Income, place and perceptions of fiscal fairness: evidence from Australian federalism

Abstract

How do citizens assess whether the state or territory in which they live receives its ‘fair share’ of federal resources? We develop a theory of dual positional logic, which holds that perceptions of fiscal fairness emerge from the intersection of individual income and territorial context. Citizens experience redistribution both as individuals–through progressive taxation and transfers–and as residents of advantaged or disadvantaged places. Alignment of these positions reinforces judgments of fairness, while divergence creates cross-pressures. We test this by using a nationally representative survey module fielded in August 2023 in Australia, a federation marked by high vertical fiscal imbalance and an institutionalised system of horizontal equalisation. Results from multinomial logit models reveal a clear conditional pattern: low-income respondents in disadvantaged areas are most likely to perceive unfair treatment, with this likelihood declining sharply as local conditions improve; by contrast, high-income respondents are especially likely to perceive unfairness in affluent areas. These findings advance debates on fiscal federalism by demonstrating how individual income and place-based context jointly shape citizens attitudes toward intergovernmental redistribution. Show more