Budget Misreads The Mood On Social Welfare

Do Australians still care about our social safety net? About fairness? About that old-fashioned notion, the “fair go”?

Leading into this budget, the government clearly calculated that we do not. How else to explain a budget deliberately targeted at Australia’s poorest, sickest and most vulnerable?

The status of Australia’s safety net is worth considering, if only because the federal budget forces us to. The budget’s extraordinary attack on Australia’s welfare state, and the public’s surprisingly antagonistic reaction to it, has ripped away the veil of tacit assumptions that normally cloak politics as usual.

As a result, and not for the first time, we’re seeing an electorate deeply at odds with the neoliberal philosophies of the government, and of Australia’s political system at large.

As New Matilda and many others have pointed out, Treasurer Joe Hockey’s first budget wasn’t really a wholesale belt-tightening. Instead, it was a redistribution of government spending: an upwards redistribution, as it turned out.

Voters hate it. A week after the statement was handed down, Prime Minister Tony Abbott and his colleagues are scrambling to contain the fall out.

While opinion polls are by no means a complete reading of the public mood, the atmosphere of public rancour they are picking up appears genuine.

The Coalition is down around 45-55 in two-party preferred terms, with poll figures assessing the budget itself showing savage reactions.

Nielsen shows a whopping 74 per cent of respondents think it will make them worse off. Newspoll has that figure at 69 per cent.

The astonishingly negative poll figures point to the government’s biggest problem: voters are not just dissatisfied. They are scared. The budget’s overt targeting of vulnerable groups such as single parents, students, the poor and the unemployed has clearly led many to worry that the government is no longer looking out for them.

After decades of slowly tightening social welfare provisions, Australia’s social safety net is already finely tuned. The vast majority of government benefits are paid to the poorest 20 per cent of households. Under John Howard, family tax benefits were created and expanded, but under the Rudd and Gillard governments they were tightened up considerably, and there were some punitive measures for single parents and Indigenous benefit recipients to boot.

As a result, those households receiving benefits are already very much amongst the most needy.

If many Australians are worried about the budget’s impacts on their household finances, they have good reason.

Detailed calculations missing from the budget itself show a stark picture of millions of families worse off after the changes announced by Joe Hockey last week.

Known as the “detailed family outcomes”, these figures have been included in budgets since Peter Costello’s tenure. They model the financial impact of budget changes on various types of households. But the detailed family outcomes were missing from last week’s papers, for obvious reasons.

Luckily, the Australian National University’s Peter Whiteford and Daniel Nethery have modeled the impacts in an attempt to recreate the tables. For those already living on the edge, the implications are frightening.

An unemployed 23-year-old will lose $47 a week, or 18 per cent of her income.

An unemployed single parent with an eight-year-old child loses $54 a week, or 12 per cent.

A single-income couple on average earnings with two school-age kids loses $82 a week, or six per cent of their disposable income.

Cuts like this are not trivial. How would you feel if you took an 18 per cent pay cut?

Could you make ends meet with $80 a week less in your pocket?

In contrast, the new income tax levy for high-income earners will cause minimal pain for the wealthy.

For the well-to-do, a small cut to disposable incomes is much easier to handle than for those on Newstart.

The rich have savings. They have assets. They have good accountants. And in any case, the hit to high-income earners is small, even in absolute terms.

As Whiteford and Nethery note, “high-income couples could together bring in up to $360,000 a year and not contribute an extra cent”.

Calculations like this are helping to cement an appreciation of this government as mean and inequitable.

Fairness remains a key value for many voters. But even if ordinary citizens aren’t re-embracing a belief in social democracy, the cold hard facts of weekly budgeting provide plenty of motivation for an electorate that consistently tells pollsters and researchers that cost of living pressures are their key concern.

Perhaps this is why this budget has seen consumer confidence fall at the fastest rate since 2008, the eve of the Global Financial Crisis.

Interestingly, some on the right have been attacking the government for not being tough enough.

Indeed, some conservatives have expressed disappointment at Hockey’s supposed timidity, concerned about how slowly the budget will move back into surplus.

Andrew Bolt, always a handy litmus test of conservative thinking, is worried about Australia’s AAA credit rating, while the reliably reactionary Terry McCrann pointed out last week that “the total of supposedly savage cuts knock less than $2 billion off the $32 billion deficit expected for this year.”

Perhaps it was sentiments like this that helped shape the government’s budget tough-love strategy. If that’s so, the government has badly miscalculated.

Rather than softening up the electorate for a budget that was better than expected, the sustained campaign of pre-budget leaks leading in to the Commission of Audit appears merely to have primed the public for bad news.

The available evidence suggests Australians prefer a fiscally prudent government, but not at the expense of the safety net.

Medicare, and free public health care in general, has always been extremely popular. So, for obvious reasons, is the aged pension.

Yet the government has chosen to directly attack universal health care with its $7 co-payment, and to crimp future pension rates by reducing the rate of pension indexation.

The political implications are fascinating. Labor has already regained some momentum, something few expected so soon after its crushing election defeat.  

With something to fight for, finally, Bill Shorten’s budget reply speech showed an energy that many doubted he ever possessed.

More deeply, perceptive commentators are musing about what the savage public reaction means for the broader neoliberal project, in which “reforms” like doctor’s fees, cuts to benefits and deregulated higher education are presented as necessary for the ultimate goal of a stronger economy.

The championing of economic growth as the ultimate public good is a project shared by both major parties, but they appear to have forgotten that many voters were never that interested in a stronger economy for its own sake.

As the Piping Shrike blog noted this week, “the real problem for the government is not even the overwhelming majority of voters who think they will be worse off, but the unusual majority that think it will all have been for nothing to fix the economy.”

Public opinion is a fickle beast and the pundits who try to predict it are soon embarrassed. Even so, it does seem that the budget marks an inflection point in the fortunes of the new government.

The critical moments for the Rudd and Gillard governments both came well before the subsequent elections that marked their fates: approval for Rudd collapsed after his decision to abandon the “great moral challenge” of carbon pricing, while Gillard’s reign was shaped early by her backflip on the carbon tax.

The worry for Coalition strategists is that the budget will come to define a negative popular image of the Abbott government for the remainder of this term.