Most Australians plan to save not spend their tax cuts, as new virus cases temper optimism

Australians are strongly supportive of the Federal Budget’s measures and the good reaction is reflected in an uptick in optimism about the economy, this week’s research tracker shows. In particular, they support tax cuts, extension of JobKeeper and pension payments. The bad news for Government is that most of those who expect a tax cut (66%) plan to squirrel it away as savings. Only a third (34%) are likely to spend this money which is supposed to stimulate the economy and this underlines the challenge Government faces to lift consumer confidence quickly.

Meanwhile, optimism about beating the virus has waned this week as virus cases have increased here and overseas. This week’s survey of 1,676 people, taken Monday 12 to Wednesday 14 October, suggests the community is restive, simultaneously wanting more normalcy while worrying that people are relaxing too quickly and not maintaining social distancing.

Budget reaction

• Of the 83% who were aware that the Budget was released last week, around half (52%) support its measures, with 22% neutral and only 18% opposed to them.
• Unsurprisingly there was strong support for stimulus handouts including pensioner payments (68%), the JobKeeper extension (65%) and personal income tax cuts (63%).
• The majority (57%) felt the level of Budget spending was appropriate (even after being prompted on the debt level), with only a third (33%) believing it was too high, and just one in 10 (10%) saying it is too low.
• Top reasons for people supporting the Budget measures included a belief it will get the economy going again (16% of supporters mentioned this), provide support to people (12%) and help people back to work (10%). Key criticisms were lack of support for the unemployed or struggling families (23%) and older workers and seniors (21%). Lack of support for childcare, at the centre of the Opposition’s alternative Budget, was only mentioned as an issue by 3% of those opposed to the budget.

Winners and losers

• Most believe that the Budget is fair for men, business owners and young people, with self-funded retirees, older workers, women and pensioners considered to have benefited the least. Around half (51%) believe it is fair for themselves personally with 31% feeling it is unfair.
• Key Budget supporters were from NSW (59% versus 48% elsewhere), men (69% versus 45% of women), business owners (68% versus 50% for non-business owners), full time workers (66% versus 31% unemployed and 33% casual workers) people with a household income above $100,000 (66% versus 47% who earn less) and homeowners (57% versus 40% of renters).

Tailwind for economic optimism

Prompted concern about the economy is still high (79%) but future predictions are becoming more optimistic. Just 47% think it will get worse in a month (down from a peak of 78% eleven weeks ago) and 43% think it will get worse in three months (down from 66%).

However, virus apprehensions creeping back

As case numbers have crept up in the last week, prompted concern about the virus has ticked up a couple of points to 73%, reversing the previous falling trend. Only 48% say it will get better in three months and this is down from 56% two weeks ago. An increasing number also feel that other people are not taking social distancing seriously enough (69%, up from 62% two weeks ago) and this growing concern is stronger in NSW (72% compared with 62% two weeks ago).

Victoria agonistes

Victorians continue to be less likely than others to feel the restrictions are fair and reasonable (58% down from 62% last week) or that appropriate measures are being taken by government to protect Australian businesses (55% versus 69% elsewhere). Notably, the number of Victorians who think the relaxation of restrictions is happening far too slowly has grown to 43% and now rivals the number who think it is the right pace (44%).

Border wobbles

Support for opening borders by Christmas has significantly declined this week (59% down from 64% last week), with support either declining or stagnating everywhere. Support for borders opening by Christmas remains highest in Victoria (69%) and lowest in WA (32%).