Australians’ optimism about the future of the economy falls to a new low following the May Budget.
Optimism levels have reached new lows in all States with the optimism rating falling into negative territory in Queensland and South Australia for the first time.
While Western Australians remain more optimistic than other Australians, the gap has narrowed and their optimism crashed in response to the Budget.
Optimism has fallen among both men and women, with the Index for women going negative for the first time.
The post-Budget decline in optimism has been driven by younger Australians, aged 18 to 34 years, as well as those aged 65 and over.
The optimism index for Coalition voters has continued its 2012 decline and fallen well into negative territory following the Budget.
The Budget didn’t seem to have any impact on the optimism of the true believers, with the index score for ALP voters remaining unchanged from its pre-Budget level.
Allianz Australia Managing Director, Terry Towell, said “Australians optimism about the future of the economy has fallen further in response to the Federal Budget, hitting a new low in May with an optimism rating of only 1, down from the level of 5 recorded in March. The decline was driven by falls in optimism among both men and women, across all mainland States of Australia, and by both younger Australians aged 18 to 34 and those aged 65 and older. Perhaps unsurprisingly, in terms of voting intentions, sentiment among Coalition voters fell significantly, but this was not offset by a post-Budget boost to the optimism of ALP voters, which remained flat.”
“Optimism about the future of the economy fell Australia wide, with the optimism rating of all mainland States falling to new record lows. The outlook in both Queensland and South Australia was particularly grim, with their optimism rating falling into negative territory for the first time, at minus 5 and minus 1, respectively.“
“And while West Australians are still more optimistic about the future of the economy than other Australians, the gap has narrowed significantly as their optimism rating plummeted to 4 in May, down from 15 in March and 27 in January.”
“While men maintained their more optimistic outlook about the future of the economy compared to women, the negative impact of the Budget on optimism was felt by both sexes, with the optimism rating for women, at minus 3, falling into negative territory for the first time.”
“The Budget’s impact on optimism is seen most markedly on younger and older Australians, with the optimism rating for 18 to 34 year olds falling from 10 in March to zero in May, and the rating for those aged 65 and older plunging from 18 to 6 over the same period.”
“On the political side, optimism about the future of the economy has fallen further among Coalition voters in response to the Budget, with their optimism rating going negative for the first time, from zero in March to minus 7 in May. And while ALP voters continue to be significantly more optimistic about the future of the economy than Coalition voters, the Budget did nothing to increase their optimism, with the rating of this index remaining at 17 in May, the same level of the previous survey in March.”
Background
Allianz and Newspoll have joined forces to conduct a bi-monthly survey which measures Australians’ level of optimism about the future of the economy, environment and society, as well as their overall happiness. Optimism indexes in each of these four areas are created to measure changes in optimism over time and differences in optimism among those in different demographic groups.
Respondents’ score their level of optimism on a scale from zero to ten. Those that score between zero and three are regarded as pessimists and those that score between eight and ten as optimists. Those that score between four and seven are regarded as neutral.
The net result of deducting the proportion of pessimists from the proportion of optimists gives the relevant Optimism Index. A positive Optimism Index results if the number of optimists exceeds the number of pessimists, and the reverse results in a negative Optimism Index.
Survey results
All Australians
Optimism towards the future of the economy has taken another dive post the Federal Budget, with the optimism rating falling to a record low of 1. This represents a further fall from a rating of 5 in March and 8 in January, and is the lowest score recorded since the survey began in November 2010.
The result is driven entirely by a fall in the proportion of Australians that indicate that they are optimistic about the future of the economy, which fell from 19% in March to 15% in May. The proportion of optimists therefore only just outweighs pessimists, the proportion of which remained steady at 14% over the period.
Optimism by State
Optimism towards the future of the economy is at its lowest point in all mainland States since the inception of the Allianz Future Optimism Index in November 2010. For the first time, the optimism ratings for Queensland and South Australia entered negative territory, which means the number of pessimists outweighs the number of optimists.
While still marginally higher than the other States, Western Australians, which have typically been far more optimistic about the future of the economy than other Australians, have experienced a drop in their optimism rating to a record low of just 4. The fall is almost entirely due to a fall in the proportion of optimists, which fell 10 whole percentage points from 27% in March to 17% in May.
Optimism by Gender
The Optimism Index has reached new lows for both males and females in relation to their feelings about the future of the economy. The rating for males has slipped to a score of 4, while the score for females has entered negative territory for the first time with a rating of minus 3.
Optimism by Age
The slide in optimism towards the future of the economy is seen amongst younger Australians aged 18-34 and those aged 65 and over, with both groups recording large drops in optimism. The 18-34 year old age group saw a significant fall of 10 rating points to zero in the latest survey, whilst those aged 65+ dropped by a massive 12 rating points, from 18 to 6.
Optimism by Voting Intention
Optimism about the future of the economy has held up among ALP voters following the Budget, who have maintained an Index Score of 17 compared to March. Another perspective though is that the Budget has not had any positive impact on optimism about the future of the economy, even among Labor voters.
For Coalition voters however the outlook continues to worsen; their optimism rating has continued to fall from its January peak of 5, to zero in March and well into negative territory with a score of minus 7 in May.
‘Other’ voters, about half of whom vote Green, have also slipped into the red for the first time, with an optimism rating of negative 2 following the May Budget.
