Price rises for goods and services in Canberra from December 2001 to June 2012. Wages represent average full-time earnings in the ACT over the same period. Source: Australian Bureau of Statistics.

 

Will next month's US presidential vote hinge on a single, unguarded comment from one candidate, and the public's reaction to it? Many pundits believe Mitt Romney's dismissal of the "47 per cent" of Americans who don't pay federal income tax was that disastrous for the Republicans.

I suspect few Australians realise they live in one of the developed world's lowest-taxing countries. 

To recap, multimillionaire Romney told a private audience in May that the 47 per cent were "victims" who took no responsibility for their lives. "My job is not to worry about those people," he said. Perhaps he forgot that many of those Americans were retirees, war veterans and others who might normally vote Republican. The comment was leaked, and the Democrats' TV ads have reminded the public of it ever since.

Last week, however, a survey for The Economist magazine detailed a curious reaction to the remark. Romney's tax figures were spot on, yet only 24 per cent of Americans thought they were part of the "47 per cent".

There are two possible, but conflicting, explanations for this misconception. One is that we like to believe we're not at the bottom of the pecking order, even when we are. This may also explain the prevalence of "downwards envy" among low-income earners, who, as a group, tend to have more hostile views towards those who are even less advantaged (such as asylum seekers or Aborigines). Looking down on others makes us feel better about ourselves.

The other explanation, which I think is more likely, is we tend to feel harder done by than we truly are. The Economist's poll showed almost one in four Americans believed they paid income tax when they didn't. It's hardly surprising. When the think tank Per Capita surveyed Australians last year, it found we were about 20 times more likely to say we paid too much tax than to say too little. I suspect few Australians realise they live in one of the developed world's lowest-taxing countries.

The federal government's ineffectual attempts to sell its carbon tax also fell foul of our inclination towards financial victimhood. A few months back, an Ipsos Social Research survey found 52 per cent of Australians opposed the tax while only 28 per cent supported it. But when they were told that some revenue would be redistributed to low and middle-income earners (i.e. that they'd get some cash), support for the tax jumped to 47 per cent and opposition collapsed to 29 per cent. The hip-pocket nerve never dulls.

Which is why I don't discount the Canberra Liberals' chances of a very strong showing in tomorrow's election, whatever this newspaper's polling might have predicted this week. Opposition Leader Zed Seselja's minimalist campaign theme – that Labor will "triple your rates" – will net its fair share of voters. The details – such as whether Labor's tax reform is good policy, over what period our rates will rise, and what savings we will make through cuts to other taxes – are irrelevant, because details don't matter to most voters. They will believe the cost of living is outpacing their efforts to keep up.

The data, however, undoes this myth. Over the 11 years Labor has governed this city, the earnings of the average full-time Canberra worker increased 72 per cent, while the prices of goods and services in the ACT rose just 34 per cent. Sure, some prices – particularly health expenses and utility bills – rose more quickly than wages, but the vast majority didn't. On the whole, we're much wealthier than we were in 2001.

The trend is similar in most parts of the country, not that we admit it to ourselves. When the motorists' group NRMA polled Australians in the middle of this year about their finances, two in three said the cost of living had affected their "stress levels". What rubbish. Life itself is what's worrying these poor souls, not the cost of it. Spending ever more on stuff is a choice; it's not forced on us.

Not that a politician would tell us that. They know we want good news, but will only believe the bad.

Markus Mannheim edits The Public Sector Informant. Send your tips to aps6@canberratimes.com.au.