The power of newspaper spin

It is clear to everyone with eyes that the Murdoch press, and especially The Australian, is currently campaigning actively for Howard. The editorials and opinion pages do not matter but the front page stories what is covered and how are having and will continue to have a big impact on the political debate. Indeed, it appears that there is a two-way alliance between Howard and The Australian. Howard ministers give the Australian exclusive stories and feeds them official leaks while the newspaper highlights things which are positive for Howard (or embarrassing for Rudd) and this is acts as a cue for Coalition leaders.

The latest example is not nearly as dramatic as some of the others in The Australian recent weeks (nor indeed is it untruthful as far as it goes) – but it is of interest all the same as additional evidence of media spin.

The story relates to ABS new release 6537.0 on Government benefits, taxes and household income. The Australian story has the slant that this new publication shows that the Howard Government is helping battlers. In fact, all that the article does is highlight a boring old story that we have all been aware of for a long time that Australia has a highly effective redistributive system.

What the Australian story fails to do is to look at the TREND in distribution of taxes and government benefits over time. Although changes in methodology make precise comparisons difficult, the ABS (Appendix 5) does reveal that between 1998/9 and 2003/4, the richest 1/5 of the population got an increased share of government benefits (such as health and education) and contributed a substantially reduced share of total taxes. People in the lowest income quintile also did well (indeed better than the top quintile). The losers were Australians in the second income quintile: in the five-years to 2003/4, they received a lower share of government benefits and had to pay a higher share of taxation!

The net gains made by the richest Australians and associated deterioration in the position of lower middle class Australians tells a more interesting story about the Governments impact on “Howard battlers” than the one highlighted in the front page of The Australian. This is not to deny in any way that Howard has been very generous with his family benefits for low-income families (and more recently with tax offsets) and deserves credit or it.

The power of spin!

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whyisitso
whyisitso
14 years ago

“Howard Government is helping battlers”

“Australia has a highly effective redistributive system”

I really don’t see that there’s anything mutually inconsistent with these two statements. In fact quite the reverse. Boring maybe to you but the anti-Howard spin that is put about by the left asserting the opposite needs to be countered.

Yes I agree the Oz is campaigning against Rudd, but is certainly not resiling from publishing stories seen as anti-Howard such as the Kirribilli party and of course notoriously Caroline Overingtons’ hysterical finding of Downer guilty well before the conclusion of the AWB report.

The left, well in control of the Fairfax and ABC coverages, is as usual squealing like stuck pigs at any tendency of bias the other way. What’s new? Boring!

What a disappointment to them it must be after their celebration earlier this year of Rupert Murdoch’s ludicrous “endorsement” of Kevin Rudd. Has he lost control of his editors???!!!

James Farrell
14 years ago

The story is here:

http://www.theaustralian.news.com.au/story/0,20867,21902070-601,00.html

It is a strange piece. The first half reads like a press release from the Treasurer’s office, while the second half consists of some pretty dry observations from Anne Harding. If you read it quickly you might think that it’s quoting an expert backing up the government’s claims.

It also appeared in the Daily Telegraph, so I don’t think you can say ‘especially the Australian’ is barracking for Howard. I suppose the tabloids have more in fact have more influence with swinging voters, but I have no facts or figures to confirm this.

Patrick
Patrick
14 years ago

Does that mean the AFR are also campaigning for Howard?

That wouldn’t surprise me, but it might undermine the ‘oooh Murdoch’ factor that seems to mean so much to you.

whyisitso
whyisitso
14 years ago

“has the system become less or more progressive during his term?”

A hell of a lot of people think the system has become a lot less progressive under Howard because of the leftist media spin. This needs to be corrected.

“So it is hardly surprising that the poor get more out of the system than the rich”

Well whaddyaknow? A leftist actually admitting that after eleven years of the evil Howardstello the poor get more out of the system than the rich. Wonders never cease.

Brendan Halfweeg
14 years ago

Fred, your “levelling of opportunities” may undermine the very system that allows Australian government to play its Robin Hood role by creating disincentives to the more productive members (whatever the reason they are more productive).

whyisitso
whyisitso
14 years ago

“the editors of these newspapers do not deliberatly and systematically distort the news in pursuit of a particular political agenda”

That’s a very benign view of the SMH, Fred. Through your left prism you simply fail to see the incredible amount of left wing bias and opinion masquerading as news conducted in the SMH news pages. Just have a good look at the value-laden (leftish) adjectives these journalists use in their front-page articles.

As far as op-ed writers are concerned the misrepresentations of the views and assumptions of economists and Howard ministers presented by Ross Gittins is one of the worst examples in their opinion pages. I won’t even include the writings of such idiots as Mike Carlton because writers such as him just shouldn’t be taken seriously or even read.

Lloyd
Lloyd
14 years ago

I’m assuming whyisitso you find Gerard Henderson, Janet Albrechtsen, Miranda Devine and Greg Sheridan paragons of common sense and reason. As opposed to people like Ross Gittins and Mike Carlton. One can only assume your brain stop developing some time ago.

Jc
Jc
14 years ago

“The net gains made by the richest Australians and associated deterioration in the position of lower middle class Australians tells a more interesting story about the Governments impact on Howard battlers than the one highlighted in the front page of The Australian.”

Fred, much to my disappointment this government is one of the highest spenders ever! Whichever way you want to look at it these guys have used a tip truck to get the cash out to the prols.

The richest Australians have become richer because they own a good portion of a stock property market that goes gone vertical in the past years. So if it’s wealth you’re measuring that accounts for all of the gains.

As far as income goes, I can’t say because I don’t have the figures in front of me. I don’t really thnk there is a problem unless you consider people working in the mining towns as part of the rich these days. Tradesmen are earning 150K in those areas.

The unemployment rate is at a three year low and anecdotaly I know that unskilled workers are as scarce as hens teeth these days.

To put it simply we have never had it so good in this area.
——————–

“This is not to deny in any way that Howard has been very generous with his family benefits for low-income families (and more recently with tax offsets) and deserves credit or it.”

Generous! It’s a bloody traversty what they have done with the loot. It’s almost bloody criminal. Just front up with the truck and take all you want is how they have spent money.

whyisitso
whyisitso
14 years ago

“Im assuming whyisitso you find Gerard Henderson, Janet Albrechtsen, Miranda Devine and Greg Sheridan paragons of common sense and reason. ”

Other than Miranda, yes. and although she craps on with stuff I find ridiculous, I also findf myself agreeing with point-of-view about 60% of the time.

It does seem to be a characteristic of the left, as exemplified by comment #9’s last sentence that they assume they alone possess the moral and intellectual superiority to judge the worthiness of others’ opinions. Well get a life Lloyd and Co. You don’t!

observa
observa
14 years ago

Of course the overall situation where 40% of households are now subsidising the other 60% to some degree and the top 20% are doing most of the subsidising, is no doubt heavily dependent on carbon. When you don’t actually physically expend the energy yourself, it’s perhaps easy to become blase about such prolific transfers. That may all be about to change with the end of the great carbon age. Here it might be useful to view the current transfer volumes in societies that don’t have anywhere near the command of carbon that we do. You get the feeling the left/greens are about to face a rather unpleasant dilemma here, which will have nothing to do with Howard or any other pollie for that matter.

Jc
Jc
14 years ago

Lloyd says:

Im assuming whyisitso you find Gerard Henderson, Janet Albrechtsen, Miranda Devine and Greg Sheridan paragons of common sense and reason. As opposed to people like Ross Gittins and Mike Carlton. One can only assume your brain stop developing some time ago.

Compared to The Age writers? An Age staff writer said she would prefer to live in a socialist dictatorship.

Take a look,
“Personally, I’d be happy with a benevolent socialist dictatorship…….”

http://www.theage.com.au/articles/2007/06/12/1181414295905.html

Andrew Norton
Andrew Norton
14 years ago

Fred – I think the tax statistics in this ABS publication could be misleading. There is one reason why the tax burden might have shifted, ie the introduction of the GST. However the ATO’s data shows the top 25% paying a substantially higher proportion of income tax over the same period, 64.2% compared to 61.5%. The ABS concedes (p.74) that it was not able to allocate a substantial proportion of income taxes reported in its other publications.

Another reason evident in cat 6537.0 that the top quintile’s tax contribution has dropped is that their private income share has declined – it is down 2 percentage points while their tax share is down 1.8 percentage points. I haven’t checked other income data sources, but the intitial drop is counter-intuitive.

Equivalised final income does show the ‘progressive’ feature lauded in The Australian, with the bottom 3 quintiles gaining and the top 2 losing. The apparent losses you note above are presumably due to household composition factors. While I too dislike The Australian (and any paper) in campaign mode the gist of their story was correct on these figures.

Fred Argy
Fred Argy
14 years ago

Thanks Andrew. I agree that one should not to get too excited about the trend in tax shares. Although the ABS itself says that “taxes are more equally distributed in 2003-4, with the share of taxes paid by the lower four quintiles increasing and the share paid by the highest quintile decreasing”, the income movements also need to be taken into account. There may still be an interesting story about the rising share of government benefits going to the top quintile but statistically it may not be very significant.

And there is no doubt that income distribution has NOT become more unequal under Howard – a fact I have tried in recent years to explain to left-wing writers who persist in saying that income inequality has been increasing. It has not, although the trend may change. The real worry is about increasing inequality of opportunity but you know my views on this and it is not the issue we are currently debating.

But returning to my original post, my main grouch against the Australian article was that it made a big drama out of the fact that “low income earners receive the lion’s share of government assistance”. As I acknowledged in my post, this was not incorrect. But it was hardly worthy of front page treatment per se (everyone should know by now that Australia has a well targeted tax/transfer system). Had the Australian examined trends, it might have had a more valid story to tell.

Ken Lovell
14 years ago

‘A hell of a lot of people think the system has become a lot less progressive under Howard because of the leftist media spin.’

Is there any evidence to substantiate either of these claims? Especially the one purporting to know how ‘a hell of a lot of people think’. I don’t recall reading about any research conducted into people’s views on the matter.

Andrew Norton
Andrew Norton
14 years ago

Fred – I’m not sure that people do know much about how the tax-welfare system works. For example, in the 2004 AES 30% of respondents thought the people on low incomes paid a bigger proportion of their income in income tax than people on high incomes. Even a good economist like Joshua Gans thought that spending on education and welfare had been cut under Howard. And you note that you have to keep reminding your left-wing friends that inequality is not rising.

I’m sure if you asked most people, not just left-wingers, if the gap between rich and poor was widening most would say ‘yes’. Though the handful of people who study the evidence don’t think this is right, most newspaper readers would not have registered the occasional article pointing out the correct information.

Backroom Girl
Backroom Girl
14 years ago

Fred – an important thing to remember when trying to compare the relative position of people who were in any particular income quintile in 1998-99 with people who were in that income quintile in 2003-04 is that, not only are they not the same people, but in all probability they are quite different kinds of people. (So it might be a bit of a long bow to talk about them as ‘losers’.)

Over that period there have been both social and policy changes that are likely to have had an impact on where people with particular characteristics are likely to appear in the final income distribution. On the social (more strictly speaking, labour market) side, there have been very substantial increases in labour force participation among women aged 45 and over and among men aged 55 and over. So households with ‘mature-aged’ workers are likely to be higher in the income distribution than they were in 1998-99.

On the policy side, all that extra money that this government has thrown at families with children (especially single parents) must also have had an effect on where families with children stand relative to families without children.

So, in the end, it may be that the effect you note where people in the second quintile received less benefits and paid more taxes may be largely (or even entirely) explained by changes in the demographic characteristics of households that fall into that quintile.

Tom N.
Tom N.
14 years ago

HAVING THEIR KIDS AND EATING OUT TOO!

“This is not to deny in any way that Howard has been very generous with his family benefits for low-income families (and more recently with tax offsets) and deserves credit or it.”

Why, Fred? You often assert that government largesse for families is a good thing, but to my knowledge you have never explained why people who choose to spend their time and money on the pleasures of parenthood warrant even more welfare (errr, sorry, family assistance), at the expense of childless people, who have simply chosen (if they had a choice) to spend their time and money on other things.

Backroom Girl
Backroom Girl
14 years ago

Er, Tom

This is a bit off topic, but I’ve never quite understood at what point the child as parental consumption choice becomes a citizen in its own right and therefore entitled to some share of what society has to offer, including financially.

I’d be one of the first to agree that the current government has probably gone a lot further than it needed to increase the disposable income of people with children relative to those without. However, I would have thought it indisputable that a family with children (who will, after all, be the working tax-paying citizens of tomorrow) needs a higher income than a family without children to attain the same standard of living. Whether you do this through various tax mechanisms (tax rebates or deductions, higher tax thresholds) or through income transfers is largely a matter of choice, but conceptually that is all that the ‘government largesse’ you refer to is attempting to do.

Andrew Norton
Andrew Norton
14 years ago

As the equivalised final income statistics indicate (ie, taking into account more persons in the household), families are better off, on average, than singles.

This is mainly because their private income is much higher to begin with, but nevertheless it calls into question the nature of ‘need’ here.

Backroom Girl
Backroom Girl
14 years ago

Andrew – The point of income equivalisation is to be able to compare households of different size and compostion “all other things being equal”. A couple with children generally does not have a higher equivalent income than a couple without children and the same level of earnings, even with all of the aforementioned government largesse. (Otherwise everyone would be going out and having kids just for the extra money, wouldn’t they?) :-)

Comparing the average family with kids to the average single person household is a bit meaningless, since as you note people without private income are a much larger subset of the latter group than of the former (ie all other things are definitely not equal).

Patrick
Patrick
14 years ago

But if you actually want an argument, Tom N, bg has provided the best one: children ‘will, after all, be the working tax-paying citizens of tomorrow‘.

Since I don’t think anyone thinks that organic growth is lower cost than immigration-based growth, I think this is a policy that anyone who cares about real-world facts can be boxed into supporting.

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[…] Norton and Fred Argy both focus (albeit from slightly different perspectives)

Andrew Norton
Andrew Norton
14 years ago

BG – You are right that kids cost (which you would know from experience better than I do). But there are many reasons why households with kids are likely to be better off than other households – often multiple incomes, the selection effect of men with good incomes being more likely to find partners, parents working harder to finance their family, and economies of scale. All this makes additional largesse less necessary.

Tom N.
Tom N.
14 years ago

SEPARATING CONSUMPTION CHOICES FROM INCOME COMPARISONS

Backgroomgirl said:

I would have thought it indisputable that a family with children … needs a higher income than a family without children to attain the same standard of living.

This misses the point that, in choosing to spend their time and money on having children, parents are valuing the net pleasures of parenthood at more than the other things they could spend their time and money on. Of course, once you spend your income on something, whether it be a BMW, a world trip or on having and raising a child, you have less money left – and thus need more money to get back to the financial position of someone on the same income who hasn’t spend their money on such things. But so what? We wouldn’t say that the person who purchases a BMW needs a higher income than someone who buys a Skoda, or who simply doesn’t purchase a a car, to attain the same standard of living; nor should we when talking about people who choose to spend their income on having kids.

Tom N.
Tom N.
14 years ago

DOMESTIC REPRODUCTION VS IMMIGRATION

Patrick said:

Since I dont think anyone thinks that organic growth is lower cost than immigration-based growth, I think this is a policy that anyone who cares about real-world facts can be boxed into supporting.

Sorry Patrick, but your box is made of wet cardboard. Consider the costs of subsidising domestic reproduction today versus importing already-raised and educated 22 year olds in 22 years time. Both options provide you with a worker-cum-taxpayer, but the latter saves 22 years of public subsidies and induced private expenditures in the process. Of course, there are more issues – cultural preferences (which may favour domestic reproduction), and the benefits of pre-screening (which favours sourcing via immigration), to name just two. However, the point remains that the case for domestic reproduction subsidies on topping-up-the-population grounds is not nearly as strong as you seem to think.

Patrick
Patrick
14 years ago

Yes it is. What world are you living in with quantities of educated, balanced, 22 yos? Not to mention that you are probably understating those two advantages you concede.

Fred Argy
Fred Argy
14 years ago

I accept that the government may have tilted the field too much in favour of families with kids, but my support for the family benefit reforms of Howard rests on a simple proposition: without them, inequality would have increased substantially in Australia over the last decade. The ABS data on inequality (the GINI) shows a huge impact from these measures. The same distribution outcome could have been achieved by other means (I prefer social investment in opportunity-enhancing programs to passive welfare in principle), but there is no denying its effectiveness in keep child poverty at bay.

Leopold
Leopold
14 years ago

Given the overwhelming community perception (and it is overwhelming) that the ‘rich are getting richer and the poor are getting poorer’ I don’t know that this is such a ‘ho-hum’ report from the Oz, Mr Argy. I think most people in this country DON’T really understand that Howard has taken good care of poor families – they think he takes care of middle-class swing voters, not the poor, and even many of the recipients of FTB ‘A’ probably think of it as cynical middle-class welfare.

But the Oz is quite clearly campaigning for Howard, yep.

Tom N.
Tom N.
14 years ago

Your “arguments”, Patrick, seem to primarily involve you declaring that your position is correct and that people with opposing views can’t be serious, or must be living on a different planet etc etc. Rather than getting huffy and acting all superior and/or dismissive when someone presents arguments which counter your view, why not actually seek to directly address their arguments, if you can, or concede the point, if you can’t. Or, if that is too much to ask, then at least hold your spray.

PS: Contrary to your post, I did not concede two advantages to domestic reproduction. One of the matters I mentioned – cultural preference – was an advantage; the other (the ability to screen people for quality) is an advantage of the immigration route.

Tom N.
Tom N.
14 years ago

JOHN HOWARD vs ROBIN HOOD

Fred Argy said:

I accept that the government may have tilted the field too much in favour of families with kids, but my support for the family benefit reforms of Howard rests on a simple proposition: without them, inequality would have increased substantially in Australia over the last decade.

I accept that that is a defensible position, Fred, if one assumes that there was no alternative and feasible means of addressing vertical inequity. Of course, simply taking from the rich (whether parents or childfree people) and giving to the poor (whether parents or childfree) is an alternative that in my view could have improved vertical equity without the major adverse effects on horizontal equity (ie between parents and childfree people) that have resulted from the Liberal’s policies.