with the mummy party/daddy party thesis. Voters view political parties in stereotypical terms, seeing Labor as stronger on ‘welfare’ issues such as health, education and social security, and the Liberals as stronger on tax, defence and immigration (Newspoll’s list is the most accessible). Like most stereotyped views they are not completely immune to reality, but as the general public often has a poor grasp of actual trends they tend to form judgments based on their general perceptions of the parties, rather than their real record or (for Oppositions) their alternative policies.
This is one reason why despite increasing spending more quickly than the Keating government on education, health and social security over the last few years, and at a considerable rate by any standard, the Coalition still trails Labor as the better party on these issues. Using the Australian Election Study measure, the Coalition has recovered some of the ground lost as they cut the Budget deficit in the mid-1990s, but they are not back to their 1996 position. And as I say in the Weekend Oz:
Even on family issues, Howard’s signature theme, the Coalition has dropped from equalling Labor in early 1996 to being behind in all but one poll since 1997. If $27 billion a year in family assistance doesn’t change people’s views on which party handles family issues best, then it is hard to imagine what might.
The problem here is not just the difficulty in trying to out-Labor the Labor Party. It is that in trying to do so the Liberal Party risks undermining its real areas of political strength. High spending has to be financed with high taxes, which risks the stereotype of the Liberals as the lower tax party. Howard has largely escaped this political cost because the strong economy has produced so much tax revenue that he was able to reduce tax rates in the 2005 and 2006 Budgets. But when the economy slows, this escape hatch will be super-glued shut while the government faces millions of people determined to defend their ‘entitlements’ at the ballot box.
Howard has also mixed messages on welfare. As I argued during the week, there is a healthy scepticism about welfare’s effects in the electorate, which has helped create a needs-focused system: you don’t get it unless you need it, and you don’t get more than you need. Yet Family Tax Benefit B has no means test at all, and Family Tax Benefit A can still be claimed by families bringing in more than $100K a year. Howard tries to spin this by playing up the ‘tax’ element of ‘tax benefit’ (ie it’s your own money we are giving back to you) but this is a rather subtle point – and leads to the objection that if it is their money anyway why don’t we just let them keep it in the first place?
If the good economic times keep going the Coalition may scrape back into power late this year. But when the Liberals finally do return to Opposition, what will they stand for that Labor can’t make an equal or better claim to represent?