When trust goes bust: how we bind during a crisis and break in the aftermath

This story is part of the December 4 edition of Good Weekend.See all 12 stories.

Who do Australians trust? It’s a trick question, because the ­answer can shift dramatically according to the level of danger we perceive from the rest of the world and the degree of financial support we receive from our governments.

Ask us to rate our institutions during a global shock – a financial meltdown or pandemic – and we will respond with record ­approval ratings for all levels of government, parliament and the public service. Ask us again once the threat has passed and we ­revert to our cynical selves, declaring a loss of faith in all of the above.

These duelling impulses – to unite in a crisis and divide in the aftermath – have always been with us, but the disruptions of the 21st century have revealed a new way to quantify it in the concept of the trust bubble. It is the moment of national peril when we suspend our traditional loathing of politicians and barrack unconditionally for our leaders to succeed on our behalf, as we would our footy or rugby league clubs, the Matildas or the Pat Cummins version of the Australian cricket team.

We saw it first during the global financial crisis (GFC) of 2008-09, when Australians obeyed the order from then prime minister Kevin Rudd to go shopping in the national ­interest and saved the economy from a hard landing. History repeated 12 years later, when Scott Morrison paid many of us to stay at home to fight the coronavirus and Australia was one of the few rich nations to avoid mass infections and deaths during 2020 and 2021.

Then PM Kevin Rudd, with treasurer Wayne Swan, addresses a press conference in 2009 during the global financial crisis.Credit: Glen McCurtayne

In both cases, public trust in Canberra to do the right thing for the Australian people surged as the government delivered unprecedented levels of assistance to households, then dissolved after the recovery was assured and the free money stopped flowing. At this point, the most vulnerable job in the economy was the prime minister’s. Rudd was removed by his colleagues in a coup in 2010, and Labor lost its majority after a single term in office, while Morrison led the Coalition in 2022 to its worst defeat since the formation of the modern Liberal Party.

As the world faces the volatility of a second Trump presidency and Australians head back to the polls in 2025, with another hung federal parliament a real possibility, the question of trust will loom once more. Which side of our identity will assert itself? The answer will ­depend on whom Australians hold responsible for the cost-of-living crisis – the third great global shock of the 21st century so far.

It is important to note that we remain one of the world’s most cohesive societies. Australians reported above-average levels of trust in the police, the judicial system, the public service, all levels of government, the parliament and even the media in the most recent OECD ­survey of 30 countries, held in 2023. Among our English-speaking peers, we are more trusting than the British but marginally less trusting than the Irish, Canadians and New Zealanders across most benchmarks. The British deserve special mention because they ranked last of the 30 countries for trust in their political ­parties, news media and in inter­national organisations, and second-last for their national government. Who can blame them when the British have just beaten our record for political chaos, with six different prime ministers over the past eight years? We had five between 2010 and 2018, not counting Rudd’s brief second coming in 2013.

As we head back to the polls, the question of trust will loom once more. The answer will depend on whom we hold responsible for the cost-of-living crisis.

The US was not included in the OECD report, but we can compare our attitudes to theirs across equivalent national surveys ­conducted by Pew Research Centre in the US and the Scanlon Foundation Research Institute in Australia. Here is the most vivid ­illustration of our essential difference as a people. Americans assume the worst of government in a crisis; Australians, on the other hand, defer to authority and see government as their protector.

Consider the GFC, which had its origins in the collapse of the US housing market in 2007. Levels of trust had already fallen by more than half over the course of George W. Bush’s presidency, from an average of 54 per cent immediately after the 2001 terror attacks to 24 per cent by 2007. They continued to slide through the GFC, reaching a low of 15 per cent in 2011 under Barack Obama. The figure has bounced along the bottom ever since, and was just 22 per cent this year, ahead of the presidential election.

In Australia, trust in government jumped from 39 per cent on the eve of the GFC in 2007 to 48 per cent in 2009, then crashed to 31 per cent in 2010 after we had officially avoided recession. At the time, it seemed that the Labor leadership coup and the uncertainty of Julia Gillard’s minority government was the main driver of discontent with our democracy. By 2012, the figure was just 26 per cent. But the boom and bust cycle returned with COVID, under a Coalition government. Trust soared from 36 per cent in 2019 to 56 per cent in 2020, then dropped to 44 per cent in 2021 and to 41 per cent after the economy reopened in 2022.

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What binds us in crisis is the suspension of politics. The podium belonged to Rudd during the GFC, with no rival press ­conference scheduled to counter his rolling ­addresses to the nation. The then opposition leader, Malcolm Turnbull, supported the first stimulus package. The then head of the Treasury, who would not normally be in the public eye, briefly became a national hero; the prime ­minister would repeatedly cite Ken Henry’s mantra to “go early, go hard, go households” to reassure voters that the billions being spent to prop up the economy had been sanctioned by rational advice. The pandemic broadened the stage to include state and territory leaders, as the Federation intended in a health crisis. Chief health officers stepped forward in place of the secretary of Treasury and the governor of the Reserve Bank as the learned servants of the public, operating above politics.

The pandemic lifted all incumbents, regardless of their age or political colour. Five state and territory governments stood for ­re-election during the lockdown years of 2020 and 2021, and all five were comfortably returned. That list included the blowout in Western Australia, where Mark McGowan’s Labor ­government won a record 53 of 59 seats in the lower house, including all but one in Perth.

Pandemic winner: then WA premier Mark McGowan after his historic win in 2021. Credit: Peter de Kruijff

Yet government has changed hands in five of the eight elections held since reopening, with the Coalition losing office nationally and in NSW and the Liberals losing in South Australia in 2022-23, while long-term Labor governments were routed in Queensland and the Northern Territory this year. Worryingly for Prime Minister Anthony Albanese, the ­decline in trust in Canberra was not halted by the ­defeat of the Morrison government, and is now at 33 per cent, three points below our pre-pandemic level but still 11 points above the US.

Inflation is an old-school economic shock with a long history of killing governments. It damages the incumbent from the outset; there is no boom in trust which a leader can harness. The policy levers that are pulled in a financial or health crisis – government stimulus and rapid-fire cuts in interest rates – are forced in the opposite direction to deal with inflation. The Reserve Bank squeezes consumer spending and investment with higher interest rates – raising the cost of credit to slow the increase in the cost of living. Absurd when put that way. But this is what authorities allude to when they refer to monetary policy as a blunt instrument. It lacks precision and can bludgeon an economy into recession, as the governments of Menzies, Whitlam, Fraser and Hawke could all attest.

The return of inflation after a hiatus of more than 30 years has come with the added complication of a housing crisis, which pre-dated the shock. As such, this bout of inflation is interpreted by voters as confirmation of an existing economic illness, not another contagion that the government can blame on the rest of the world and address with handouts. Higher interest rates make housing even more unaffordable, a case of the cure feeding the disease.

When I outline my theory of the boom and bust in trust to Treasurer Jim Chalmers, he says the assistance delivered during the GFC and pandemic has “desensitised people to big outlays”. He runs through the shopping list of support the government has delivered in its fight against inflation: “tax cuts, energy bill relief, rent assistance, JobSeeker, early childhood education, medicines. Absent those two other shocks, that would be seen as a pretty
big intervention.” He mentions a question a journalist asked him – “Are you disappointed you didn’t get a big bump from those measures?” – and shares his reply: “I don’t think people are in the mood to give governments credit. Our primary motivation is getting it right.”

This is the curse of governing in the 21st century. No party can buy back public trust once the bubble bursts.

This is an edited extract from George Megalogenis’ Minority Report: The New Shape of Australian Politics (Quarterly Essay, Black Inc, $30), out now.

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