Is opinion turning back against tax and spend?

Regular readers will know that I have a distinctive explanation of why public opinion has shifted since the mid-1990s to favour more taxing and spending. Most researchers in this field think it is an ideological shift towards government services, while I argue that it is linked to household finances. Under my theory, when economic times are good people tend towards spending more on everything, including those services they pay for via taxation. When economic times are not so good, people want to protect their household budgets, and opinion tends towards preferring lower taxation.*

According to my theory, in a mild recession we should be starting to see a shift in opinion back towards lower tax. One indicator of perceptions of household finances I used in my original research, Roy Morgan’s consumer confidence poll, shows that while confidence is rising again it is still well below its 2007 levels, when pro-tax opinion was high.

An Essential Research poll published on Pollytics blog earlier this week on whether tax increases to fund more spending have support appears consistent with that theory.

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Question: Would you support tax increases if they were spent on improving government services and infrastructure?

As it would be very difficult to argue that there has been an ideological shift to smaller government in the last two years, if this finding is reliable it would support my theory.

However another question in the same poll casts doubt on whether a repeat of the usual question about social services, with no mention of infrastructure, would get an anti-tax result. It found that 73% of respondents would be prepared to pay higher taxes for better hospitals and health services, and slim majorities were also willing to pay more tax for more police, better roads, and better schools.

A 2007 question on how to spend the surplus (it seems so long ago) found little support for infrastructure spending, so possibly mention of an unpopular spending item resulted in a more negative result.

So question wording issues leave me with no clear evidence. Unless the Australian Survey of Social Attitudes or the Australian Election Survey asks a question with the same wording as in the past, and do so while the downturn persists, I may have to wait a long time to put my theory to the test.

* This is not to say there are no ideologues in the sample, but that any ideological shifts are too small to explain large medium-term shifts in opinion.

9 thoughts on “Is opinion turning back against tax and spend?

  1. The government just gave us more spend and less tax, and told us that that was a sustainable fiscal policy. If you believe that, there’s no reason to support more tax.

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  2. Interesting that these questions are never posed as fewer spending and better services. This is really what we should be aiming for.
    Be nice if we had a free market think-tank in Australia that could actually focus on the big picture economics of what’s going on right now, and offer real alternatives, rather than going off on so many tangents about everything from China’s political institutions to the merits of short selling , or else basically carrying on like a partisan branch of the Liberal Party.

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  3. Why, Mitch, that would be interesting indeed. I would also be very interested to hear about the public’s opinion on whether we should try and reduce crime but avoid mistaken convictions and overly harsh penalties, or perhaps whether we should aim for lower unemployment and higher wages with better working conditions…

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  4. While I do not question your theory (which applies more to trends), the sort of answers one gets on the fiscal mix depends on the way the question is asked.

    People do not trust governments so they prefer specific suggestions. Thus they might prefer hospitals and health care, Police, schools, roads, public transport etc. And the more universal the spending, the greater is the level of support it gets.

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  5. Andrew wrote: “Is opinion turning back against tax and spend?”

    It always seems to turn against ‘tax and spend’ whenever the conservative parties are out of power. Funny that. Then when they’re back in power, those same conservatives find all sorts of interest groups needing extra spending in RARA-land, big business and those marginal electorates. Howard wouldn’t be Howard if he weren’t splashing money at the grey-power brigade and so on ;).

    What’s always amazed me is how the conservatives manage to lay any sort of claim to fiscal responsibility at all when they tend to spend on pork barrels or rewarding their base while the centre and centre-left parties tend to spend on actually building national infrastructure.

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  6. Pete – Your ideological commentary aside, US research supports your view that issue cycles move against the party in power. We don’t have enough very long-term datasets to say that this is definitely the case here, but it is the case for tax-and-spend questions at least, for which we have 40 years of very similar questions.

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