An election to be lost rather than to be won

The federal election campaign is on, so each side is attempting to outbid the other for our vote. Commonwealth governments have been doing this for a long time. Adjusting for inflation, Commonwealth expenditure per person has tripled since 1963/64. 

Commonwealth expenditure has grown faster than the economy and the population. Governments clearly believe spending more money is the way to the voters’ hearts, or at least support in the polling booth. But are they correct?

From 1969 onwards, there have been two-party-preferred swings against the incumbents in 12 of the 14 House of Representatives elections. Incumbency is clearly a wasting asset. But if the norm is a swing against the incumbents, that suggests voters have not been very grateful for all that extra spending.

What does ‘buying votes’ mean?  That the cost of taxing people, of paying people to raise the taxes, of paying other people to spend the money, of lost economic activity from taxes and of any waste or inefficiency in delivering the government spending – plus any envy effects from people not receiving the spending – is exceeded by the gratitude of voters for having their own money spent on them. 

Yet, once a spending program is established by one side of politics, it is probably not going to be abolished by the other side (remember that tripling of expenditure per head).

How plausible does such successful net-gratitude sound?  On the evidence, not very.

Take the health expenditure the Coalition has been busy trumpeting in recent months.  Do voters think that a Latham-led ALP Government would take the money away if elected?  If they don’t, the expenditure provides no specific-to-them reason to vote for the Coalition.

The evidence from those 14 elections is that voters generally don’t respond electorally either way to Coalition spending, while they tend to punish extra ALP spending, and reward ALP cuts. 

Given that Coalition oppositions tend to have lots of fun pointing to government waste, while ALP oppositions tend to ignore Coalition spending (did you know that education and health spending has gone up faster under Howard than Keating?) this result is perhaps not so surprising.

Vote-buying presumes voters are both selfish – wanting money spent on them – and altruistic – positive or neutral about money spent on others.  The evidence does not support them being conveniently inconsistent in this way. 

After all, spending received merely means you are getting ‘your own money’ back while spending on others suggests that some other group is more worthy than you.

What the evidence strongly suggests voters really dislike is paying for extra government.  The more governments raise revenue per person, the fewer votes they tend to get. 

Coalition governments particularly have been punished for raising taxes.  People clearly expect Coalition governments to hold the line against tax increases.

Good economic growth is not helpful for incumbents.  Economic growth over the seven elections since 1984 have been higher than in the previous period, and the average size of swings against incumbents has been lower. 

So far, so good.  But shifts in votes for incumbents have also been more clearly in the opposite direction to economic growth.

Presumably, bad times make governments more focused (and oppositions more complacent), while good economic times encourage greater government complacency (and more opposition focus) as well as more attention by the electorate to other matters.

As for the current election, on budget figures, Commonwealth revenues will go up 5 per cent per person over the term of the Parliament (continuing the budget fiction that the GST is a State/Territory tax and expenditure).  On past experience, a major black mark against Coalition incumbents.  Similarly, Commonwealth expenditure per head will go up 4 per cent per person.  On past experience, no benefit for Coalition incumbents. 

GDP growth per person will be 6 per cent.  On past experience, people will therefore focus on other concerns to the Coalition’s detriment.

In summary, Peter Costello’s tax policies will encourage people to vote against the Coalition, Tony Abbott’s spending policies will not encourage them to vote for the Coalition, the good economic outcomes will mean other issues will become more important. 

Yet the Coalition hasn’t really established any new ‘other issues’ in its favour.  The result which best preserves the historical correlations, based on the Coalition incumbent’s tax-and-spend policies, is a 2.6 per cent point swing against the incumbents, which would give the ALP an 8-seat majority.

This result is compatible with recent polling results, at least before images of dead children reminded us a war is on, and gave the Coalition a polling ‘bounce’.  Still, on the historical evidence, the Coalition’s tax-and-spend policies make this election Mark Latham and the ALP’s to lose.

Michael Warby, is a Melbourne writer, educator and analyst. This is based on his article in the Spring 2004 edition of Policy. www.policymagazine.com