Majority of Australians want fiscal deficits to be maintained and the majority of younger Australians want to ditch capitalism

We are now full-swing into the national election campaign in Australia (election on May 3, 2025) and we have a new party – the Trumpet of Patriots – (funded by a property developer/miner) channelling Trump’s approach, the conservatives channelling Trump’s approach (although with a slight more subtle voice but not much), the Greens chasing their tails, and the Labor government desperately trying to stay in power after running scared of doing very much over the last three years. It is not a great choice. The usual scare tactics from the Opposition are out in force – immigration, defence vulnerabilities, etc and the usual ‘free market’ stuff. The Labor government keeps hammering on about their fiscal rectitude – two surpluses out of three – as if we are all mainstream economists who are obsessed with those irrelevancies. But it seems that the voters are not so aligned with mainstream economists.

On February 28, 2025, YouGov Australia released a poll – Coalition leads 51-49 in latest YouGov poll, with strong support for Government ownership of Whyalla Steelworks – in which 62 per cent of respondents wanted the federal government to take over a major steelworks which is going broke.

The poll found:

… overwhelming support for government intervention in the future of the Whyalla steelworks:

– 62% of Australians support a government takeover of the steelworks

– 60% are in favor of public ownership of the plant

This preference spanned all the parties more or less equally, which rejects the notion that the conservative voters overwhelmingly favour privatisation.

The poll commented that:

The 60% support for public ownership of the Whyalla steelworks, including 61% of people who intend to vote Liberal in the next election, demonstrates the strong backing for government intervention to secure Australia’s steel industry.

As an aside, the Poll gave the Trumpet of Patriots around 1 per cent of the vote – so the millions they are throwing at the election won’t get them very far.

More importantly, it demonstrates that unlike voters in the US, Australian voters cannot be so easily conned, albeit the issues and realities are slightly different.

But there was another YouGov poll that was even more interesting – this one run by that group for the national broadcaster, the Australian Broadcasting Commission (ABC).

The ABC report (March 31, 2025) on the results = Few Australians feel financially better off, new poll shows. Charlotte says she feels ‘worthless’ – open up all sort of questions.

In relation to the title of that article, the Opposition leader has been pulling the Trump line as the campaign gets underway – ‘Are you better off now than three years ago?’ – the three years ago being when the current Labor government took office.

It is a no-brainer type of question in a period when inflation and interest rates have risen and corporations have been price gouging.

Of course, most people and certainly those who do not have large financial asset wealth are worse off now.

But is that because the current government failed, or that the mess they inherited from the, now, Opposition when they were in government has taken time to resolve?

Further, is a temporary blip in the monetary advancement of the nation the real issue?

We have an existential crisis unfolding (probably quite rapidly) in the form of our 1.7 times the regenerative capacity of the biosphere footprint to deal with and the adjustment required to move towards righting that ship will involve severe monetary adjustments in our material standard of living.

Further, while I am critical of the government’s handling of the employment situation, the fact remains that unemployment, while rising, has not gone anywhere near where a normal Phillips curve inflation adjustment would have pushed it.

There are reasons for that which are not the subject of this blog post.

But the reality is that the transition probabilities remain high for new entrants and anyone unemployed to gain employment of some sort, and they are low for those already employed to lose their jobs.

So given our employment prospects are central to our material standard of living (for most of us) then the last three years hasn’t been as bad as past conservative governments have delivered.

But back to the poll I mentioned.

Economists are continually appearing on national media – TV, radio, podcasts etc – claiming that the fiscal deficit is too high and needs to be ‘repaired’ and that the citizens do not want their grandchildren burdened with higher taxes as a result of the debt that the government issues to match the deficits.

They think they speak for all.

But the poll that was taken to explore attitudes to fiscal policy delivers some quite stark results that reject the sort of mindset that economists think rules.

Yes, 42 per cent of the respondents said that in terms of personal wealth they are worse off now compared to 12 months earlier.

40 per cent said their financial position was static and 12 per cent said they were better off.

Given the highly skewed wealth distribution that result would accord with those who hold financial assets and those who are borrowers.

When interest rates started rising in May 2022 and kept rising 11 times until they stopped in November 2023, and the vast majority of home mortgages are variable rate, then it is no surprise that the distributional shifts in real income that resulted would leave a small minority better off (much) and a large proportion static (probably do not have a mortgage), and a slightly larger proportion worse off (around 37 per cent of homeowners have mortgages in Australia).

And the financial squeeze was not just because of the interest rates.

The federal government ran two surpluses in 2022-23 and 2023-24 which of course impose a liquidity squeeze on the non-government sector which can only be resolved by wealth reduction (liquidation).

Commentators keep telling us that fiscal surpluses are virtuous and increase national saving.

In fact, a government surplus (deficit) is exactly equal to a non-government deficit (surplus).

A non-government deficit requires that sector to shed wealth in order to ‘finance’ the deficit.

However, a government deficit adds net financial assets (wealth) to the non-government sector (and does not need bond issuance to fund it).

Alternatively, a fiscal surplus cannot be construed as national saving.

Saving is the act of foregoing consumption and investing the saving in order to generate larger consumption possibilities in the future as a result of the interest return on the saving component.

That makes sense when applied to an individual, a corporation or the non-government sector in general.

I am financially constrained and if I increase my saving rate and generate interest-earning flows from the saving then next year I have more to spend given my base income.

However, that concept of saving has no application to a government that issues the currency that we use.

In what sense can it ‘save’?

It has no financial constraint on its spending because it creates dollars by typing numbers into computer systems that link government to the banking sector.

That means its future spending capacity in financial terms is infinity minus a penny.

Which is the same financial spending capacity it had yesterday and the day before.

And that capacity is irrespective of what the fiscal balance was yesterday or the day before.

So a government doesn’t forego consumption spending in the current period to generate higher future consumption spending.

It just doesn’t make any sense to use the ‘saving’ concept when talking about government.

That point also then rejects all the claims that governments have to build piggy banks up now for future exigencies and all those sorts of arguments.

Like the claim that running surpluses will build up a pool of saving that the government can draw on as the society ages and more people are requiring pension support and medical procedures.

Those sorts of claims are totally ridiculous and without foundation.

Anyway, that sort of fiscal nonsense is abroad in this election campaign.

And what do Australians think of it?

The poll asked the survey respondents what should be given priority: fiscal support (increased deficits) or debt reduction?

66 per cent said that the government should be providing more financial support and cost of living relief.

Only 25 per cent said that ‘Reducing government debt’ was the priority.

So the population has quite different views than the ‘economists’.

Another question focused on whether tax cuts were helpful.

The most recent fiscal statement from the federal government gave across the board tax cuts (as an election bribe).

However, the poll found that:

… most Australians (65 per cent) say they should have been targeted at low-income earners who need it the most rather than a universal cut (27 per cent).

So the economists who broadly always claim tax cuts are desirable have missed the sentiment of the people who still value, it seems, equity before personal gain.

Another YouGov – Public Data Poll (published June 24, 2024) – found that:

53% of 18- to 24-year-olds want more Socialism.

This is particularly interesting.

The poll asked respondents “if they think Australia should be more socialist or capitalist on an eleven-point scale, 0-10. 0-4 indicates a degree of support towards socialism, and 6-10, a degree of support for capitalism. 5 is the neutral option, placed equally between socialism and capitalism.”

The results are shown in this graphic from YouGov:

When we think of the future, the opinions of the aged cohorts are largely irrelevant.

It will be the 18 to 24 year olds who are the future leaders and I found this result to be really heartening.

Only 22 per cent of this cohort want to stay with a capitalist system.

Overall, it was the conservative voters (Liberal-National coalition) who want to stay with capitalism in the main.

The reality for young adults into prime-age is that the capitalist system is dudding them.

Their employment is increasingly low-paid and precarious.

Their capacity to save and purchase a house is almost non-existent

They are lumbered with massive educational debts as a result of the shift to user-pays tertiary studies.

And they understand better than most the environmental challenge that they inherited.

Unlike the claims that everyone is worried about the intergenerational consequences of public debt (the economists’ favourite storyline), the reality is that people, especially younger people are worried about real things – the environment and access to housing.

Which accords with their desire for more public sector intervention, more public investment, more public support.

Now think about this scenario.

The views expressed by these respondents are largely what we might term ‘uneducated’ in the sense that I doubt many of the respondents who want fiscal deficits continued and enhanced fiscal support from the federal government are across the detail about currencies – that is, I doubt they have a Modern Monetary Theory (MMT) understanding of the world.

Their views are expressed though in the face of constant assertions in the daily media from economists and politicians that they are dangerous and unsustainable.

So despite the mainstream economic consensus, large numbers of Australians reject it.

Now imagine if the population became better educated along the MMT lines and could really understand and critique that mainstream economics consensus.

I suspect then the results would swing much further away from the mainstream fiscal consensus and no politician would dare claim virtuosity for creating fiscal surpluses etc.

The public would demand we treat our unemployed better.

There would be support for a Job Guarantee.

And the public would demand much greater public investment in climate change mitigation than we are seeing.

And the target audience for further MMT education has to be the younger generation.

They are already ‘red’!

Conclusion

There is hope.

That is enough for today!

(c) Copyright 2025 William Mitchell. All Rights Reserved.