Labor 'doing it tough' on economic management

Crikey

Perceptions about the high cost of living, and voter distrust of Julia Gillard, are the key reasons the government gets no voter reward for a well-performing economy, data from Essential Research shows.

Labor's inability to capitalise politically on an extraordinary series of economic figures showing the economy performing better than virtually any other in the developed world has frustrated the government and even vexed political commentators, who assume that economic management is central to voter expectations of political parties. Last week Essential asked a series of questions in an effort to elicit why.

There are two threshold issues before we get into the reasons. First, a key reason the government remains unpopular despite its economic success is that it's, well, unpopular. Partisanship strongly influences how people view the economy. Labor voters think the economy is doing well – 56 per cent think it is doing well compared to 13 per cent who don't. Greens voters have a similar view.

But Liberal voters can see little but gloom – 42 per cent think the economy is poor while only 24 per cent think it's good. Interestingly, independent or "don't know” voters split almost evenly on the question, although the sample size is very small. So while ever the government's polling is poor, it will struggle to get acknowledgement of its economic record.

So, voters only see what they want or expect to see – that's not surprising. But partisanship also extends, though to a lesser degree, to how voters view their own financial situation – 53-27 per cent of Labor voters describe their household financial situation as "satisfactory”; 49-17 per cent of Greens voters feel the same way. But only 39 per cent of Liberal voters are satisfied, and 30 per cent are not, despite the fact that satisfaction rises with income.

Being unhappy with your financial situation doesn't appear to stop some people from spending. Nineteen per cent of people who expressed dissatisfaction with their financial situation took an overseas holiday in the past 12 months; 9 per cent undertook home renovations, 30 per cent bought a major household item; 5 per cent even bought shares. More of that in a moment.

Once we get beyond the filters of partisanship and (mis)perceptions of financial security, we can start to answer the question of what creates the disconnect between voter sentiment and economic management.

There are two strands to follow — voters who don't agree the economy is doing well, and those who do. The second most commonly cited reason voters don't think the economy is doing well takes us back to circularity — 27 per cent think the economy isn't doing well because it is being badly managed by the government — although that is almost entirely Liberal voters.

The reason most commonly cited by voters as to why they disagree on the strength of the economy is "increasing cost of living” – 34 per cent of voters identify that as the main reason the economy is not doing well. Critically, the sentiment is unaffected by partisanship – the Labor/Liberal/Greens split is 34 per cent, 32 per cent and 40 per cent.

We've frequently canvassed why the perception of cost of living pressure is, for voters outside the lowest income quintile, simply wrong. When even the Herald Sun explains why incomes have surged well beyond inflation in recent years, you know we're nearing consensus on the subject.

Regardless, voters appear wedded to the idea that they can't keep up. As the data above suggests, of course, for many people this is more about high levels of consumption and lifestyle expectations than about really doing it tough – when you can afford an overseas trip but complain about your financial situation, or buy shares while moaning about the cost of living, you're problem is your lifestyle, not rising costs.

But here's the problem for Labor: every time Wayne Swan or Julia Gillard tell voters that they understand families are doing it tough, they're reinforcing the strongest reason that people don't think the economy is performing well. Whenever Swan attends a press conference following low inflation data and declares that "families are doing it tough”, as he did earlier this month, he exacerbates his political problem. In effect, the government is repeatedly telling voters the economy isn't doing well, then wondering why they won't give it credit for economic management.

The other strand, voters who agree the economy is doing well, were asked why they thought the government got no credit for it – a slightly meta question but intended to avoid the issue of partisanship directly determining responses. The most frequent response was that voters don't trust the Prime Minister – 28 per cent – a view shared across party lines: 21 per cent of Labor voters say voters don't trust her, 35 per cent of Liberal voters and 44 per cent of Greens. The impact of the carbon price was the second most frequent reason (17 per cent), a view shared by Labor and Liberal but not Greens voters, then 15 per cent who think the economy is doing well for reasons other than the government.

Voters, therefore, don't want to give credit to the government for the economy even if they think it is doing well, because they don't like Gillard and they dislike the carbon price. Things may improve come July when it becomes clear the carbon price has had minimal impact, but that's unlikely to significantly shift voter sentiment, given that at 17 per cent it doesn't play a dominant role even for people who acknowledge the economy is going well.

Other measures to improve voter appreciation of the government's economic performance, however, would appear to be in its own hands

This story first appeared on www.crikey.com.au on May 29. Republished with permission.