As if the Albanese government needed any encouragement on this score but Jim Chalmers has just been given fresh licence to elevate the budget into an obscenely expensive political project.
To use an adapted Trumpism, the community appears to be willing on a “spend baby spend” approach to the cost-of-living crisis.
As much as economists may have been trying to educate a lay public on the perils of government spending during an inflation crisis, a thumping majority of voters don’t seem to care.
And it’s not just Labor voters who are indulging the handout mentality, Coalition voters are in on the act too.
As counterintuitive as it is from a broader economic point of view, Australians remain of the view that this doesn’t matter to them personally.
This presents a twofold danger. It is not only a danger to the economy when a government is obliging but it is the obliging party that is likely to remain in government.
The surprise findings from the latest Newspoll raises a significant challenge for Peter Dutton and the Coalition’s narrative of austerity on spending.
What does he do when Labor starts handing out the cheques? Me-tooism on spending would trash the integrity of its position on excess.
There are strong community expectations that governments should spend more to assist with cost-of-living pressures. The pandemic likely conditioned and re-enforced this thinking.
It’s been more than a decade since Labor government debt and deficits were a political equity for the Coalition and were an advantage for Tony Abbott at the 2013 election.
Based on the Newspoll findings that 83 per cent supported the big state, there must be a question mark over the Liberal Party’s back-to-basics approach to economic management.
The problem for Dutton and his opposition Treasury spokesman Angus Taylor is that they have succeeded in making the case for one side of the equation.
Almost half – 45 per cent – of voters accept the argument that government spending will push up interest rates, while 25 per cent believe it will make no difference.
Fortunately, only 6 per cent accept the argument more government spending would in fact lower interest rates. But it also confirms a cynical reality that the Albanese government has navigated. Clearly not all voters think higher interest rates are that bad, or at least may not directly affect them. And that’s because only about a third of voters have a mortgage to service.
Retirees benefit from higher rates on deposits, whereas younger voters aren’t impacted by home loans – despite higher rates having a direct impact on rents.
So while the Coalition has made the case that Labor’s big-spending agenda has prolonged the interest rate and inflation crisis, most don’t care as long as that spending is going directly into their pocket to make up for it.
What will trouble Dutton’s belief that the community had drawn the link is the reality that 77 per cent of Coalition voters support more government spending, knowing the knock-on effect on interest rates.
He needs to sharpen his economic message.
Labor made a calculation early on that mortgage holders could wait for relief in lieu of big spending programs that appealed to its own base and the non-mortgaged victims of inflation.
Dutton and Taylor believed they could win the argument on economic management by appealing to fears that government spending was making the situation worse.
Irrespective of whether it’s true or not, and that more voters accept this fact than not, it doesn’t appear to be a winning argument against a big-spending Labor government.
If anything, it’s likely to encourage them to spend more.
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