What does the public want done with the surplus?

Though there are signs that tax cuts are coming back into public favour, two polls published this morning suggest that this is more due to the politics of massive surpluses, which allow tax cuts and more spending, than to a shift back to preferring tax cuts over more public services.

The more interesting poll, for my purposes, was a Galaxy poll published in the News Ltd tabloids. It asked:

On balance, which one of the following would you prefer the Government to do with $34 billion?

And the answers were:

Give tax cuts 12%
Spend it on schools and hospitals 71%
Give more money to states 3%
Invest in some major infrastructure projects 13%
Uncommitted 1%


That tax response is less than a quarter of the lowest support for tax cuts otherwise recorded this year; this question implies an either-or choice that does not exist in reality. It is however consistent with my general theory of opinion on tax and spend, that in a period of prosperity people want to spend more on health and education, but for most people more government spending is the most practical way of doing so. Incremental tax cuts just don’t generate enough additional income to finance private health and education, the most reliable ways of getting better services.

The Galaxy poll reports 12% of people saying that the tax cuts make it more likely that they will vote for the Coalition, while the ACNielsen poll in the Fairfax broadsheets finds 8% saying that they will probably change their current voting intention. We should be sceptical – Galaxy picks up only a 3 percentage point improvement in the Coalition primary and ACNielsen 2 percentage points. But two polls finding much the same change and a persuasive reason why the numbers have improved gives some confidence that the shift is not just statistical noise, though that is a possibility.

One other interesting point in the Galaxy poll is the very low percentage of people favouring more money being given to the states. Almost all the bad public services the public complains about – hospitals, education, transport – are principally the responsibility of state governments. The public thinks that more money is the answer. Yet they don’t seem to want to give the money directly to state governments. ‘Aspirational nationalism’ may be a terrible term for a little-better idea, but Howard (and Rudd, for that matter) may well be right that the public has concluded that the state governments are hopeless, and they will have to rely on the federal government for better services.

13 thoughts on “What does the public want done with the surplus?

  1. If Howards wins this election, it should cripple the credibility of these sorts of polls for some time. People are told from birth how bad it is to care about money and so when faced with a human questionner on the other end of a phone, who has called them to learn their opinions on effectively what defines them as ethical beings, they have a strong incentive to give these sorts of answers. There may be no shame on reality TV, but I suspect there is in answering pollsters.

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  2. …maybe we don’t even have to wait until the election: Rudd has adopted 90% of the Coalition’s tax cuts. Clearly he doesn’t believe this poll either.

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  3. Rajat – It is good that me-tooism has worked here, but I’m not sure that (2) is a big factor explaining these polls. Opinion only shifted to majorities favouring more spending between 2001 and 2003 (though it had been trending that way for a long time). While there may have been some shift in the socially acceptable thing to say, I think it is more likely that circumstances changed than principles changed. We are only looking at two forms of self-interest here, not self-interest versus principle – people support spending on things they are likely to use, health and education services, rather than on purely altruistic objectives.

    There is nothing wrong with wanting to increase consumption on health and education; that is exactly the pattern of behaviour we see among affluent people who have greater control over their consumption levels. But the $20 a week that most workers will get from these tax cuts won’t get them very far so wanting more government spending on health and education instead is perfectly rational.

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  4. If the poll questions correspond to those answers then of course the result for ‘giving’ money to the states was low. Everybody wants tax cuts, and spending on health and education and infrastructure – nobody wants money vaguely given away.
    If the question had been “give more money to the states to spend on health and education” it probably would have got 71% support.

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  5. I think one of the problems is that without thinking about it, many people may not realize actually who controls what — which Russell’s question solves. What percentage of people made the connection that the states have to pay for all of these services when asked the question? We don’t know, but my bet is not very many (I don’t think people do for many issues — they just see one pile of money and the end result, not the intermediate steps as to how it gets there).

    Of course, if the federal government gives money to the states and tells them exactly what to do with it, then I don’t see what the point of giving it to the states is in the first place .

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  6. actually when you look at what Howard and Costello did they actually adopted the ALP plan.

    Not many of the initiatives you could really say came from their side although these days we are all social democrats.

    What about we save the surplus.

    Andrew you might find it amusing that the CBA has a sex filter on this blog.

    you nasty man you!!

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  7. Homer – That’s the second sex filter I have heard about catching my G-rated blog (or perhaps PG, in case young readers have to ask their parents what a gay bar is). It reflects more on the filters than my posts I think!

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  8. People’s views about the appropriate extent of ‘social’ expenditures may shift as their perceptions of their own economic security shift – in choppy seas it’s about me, and in calm waters it can be about us. Sounds reasonable as an explanation.

    From a different standpoint – that of principle – I think the focus on ‘us’ is often sensible when it comes to social expenditures in areas like education and training. Tax cuts in the pockets of individuals frequently can’t carry the day in terms of desirable social ends.

    I like the messiness that liberal preferences for individual autonomy bring to social organisation. Choice is a good thing so long as choices related to opportunity are not limited to certain folk by virtue of wealth or networks, for example.

    But in some circumstances the use of collective resources to secure better outcomes for individuals is the right choice. It would be no surprise if so-called ‘ordinary Australians’, bright and politically astute as she and he are, recognised this.

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  9. Homer – I don’t suppose people can appeal these things without admitting that they are wasting work time reading blogs?

    Do you know the name of the filter?

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  10. The public thinks that more money is the answer. Yet they don’t seem to want to give the money directly to state governments. ‘Aspirational nationalism’ may be a terrible term for a little-better idea, but Howard (and Rudd, for that matter) may well be right that the public has concluded that the state governments are hopeless, and they will have to rely on the federal government for better services.

    This seems an unwarranted inference. Given a choice between something they specifically want — more spending on schools and health — and something generic — whatever State governments want to spend it on — it is surely logical to give more direction rather than less.

    It also seems hard to read the Coalition’s persistently poor polling in the lead up to the election as an endorsement of centralism.

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