This decade has shown the most favourable attitudes towards more government spending since the late 1960s. In a standard question on whether respondents would prefer reduced taxes or more spending on social services, the proportion saying reduced taxes dropped from 57% in 1996 to 34% in 2007. Support for the more spending option increased from 17% support in 1996 to 47% in 2007. (The numbers from 1993 onwards can be seen at p.29 of this compilation of Australian Election Survey results (pdf)).
But why has opinion changed? The Age this morning reports one theory:
Ian McAllister, who has been one of the principal investigators for the ANU study since 1987 and is a professor of political science at the university, says the changing mood reflects greater support for collectivist solutions to social and economic problems.
This is due in some part to a growing cynicism towards privatisation, a view that it has gone too far, or at least far enough…. Then there’s the jump in private school fees and the cost of higher education, and the rise of private health insurance, which almost half the population now has. Juxtapose this with reports of public hospital waiting lists growing and some schools across the country needing major renovations.
Though I am the exception among the handful of public opinion researchers looking at this data, I don’t think this explains what is going on. The AES itself has results which are inconsistent with an ideological shift being a major factor. For this to drive support for more social spending nearly tripling in a decade, we would expect to see a significant leftward shift in the AES question which asks respondents to place themselves on a numbered left (0) to right (10) scale. There is leftward movement, but not by much: from on average 5.46 in 1996 to 5.29 in 2007. The electorate is stable in the political centre, but has substantially changed its opinion on taxing and spending.
Nor do I think attitudes on privatisation tell us anything that is useful. Negative attitudes towards proposed privatisations long predate changed opinion on taxing and spending. And if we look at actual behaviour – and the revealed preference of behaviour is far more reliable information than boxes marked on a survey form – people have increasingly gone for private options in education and health over this time period.
Yes, people are annoyed about public hospital waiting lists and schools needing major upgrades. But as with privatisation, a constant cannot explain a variable. If anything, people are slightly less peeved about the state of hospitals and schools now than they were in the in the 1990s when opinion was more favourable for less tax. There is an AES question that asks whether the standard of public health and education services have fallen or increased since the last election. In 1998, 63% thought public health was headed down, and 50% thought the same of public education. In 2007, the corresponding figures were 60% and 47%.
Four years ago I wrote a paper (pdf) setting out an alternative theory. My argument was that what we were seeing was the product of prosperity, with added capacity to increase consumption. The difficulty is that the government is the dominant supplier of important services such as health and education. While better quality private health and education is available, to take it consumers have to both forgo part of their subsidy and pay the premium for better service. While some decide to do this (as seen in trends towards private education and health), for most the cheaper option is for government to spend more on services it continues to deliver for free. That thinking is what drives opinion on taxing and spending.
We’ve hit the time when my theory will be tested. In my 2004 paper, I noted that support for more spending coincided with subjective feelings of prosperity. Now the surveys on consumer confidence and living standards are showing major declines in those feelings of prosperity. With greater attention being given to balancing household budgets, I predict opinion will shift towards wanting the tax relief that will assist with this immediate concern. This will not be the result of increased belief in small government any more than polling in the last decade represents ‘greater support for collectivist solutions’. Opinion is driven by pragmatic responses to circumstances, not ideology.