I only lasted about half an hour with last night’s debate, but early on Kevin Rudd repeated his claim that people are feeling worse off due to rising costs, and the worm climbed to the top of the screen as he did so.
Is this a case of the objective statistics not capturing the subjective experience of the Australian electorate? There is nothing unusual about public perceptions being inconsistent with the facts. But this seems to be a case in which public perceptions are not matching what the same public tells pollsters when asked questions about their finances and standard of living.
For example, the Roy Morgan consumer confidence survey asks its respondents:
Would you say you and your family are better-off financially or worse off than you were at this time last year?
In the most recent survey, 40% said that they were better off and 21% said that they were worse off. The numbers have bounced around a little over the year (it’s a monthly survey), with an average of 36% saying they are better off and 25% worse off. The comparable numbers last year were 33% and 28.5%. This suggests that, compared to last year, more people perceive an improvement over the preceding 12 months and fewer perceive a decrease.
And nor do they seem to think that price increases are going to keep whacking them, with an average of 42% saying that they expect to be financially better off in twelve months time, and 12% expecting to be worse off.
Over a longer time period, a Galaxy poll reported in Saturday’s Herald Sun asked:
Overall, would you say that you are now better off, or worse off than you were three years ago?
50% said that they were better off, while 29% said they were worse off. A large 21% were ‘uncomitted’. If memories are accurate (a big if), a longer stretch of time increases the numbers of both the better off and the worse off.
Newspoll asks:
Do you believe your standard of living in the next six months will improve, stay the same or get worse?
There are important differences between Newspoll and Morgan. ‘Standard of living’ is not simply a question of recent finances; assets as well as income contribute to perceptions, as do services received but not paid for by the household. It’s not clear that Morgan gives an express ‘stay the same’ option, which almost always attract a strong response (for example, the Australian Election Survey asks a similar question to Morgan but has an ‘about the same’ option, which gets the highest response). However, Morgan’s combined better and worse total well under 100. Further, Newspoll combines its survey with political questions, which probably triggers partisan answers.
The most recent Newspoll finding, from July this year, was that 21% thought that their standard of living would improve, 61% thought that it would stay the same, and 16% thought that it would get worse. Apart from the June 2003 to June 2005 period, only once since Newspoll starting asking this question in 1985 has pessimism been so low.
Though depending on the question and the poll 16% to 29% of the population perceive some deterioration in their circumstances, there is no evidence here that even on a subjective basis unusually large numbers of people are ‘doing it tough’. To the contrary, the direction of subjective opinion is broadly consistent with the direction of objective indicators. Though as always through a mix of bad luck and choice – many people choose lower incomes through lifestyle transitions – some people are worse off than before, prosperity means that more are headed up than headed down.
Whatever Kevin Rudd says, whatever the worm says, these are good times. The typical family may want more, but they are not worse off than before.
Andrew Norton 
The elephant in this room is household debt which has grown enormously. It’s manageable right now, but people know that if the economy hits tough times, then they are deep in the doo-doo. This is a forward looking problem, so it’s entirely possible for people to think their standard of living is better now than in the past, and will probably be as good or better in the near future, while at the same time feeling nervous about the future.
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Dear Andrew Norton
Whilst it is important to ensure that the questions asked in quantitative surveys are consistent and the numbers are accurate it is also important to look at the subjective accounts really mean.
Not everyone is a member of a majority. The message I get from these figures is that there are slightly more people who are or think they are better off. The number of people who are actually worse off, or no better off in this boom economy is a substantial number of people.
Even after you factor in the number of people who have been convinced by politicians that they are better off when they are not and the people who are better off but are convinced by politicians to whine for more – we still have a widening gap between well-paid and under-paid/under/un/employed.
I distinctly heard Peter Costello and John Howard explain the necessity of the Work Choices legislation. The purpose of WC is to ensure that workers in the profitable sectors of the economy could get more (much more) without having their wage rises flow on to the rest of the workforce, which could cause inflation. Thus the economic rationalist model encourages inefficient industries to become increasingly dependant on cheap labour and for a large number of workers to accept that they have no choice but to take on the role of slaves in this society.
I bet Mr Howard didn’t promise them that. This is also recipe for a widening gap and lots of people whose bargaining power has been eroded by anti-union legislation missing out on the boom. It is also a shortsighted recipe for socially divisive and conflict generating policies that we will come to regret as opportunity dries up crime is likely to rise.
However you play with the survey questions and the percentages, this is the inevitable outcome. The Howard government and probably a Rudd Labor government subscribe to this basic tenet of neo liberal discourse. Let them defend this.
I congratulate Spiros for his observation that household debt in Australia is at an increasingly perilous level, which is politely ignored in the media (its a private matter, apparently). Yet we know that the RBA and not the federal government controls interest rates and that these might be due to rise again for the sixth time.
The pain of maxed-out Visa cards and what is euphemistically called ‘mortgage stress’ can change governments and should not be ignored. People who are made homeless by repossession of their homes might not be around for the next survey if they can’t afford a phone. When these people are off-line, so-to-speak, they are not part of the question, “are you better off”. Yet we know from research that housing affordability is at crisis point.
We could all live a little simpler, emit less, worry less and conserve more and we could demand a more robust approach to truthful politics. A lot of this discussion assumes that things will remain as they are.
Willy Bach
Greens candidate for Griffith
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Willy, you said:
“The purpose of WC is to ensure that workers in the profitable sectors of the economy could get more (much more) without having their wage rises flow on to the rest of the workforce, which could cause inflation. Thus the economic rationalist model encourages inefficient industries to become increasingly dependant on cheap labour and for a large number of workers to accept that they have no choice but to take on the role of slaves in this society.”
You seem to assume that unprofitable businesses can pay mining sector wages while remaining in business. Clearly, that’s not realistic. So what would you propose ought to happen to the less profitable sectors of the economy? That they simply disappear? So all those people who work at supermarket checkouts and hospitality should just go on the dole? Now THAT would be socially divisive. You might say that checkout chicks should retrain to work in IT or green energy; but where is the incentive for them to do that if they get paid the same wage as someone who works in those sectors?
It is quite consistent for someone who cares about the environment to be pro-market. After all, as most people now understand, the only sensible response to man-made global warming is putting a price on carbon and letting the market work out the cheapest way of reducing emissions. So why do you consign your candidacy to the fringes by spouting anti-market rhetoric?
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Economic rationalism demands slavery and WorkChoices causes crime. Fantastic additions to the debate Willy, well done.
Anyway, to the worm. I think we are seeing people respond in the way they believe they ought to respond, not in the way that they would have responded if the ‘cost of living’ issue hadn’t been so successfully inserted into the political agenda by the Filthy Liberal. Everyone wants to back a winner…
BBB
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Willy – If the Greens get in, then we’ll all have to make do with less! Overall, I predict no significant changes to current trends regardless of which of Labor or Liberal win. At this point, Labor will redistribute slightly more to families and by repealing WorkChoices slightly reduce employment growth. But these effects will be at the margins. As I have said before, Labor’s problem will essentially be a political one of raising expectations it cannot meet.
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I think Mr Howard summed up the problems with IR laws. Good for the economy does not mean they are neccessary good for the worker. The economy has grown with the rich getting richer, the poor poorer. You can have a marvelous economy under a dictatorship. Probably easier to do so.
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Andrew
there are very big differences between the parties and there is enormous political risk coming from Mr. Working Families’ front bench whichj is quickly become evident that it is a shelter for union officals.
What I find hillarous is that there is direct correlation to the fall of unionism and the rise in the numbers of union officials in the labor party ranks.
My honest question is then:
Is the ALP a make work scheme for out of work union officials?
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Florence
You’re hallucinating. Every segment of the australian populace has never had it so good. Ever! Now there could be situations where an ummarried mother has had a third child and welfare hasn’t caught up, but overall our economy is blessed.
there isn’t a stat that goes anywhere near proving your assertion.
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“The elephant in this room is household debt which has grown enormously. It’s manageable right now, but people know that if the economy hits tough times, then they are deep in the doo-doo. This is a forward looking problem, so it’s entirely possible for people to think their standard of living is better now than in the past, and will probably be as good or better in the near future, while at the same time feeling nervous about the future.”
Which is why I keep pointing out that we can’t afford policy mistakes seeing we’re a highly leveraged economy. Tighten up the labor maket through dense policy and you end up with dead bodies on the street.
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JC,
There’s a big that that leans towards florence’s assertion: house prices as a multiple of earnings. Cheaper houses would fix it, but nobody is very keen on slums or devaluing houses by chopping the sillier subsidies we give to investors (like negative gearing). I reckon we need more slums, don’t you?
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David — there’s lots of cheap housing (excluding Sydney), its just in places people don’t want to live (the outer burbs) or not up to the quality of the average expection (despite poor quality housing in Australia being better than most of the rest of the world).
The problem isn’t lack of housing — its lack of housing that meets people’s rather high expectations. Another thing that is almost never mentioned is that almost everything else is cheap — that includes cars, electrical goods, etc., all which allow people to bid houses multiples in good places higher.
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Yeah, but provision of higher density housing nearer major cities is held back by planning regulations. In this tight a market, it’s appropriate to say that we’re basically forcing poorer people out of the inner suburbs to preserve their old worlde character/avoid creating “slums”.
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It’s true conrad that there is cheap housing, largely where people don’t want to live (i.e. where they can get work). It isn’t clear to me whether it’s a problem that will fix itself in time (as it should – if nobody can afford to buy a house, I assume it will turn into a buyers market). How long this would take is anyone’s guess. We haven’t seen any real policies from either side that would accelerate this, other than finger pointing about releasing land. I’m only half kidding about the slums: zoning laws and NIMBY’ism about high rise developments haven’t allowed our cities to “grow up” in the same way as you would expect. As for cars/electronics being cheap, that’s all well and good, but those are discretionary purchases – you can’t eat them or live in them, and on a tightening budget they simply aren’t purchased.
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“………. Cheaper houses would fix it, but nobody is very keen on slums or devaluing houses by chopping the sillier subsidies we give to investors (like negative gearing). I reckon we need more slums, don’t you?
David
You’re making less sense that usual.
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David,
I guess it depends where you want to attribute the problem. No doubt part of the problem is the government pandering to NIMBYism but no doubt part is simply because of people’s unrealistic expectations. I tend to think that the first of these is overstated. Even if people could build high rises etc. (which might not be at all easy in built up suburbs — you need large pieces of contiguous land), it isn’t clear to me people would want to live in them anyway. It seems to me that many people basically want MacMansions in expensive suburbs, and for these people, I don’t have any sympathy. I’d be interested to see some real data on these things.
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What about planning restrictions in inner suburbs? If there’s that much demand, how come we don’t see apartments being built and filled in inner suburban areas? I don’t think it’s a problem of demand for apartments, regardless of most Australians’ apparent preference for quarter-acre blocks.
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This must be a new branch of economic rationalism hitherto unknown to the world. The one I’m familiar with predicts that inefficient industries disappear and their workers go to work in other industries.
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No doubt there’s a segment of the community that wants a McMansion in an unaffordable suburb (aspirationalism I think it was called and it’s relentlessly pandered to). Everybody else seems to have little choice – especially in Sydney where the choices seem to be limited to an either/or choice of apartments or McMansions. The only exception I can think of was the redevelopment of Homebush that stemmed from the Olympic village: townhouses relatively close to decent transport infrastructure. Even then, my (possibly faulty) recollection was that nobody wanted to touch them with a bargepole and they sold very slowly. I have little sympathy for the McMansion mindset either, but people want what they want and who am I to judge that?
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David,
answering your rhetorical question, you don’t have to judge them. But then you don’t have to use the term housing shortage either when there isn’t — its like Orwell for middle-class whingers.
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Andrew, speak for yourself. My household is worse off, partly because enterprise bargaining is a joke in my sector, partly due to childcare costs, partly to interest rates
The obvious take on this is more households are better off than worse off. But the better off have become used to endless improvements, which have been less clear in the last couple of years. In essence, we’ve bred a greedy society for the majority: hence their ungratefulness. You can’t spend 10-15 years focused only on the economy and the individual, and expect different.
At the other end, we know people: single mums, people on or close to the min wage, who are really struggling, and who the govt’s changes have clearly hurt. There’s a second group on mortgage stress, who resent 2004’s interest rate promise, and who sense that the housing boom didn’t have to make it so difficult for them to break into the housing market. These folk are palpably worse off. They’re not greedy. They drove the worm.
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Hi
I feel very much left out of this boom mainly because I choose to live in regional Australia. For those people who never venture out of the city I am sure you feel optimistic as you are living in an artificial environment. I am about to watch ten years of hard work die this year because there is no water to irrigate my grapevines. There also is no work here because of the collapse of horticulture in this area because of the above. I feel that Australians who live in the city have no concept about how their food is produced and take quite a lot for granted. If climate change and the water problems are not dealt with soon you may find that there will be a worldwide shortage of food. Not really condusive to a prosperous lifestyle when there is a shortage of something basic like food. You can’t eat coal.
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