Taxes and Social Spending: The Shifting Demands of the Australian Public
Wilson, Shaun, Breusch, Trevor, Australian Journal of Social Issues
In his impressive study, Rich Democracies, Harold Wilensky, remarks that "The general contours of public opinion on taxing, spending, and the welfare state have remained quite stable over time and across rich democracies ever since surveys asked about these issues" (2002, p. 372). Wilensky also points out that public opinion alone rarely determines public policy. But the selective tax increases by the British Chancellor, Gordon Brown, in 2002 to finance improvements to the National Health Scheme occurred in the context of a shift in public opinion surveys evident in the United Kingdom throughout the 1990s in favour of greater social spending (The Observer 2001; The Guardian 2002). In Australia, a similar shift is evident. While the elite consensus for small government remains entrenched across the OECD, this study shows that Australians are becoming increasingly favourable to higher spending on social services. This remains the case when they are asked to choose between social spending and the predictably popular option of lowering taxes. This paper uses the Australian Election Study series (1) (1987 to 2001) to describe aspects of this shift in public opinion, analyse the factors that determine the public's propensity to prefer either higher spending or lower taxes, and place these trends in a broader international and political context.
It is well known in opinion research that asking the public about their preferences on taxes and spending yields results that are dependent on the question asked. In some ways this problem is not dissimilar to the one faced public choice theorists with respect to voters choosing consistently between competing public policy options. For instance, if respondents are asked to choose between `lower taxes' or `more spending' we might anticipate that the balance of opinion would generally favour lower taxes over spending of an unspecified nature because of the in-built preference among the public for lower taxation. But when the questions asked specify the type of spending, results can vary widely and contradict the anticipated finding of consistent support for tax cuts over spending. Teixeira's analysis of public opinion in the United States notes that the American public prefers tax cuts to spending only when the type of spending is not specified; "when the tradeoffs [of cutting taxes] are made explicit, cutting taxes docs not fare so well"(1999, p. 1).
Research in recent decades has amply demonstrated national and regional differences in support for welfare state spending (see Esping-Andersen 1990, Svallfors 1997). While these national-regional differences are confirmed empirically, support for welfare state spending also varies consistently according to class and gender categories (Svallfors 1997, pp. 283-301), and according to the type of spending under consideration. Spending in popular areas such as old age pensions, health and family benefits are typically strongly supported among respondents while programs identified with marginal or stigmatised groups (migrants, single mothers, young unemployed, etc.) generally attract much lower support (see Wilensky 2002, p. 371; Wilson and Tumbull 2001, pp. 390-402; Eardley and Matheson 1999, p. 30; Eardley, Saunders and Evans 2000, p. 17). One advantage of asking more general questions about the choice between lower taxes and higher spending (i.e. where the types of taxation and spending are not specified) is that the indication it provides of broader trends in attitudes towards taxes and spending over time. How general preferences shift, in turn, gives an indication of the political terrain concerning spending and taxation.
The benchmark question on taxing and spending that appears in international social science surveys is: `If the government had a choice between reducing taxes and spending more on social services, which do you think it should do?' (2) The generality of the question gives respondents no information about the type or extent of tax cuts and social spending, which may be interpreted differently by individual respondents. …