“We are living in a utopian economy: everything seems good, but underneath the story is so much worse. Politicians know all of this though. Well, most,” writes political columnist ANDREW HUGHES. 

One of the most memorable images of the 2025 federal election was that of the PM holding his Medicare card. 

“This is all people need to access one of the best medical systems in the world,” he would say. And he was right. Kinda. 

So was Opposition Leader Peter Dutton, though he said you need two things for that access: the Medicare card and a credit card. Why he didn’t hold up both more often is one of the key communication faults of the Coalition campaign, but that aside, he too was right. 

How? The recent ACT budget tells a tale similar to many Labor governments around the nation right now. 

That is increasing spending on infrastructure, which rarely returns any money close enough to have supported its business case in the first place, yet falling revenue from non-individual segments who are able to use smart accountants and money transfers to escape paying any tax at all. 

The recent repeal by the US president on measures to counter the global transfer of funds to avoid tax as agreed by many nations, ours included, means that increasing revenue in the future from sectors such as big tech is going to be nigh impossible now. 

So Labor, be it federal or state, are faced with the choice: increase taxes/fees/levies/surcharges/fines on individuals to try and fund the increasing costs of capital works and forthcoming public service wage increases, or keep on borrowing via the bond markets. Usually it’s both. 

Strategy wise this can be effective. On budget nights ambitious treasurers do stands-and-delivers about how they are building this and that, all shiny and world class, saying how these works will produce small amounts of revenue so they can be redefined on the budget books from expenses to assets, and therefore don’t count towards the yearly deficit. 

But as leading economist Chris Richardson and others have pointed out, this is just misleading on what is really going on with our debt. This is causing structural deficits to get uglier and uglier, and this deficit is the reason why ratings agencies are getting concerned because it isn’t going down. Only up. 

We are living in a utopian economy: everything seems good, but underneath the story is so much worse. Politicians know all of this though. Well, most. 

So they know they need to grow revenue and reduce spending. Both politically are dangerous, even if they are the smart options. 

Why dangerous? Because now someone, and that is us, is about to be worse off when we were told we wouldn’t be. 

It is the backflip, hidden as financial prudence. 

Yet most of us are waking up to this. According to the most recent ANU study on trust in government it is now at 37 per cent. Now that’s a very close correlation to the primary vote of both major parties. 

In my last piece I noted the drift to independent senator David Pocock and friends was coming from both major parties. So these people no longer trust any of them, and that loss of trust is hurting identification, which in turn now means roughly one in three of us will vote for a non-major party. 

As preferences don’t necessarily flow evenly, wild political results like that of May 3, are becoming more the norm due to this changing nature of preferences. 

How we are changing how we think when we vote is seen by when parties in government announce shiny buildings or moving things, the first question most of now ask, especially here in Canberra, is how much more will I have to pay in taxes? 

It’s the middle that wins you elections

This gets us back to the danger. Those on low incomes can’t be taxed much more, those on high incomes know how to park it so they pay minimal tax, hence Labor’s raid on high super balances. 

So that leaves the middle. And that is the big danger. It’s the middle that wins you elections. 

Taxing them is going to cause poll numbers to drift. Yet cutting back on big shiny things causes them to rethink what exactly you are doing with all that tax they’re paying. Not being honest to them about why you just made their life harder amplifies those things. So maybe the voter realises its time to rethink who to vote for. Its time… hmmm, nice slogan that. 

Once upon a time the rule for (re)elected governments was year one, tax and go hard; year two, a little bit less; year three start to build, and year four, the promises return. 

It’s a different era now. Losses by leaders who replaced those before them in the same party who did this strategy, such as in Queensland, mean voters aren’t fooled by a new brand name in charge. We still know what you did last summer. 

As an example, here in the ACT the anger is already coming on the health levy/tax from everywhere. One of the best advocates in Australia for consumer health, Anne Cahill Lambert, wrote a great balanced piece about how wrong it is. I agree. 

And this ultimately spells danger for would-be chief minister Chris Steel. Because it means that in 2028, when he will likely be chief minister, we will remember what he did last budget/s. And we won’t forget when we vote.

Dr Andrew Hughes lectures at the ANU Research School of Management, where he specialises in political marketing