Inside Story

That fickle budget bounce

All eyes will be on the next round of opinion polls. But it’s the ones that come later that count

Peter Brent 17 May 2024 800 words

Working at an emotional level: Coalition senators react to Peter Dutton’s budget reply on Thursday night. Lukas Coch/AAP Image

As we speak, Australia’s major pollsters are out in the field, hunting for evidence of that Loch Ness Monster of polling — grainy photos exist, but you have to squint to see it — the Budget Bounce.

They’re also asking about other stuff, of course, such as whether this budget is good for you, is it good for the economy/country, and would the opposition would have delivered a better one?

In terms of the 2025 election, though, it doesn’t much matter what people think now. As surveys for last year’s Voice referendum reminded us, people can drastically change their minds, en masse. And elections are about the future, rather than a reward or punishment for a government’s past actions — though those actions can influence expectations of future ones.

Newspoll has been asking questions, most of them repeated over time, about federal budgets for nearly forty years. On the key one — “Overall do you believe the budget will be good or bad for the Australian economy?” — the highest net score on record was for treasurer Paul Keating’s effort in 1987.

The second-highest was in May 2007, for Peter Costello’s last. That budget produced a small voting-intentions bounce (margin-of-error quibbles aside), taking the Howard government’s position from disastrous to slightly less so, and sent the betting markets back to almost 50–50. John Howard and Costello were baaack! Game on!

But the polls soon blew out again.

Still, while it didn’t save the government it might have contributed to the modest size of the loss. In the end, the result was 52.7–47.3, which was not too bad compared with the polls all year.

Right to the end, the Howard government was seen as an excellent economic manager. That, rather than all the “values” guff commentators obsessed over, was the main driver of its longevity. Thanks to the dramatically changed economic conditions since 2008, not just in Australia, Howard’s rule is still seen as a golden age. In perceptions of economic competence, no later government has come close.

In opposition, Tony Abbott and Joe Hockey understandably campaigned on a return to those bountiful years, including the budget surpluses. That helped get them into government, but in office they found the chickens coming home to roost.

All else being equal, the Coalition enjoys an advantage over Labor as “better economic managers.” And whoever is in government tends to be seen that way as well. This means a Coalition government is always regarded as superior to the opposition and a Labor one sometimes is. Hawke Labor often was, Rudd–Gillard never, and Albanese Labor was for a while, but that ended last year.

Peter Dutton’s budget reply on Thursday, which highlighted the cost-of-living crisis and the housing shortage, illustrated why first-term governments are usually re-elected. His solutions (slash immigration, ban foreigners from buying existing dwellings and end Labor’s supposed “renewables only” policy) would hold much more allure against an elderly government: it’s difficult to blame new incumbents for everything that’s wrong and claim you have new solutions when you’re only recently out of office. And promising a return to the Morrison era would not hold great appeal.

The opposition leader also joined the chorus castigating the Albanese government for its fiscal laxity in an inflationary environment, but he didn’t dwell on it lest journalists enquire where he would cut spending. That way lies piping-hot danger.

Not many Australians would have been watching Dutton on Thursday night, nor in fact Chalmers on Tuesday. The media coverage matters more, and of course, increasingly, social media. For those outlets, Dutton’s most salient message was the anti-foreigner stuff. Like the government’s “Future Made in Australia,” it’s designed to work at an emotional level. Voters react warmly to a spot of dressed-up protectionism even if mainstream economists hate it.

All public policy involves trade-offs. In this case, the government perhaps decided to assist people on lower incomes at the cost of slightly higher interest rates (one economist put it at 0.5 per cent). It would also have considered the political implications: a quick calculation via Google suggests the percentage of the electorate that has a variable home mortgage is around 20 per cent — a quarter the number of those who don’t.

Always hovering overhead, though, is the risk of fuelling the old message, “Labor can’t be trusted with the budget.”

Still, Thursday’s jobless numbers seem to lessen the likelihood of an interest rate rise this year and increase the chances of a drop early next.

Yes, we’re all looking forward to seeing what the polls say. “Boosts” driven by particular events are rarely sustainable. But no one pays more attention to them than major-party MPs, and no leader, in office or otherwise, wants demoralised and restless MPs. •