From left field: baby bonuses, rollback and swinging voter demographics

Well, the tax-demographic dynamic is finally beginning to crystallize. The Labor Party last week finally released its rollback policy, and on Sunday the PM put forward the baby bonus.

So, what kind of political impact can we expect from these competing tax packages? Here we are ultimately interested in how the tax packages may affect the distribution of swings across the 150 electorates.

But let’s start by looking at how they differ.

On the one hand, Labor's roll back is broad in scope (it applies to everyone who spends money) but narrow in application (…so long as it's on a small range of goods/services).

On the other, the Liberal's package is narrow in scope (it applies to new mums, basically) but broad in application (the money saved isn't tied to any particularly spending/saving activity).

This gives a sense of how the completing packages are structurally different. But they both try to target the benefits to particular demographic groups, with the aim of achieving a favourable voter response.

So, what will the political impact likely be?

Labor's package will essentially impact positively on those earning below $50,000 a year (savings as proportion of income), with some overlap with Howard's package because of the exemption for nappies.

Those on higher incomes are less likely to be enticed by the relatively small savings from the GST rollbacks. Add to this another demographic layer – that of mortgage payments – and you’ve got a key demographic group (white collar workers earning more than $50k a year and paying off a mortgage) that’s likely to find favour with low interest rates rather than small savings through abolition of GST.

The upshot is that Labor’s tax package will go some way towards stemming the bleeding from lower income (blue collar) workers, and contain to some extent the flow of former One Nation voters to the Coalition. The tax package’s ability to totally stem this tide is, however, fairly limited because the shift is being driven by ‘cultural’ concerns (refugees, border protection etc.)

This dynamic will see the easing of the anti-Labor swing in what have been ‘safe’ Labor seats, and reduce the chance of there being any ‘shock’ results of safe Labor members being turfed by One Nation types. But it won’t necessarily help Labor win the swings it needs to cause a change of hands in enough seats. Labor has probably shot below the mark, but at the very least it hasn’t blundered like it did in 1998 when its taxation package scared upper-middle income voters off.

The Coalition's package will impact positively on all new mums (and their families) regardless of their income. It’s only the extent to which they benefit that’s being argued. This is interesting because 25 years of demographic research (done by people like John Black – refer to www.australiandevelopmentstrategies.com.au) indicate that an excellent proxy for the 'swinging' voter is roughly females aged between 30-39, working in white collar jobs (mainly clerks). They are possibly married. Given what we know about women having children later in life (these days, into their late 20's and 30's), this is precisely the group that the Coalition's package targets.

The Coalition is able to bundle a package of sweeteners that will appeal to aspiring, middle income, mortgage-paying families living in outer-rim suburban seats. The product bundle comprises at its core the baby bonus and low interest rates, which combined will help the bottom line.

The upshot, as such, is that the Coalition's package seems more aggressive politically aiming to consolidate swinging voters in marginal electorates, whereas Labor's package is more defensive focused as it seems to be on the traditional lower-income heartland.