Responding to Victoria’s budget, the state opposition used one of the oldest moves in the Coalition playbook: they accused the Labor government of engaging in the politics of envy.
“The government has proved by its budget this week that it doesn’t like aspiration. If you own more than one property, it’s almost like you’re resented for it,” the opposition leader, John Pesutto, said on Thursday.
“If you want to work hard and send your child to an independent school, you get punished for it.
“If you have dreams, if you have aspirations, they want to target you.”
The criticism of the budget’s tax hikes for large businesses and property investors extends beyond the confines of parliament. Business groups say the measures create a disincentive to invest in Victoria, the property sector says it will raise rents, while private schools warn it will lead to fee increases.
All of the critiques share something in common – they characterise those affected by the budget measures as “ordinary Victorians” – “mum-and-dad investors” – working in occupations such as trades, nursing and emergency services, or taking on a second job to get their children through private schools.
The Liberal party, built on the values of individual enterprise, has successfully prosecuted successive federal Labor leaders for stifling “aspiration” for decades. The strategy is credited with the party’s success at the 2004 election – when the then Labor leader, Mark Latham, took to the polls a plan to increase funding for poorer schools by reducing support for the wealthiest – and in 2019, when Bill Shorten proposed sweeping changes to the federal tax system, including a cap on negative gearing on investment properties.
Indeed, Scott Morrison’s framing of the 2019 election as a “choice between aspiration and envy” has scared Labor off pursuing tax reform ever since.
But according to Kos Samaras, a former Victorian Labor assistant state secretary who is now a pollster with RedBridge Group, the “appeal to aspiration” won’t work as successfully in 2023 as it did in the past.
“The Liberals have got themselves trapped in the Howard era. Appealing to aspiration only works in times of great economic prosperity, as it was then,” Samaras says.
“We are not living through that period now. People don’t think things are going to get better. Quite the opposite.”
Samaras says Daniel Andrews and his treasurer, Tim Pallas, are concerned less about class than they are about ensuring the state is left in a better position for young people.
“It’s not class warfare, it’s generational warfare,” Samaras says.
While the premier and Pallas have repeatedly denied Tuesday’s budget has ignited a so-called “class-war”, they admit their plan to repay about $31.5bn worth of borrowings accrued during the pandemic is targeted at “those within an ability to pay”.
This includes big business and property investors, who face an increase in payroll and land taxes, respectively, which is expected to raise a significant $8.6bn over four years.
About 110 “high-fee” private schools are also positioned to lose what the premier has described as a “sweetheart deal” that saw them exempt from payroll tax, saving the government $422.2m.
“Whilst our kids will remember Covid, I will not ask them to pay for it,” Andrews repeatedly said at press conferences this week.
Pallas used a similar line during the budget media lockup: “We’re ensuring that while our kids will of course have memories of the trauma that was the Covid years, they won’t necessarily be paying for [it].”
Samaras says the government is acutely aware of frustrations of the “fastest-growing political demographic” – voters aged under 40, who now make up more than a third of the electoral roll.
He says the budget builds on this group’s disenchantment with older generations who, thanks to the Howard government’s generous tax concessions, have built wealth through the property market.
“Ask a young person about aspiration, and they’ll reply, ‘What are you talking about?’” Samaras says. “Their student debt is huge and it’s only going up. They can barely get a rental property, they are putting off having kids because they can’t find stable housing.
“They’re not part of the asset class. They do not care about new taxes.”
Samaras says there wasn’t much to lose for Labor in handing down this budget. By the 2026 election, Samaras says most will have forgotten about it. Those who haven’t will “probably vote for the opposition”.
He says the Liberals’ attack line “plays to the base”, but won’t resonate with the younger voters the party needs to attract.
However, there are concerns among suburban Labor MPs that the land tax changes could backfire, given the economic climate.
“I know it’s a cliche, but they’re genuinely mum and dad investors who bought a second property to help their kids out, and now they’re hurting,” one MP says, noting the Reserve Bank’s decision to raise interest rates 11 times in 12 months.
Another MP said Labor could also face backlash from young people if warnings that rents will rise are accurate.
Dr Zareh Ghazarian, a senior politics lecturer at Monash University, says while the timing of the budget – well ahead of the next election – will help Labor, it does come with political risk.
“In the current climate, cost of living and issues concerning the economy are really high priorities and they are really dominating the public debate. People – regardless of their age or if they renters or owners – will be asking about what this will mean for them, bottom line, and potential future aspirations,” he says.
Ghazarian says there is political capital to be gained for the Coalition in returning to the theme of aspiration, after failing to land a coherent policy platform at the November election.
“They’ve been running around in circles without being able to make any clear signals to the electorate as to what they would do that would be significantly different to the Labor party,” he says.
“This finally presents them with an opportunity to do that. It could be a circuit breaker.”
David Hayward, an emeritus professor at RMIT and chair of the Victorian government’s social housing regulation review, says the premier has successfully engaged in expectation management, having painted the budget as “difficult” in the months leading up to it.
“The premier was all doom and gloom, all the talk was about a horror budget. But this is a big-spending traditional Labor budget … with new taxes to help foot the bill,” he says.
Hayward says the government had managed to achieve a “significant shift” in the way debt – heading for $171.4bn by 2026/27 – is talked about.
“What the government builds and the services it provides now matters more than what it owes,” he says.
“While all the media are talking about the debt and the new taxes, there are more trains, level crossing removals, hospitals and schools. I think that’s what matters most to people.”
But Hayward and Samaras said Labor risks losing its political capital if it doesn’t go further in addressing the housing affordability crisis.
It appears the government is one step ahead: Andrews this week flagged measures to boost housing supply, to be announced in the coming months, while Pallas floated the idea of rent caps, firing up the chorus of critics once again.
