"Do you believe the politician with the bushel of statistics or the politician who has three poignant, heart-grabbing stories?" ... Regardless of the reason for any price rise, the Coalition will ensure

Narrative appeal ... regardless of the reason for any price rise, the Coalition will ensure the carbon tax remains prime villain. Photo: Alex Ellinghausen

When John Howard told Parliament on March 26, 2007, ''working families in Australia have never been better off'', he was entitled to boast.

From a big-picture perspective, the economy was in fine fettle.

House and superannuation values stopped rising with the global financial crisis. Until then people felt they were getting rich without the need to save. 

''We have a 30-year low in unemployment, we have had a massive rise in real wages,'' Howard continued.

Three months later, the then-government was still defending the claim, with Peter Costello calling it ''eminently verifiable''.

''If you look at the number of people in work, their wages, their lower taxes, their higher family tax benefits, I don't think you can contest that people are significantly better off,'' he told the ABC's 7.30 Report in August.

Yet Howard's proclamation turned out to be so politically disastrous, it became a key element of the Labor campaign that saw Kevin Rudd take power in November that year.

The then ALP national secretary, Tim Gartrell, had billboards made up featuring Howard and his quote and there was the story about how one of those billboards was defaced by angry voters thinking it to be a Liberal Party advertisement.

When the Howard government fell, Australia had no net debt, a $21 billion surplus and unemployment beneath 5 per cent.

Labor had successfully probed beneath the big picture and found economic tales of hardship.

''If the economy was so good, why did people not feel better off?'' went the mantra. Or, as Rudd said one day when on the warpath: ''Never been better off? Does he mean that when working families are shouldering record levels of personal debt that these working families have never been better off? Does he mean that when housing for working families is now less affordable than at any time in our history, that working families have never been better off?''

Kitchen table economics had triumphed over macro-economics.

The Canadian academic Professor Sandford Borins, from the University of Toronto, was in Australia recently lecturing our senior public servants about the power of narrative versus the facts in politics, be it about the economy or anything else.

Borins told this column of a recent debate in Ontario in which the Premier rattled off impressive statistics about hospital waiting times only to see his opponent win the day with three separate tales of hardship concerning patients needed treatment.

''Do you believe the politician with the bushel of statistics or the politician who has three poignant, heart-grabbing stories?' Borins said. ''These are the type of conflicts you see.''

He cites the adage that people are entitled to their own opinions but not their own facts. ''Politicians like to tell persuasive stories that support the points they want to make,'' he said.

''The stories could be disconnected from evidence because they deal with individual cases and not totality and averages.'' If one side had both the statistics and the poignant stories on its side ''then you're really in a strong position'', Borins said.

Otherwise, it degenerates into a glass-half-empty, glass-half-full argument, as we are seeing now in Australia. Labor is finding itself at the receiving end of what it did to Howard back in 2007.

Julia Gillard flew to Mexico at the weekend for the G20 leaders meeting where Australia's economic statistics will be the envy of the conference - a conference that will be held in the shadows of the Greek elections and the potentially disastrous consequences for already struggling economies in Europe and elsewhere.

Domestically, Labor's fact-based arguments on the economy will continue to be undermined by the Coalition's case-based narrative, helped in spades by the impact of the carbon tax on individuals. Despite the compensation and regardless of the reason for any price rise, the Coalition will ensure the carbon tax remains the prime villain. Just as Labor did to Howard on the GST.

The Reserve Bank governor, Glenn Stevens, told the Prime Minister's economic summit in Brisbane on Wednesday that the economy was very strong now ''but we're all unhappy, right? There's a lot of disquiet and dissatisfaction in the community.''

As Stevens explained, the loss of confidence is being fuelled by the need to save. House and superannuation values stopped rising with the global financial crisis. Until then people felt they were getting rich without the need to save.

The shadow treasurer, Joe Hockey, has the duty of ascribing a cloud to every silver lining. It comes with the job.

He copped a hiding for trying to talk down the economy the day the figures for the March quarter showed the economy had grown at a staggering 4.3 per cent for the year. He will not resile. On Thursday, he tweeted:

''Just spoke with Cumberland Bus. Chamber in heart of Western Sydney. Our critics should ask their members how the economy is going!''

The message for Labor is that while it is entitled to boast about the economic statistics, it needs to remember the individual and build a narrative as well.

The longer a party is in power, the more it can neglect that. Three days after Howard made his claim about working families never being better off, Anthony Albanese pointed out that Howard had fallen into this very trap.

''Ten years ago on May, 27, 1997, the prime minister said to the then leader of the opposition: 'You will never get from this prime minister an arrogant dismissal on the basis of 'You have never had it so good','' Albanese said.

Phillip Coorey is the chief political correspondent.

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