New Economy Journal

Wellbeing Budgets across the Tasman Sea

Volume 3, Issue October 2022

October 31, 2022

By - Gareth Hughes

Article Theme : Rethinking Value

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There is a friendly rivalry between New Zealand and Australia played out sports field and on the dessert table. As a patriotic Kiwi, it gives me some pride seeing Canberra follow Wellington (by some years) and introducing a Federal Wellbeing Budget (so we won that one too). The important thing isn’t who was first, but who can boost the wellbeing of its people the most.

In May 2019, the New Zealand Labour Government delivered its first Wellbeing Budget. Finance Minister Grant Robertson described it as a tool to “broaden the Budget’s focus beyond economic and fiscal policy”. Using a range of measures, the major policy components of the Budget included a significant investment into mental health and child welfare. The wellbeing approach encouraged government departments to work together and submit joint collaborative budget bids, breaking down traditional silos. Later that year the Public Finance (Wellbeing) Amendment Bill was introduced to Parliament. This requires the Treasury to produce a wellbeing report, which is expected in November this year.

The road to the first Wellbeing Budget was a long one, developed over decades. Identifying priorities and measuring progress has always been a challenge for governments, contested by their Opposition. The shortcoming of Gross Domestic Product (GDP) as the primary tool to measure progress has been long well-known. In 1974, The Kingdom of Bhutan developed a pioneering alternative to GDP, Gross National Happiness, launching a global movement towards new indicators. Work was undertaken by the Australian Bureau of Statistics with their Measures of Australia’s Progress (MAP) initiative; in France with the Stiglitz-Sen-Fitoussi Commission; and the OECD with the Better Life Index. These initiatives led into the creation of the New Zealand Treasury’s Living Standards Framework (LSF) which was the key tool to promote intergenerational wellbeing behind the Wellbeing Budget. The LSF was developed from 2011, released in 2018, and updated in October 2021. The Treasury describe the LSF as “a high-level framework for measuring and analysing intergenerational wellbeing, covering current wellbeing, future wellbeing, and risk and resilience across a range of economic, social and environmental outcome domains.”

New Zealand has now had four national Wellbeing Budgets with focuses on child poverty, health, climate change, mental health and family and domestic violence. Alongside the LSF the Treasury have developed He Ara Waiora - a complimentary framework that helps the Treasury to understand waiora, often translated as a Māori perspective on wellbeing, and launched the LSF Dashboard a measurement tool that informs the Treasury’s wellbeing reporting.

Wellbeing Budgets have been a positive development investing large sums in areas like health and climate adaptation that boost wellbeing for New Zealanders. However, it is fair to say they haven’t been transformational either in terms of process or outcome. While measured rates of material hardship for children have declined, there is still significant child poverty. The independent Parliamentary Commissioner for the Environment found short-comings in the approach for the environment and critics have pointed out there are too many indicators for the public to understand or to guide decision makers.

My constructive criticism of the last Wellbeing Budget was that spending has been focused on failure demand that responded to, but didn’t fundamentally address, long-term systemic problems. This is the concept where the Government pays costs which are responding to the damage created by the current economic system.

Current settings aren't delivering a socially-secure, high-wage, low-carbon economy, so vast sums are spent addressing symptoms and avoiding causes. The LSF can measure the progress, or lack thereof, but ultimately Budgets are intensely political documents and reflect the decisions of government politicians.

I am looking forward to learning about the Australian budgetary process and decisions and New Zealand’s looming first wellbeing report. No doubt both countries can learn from each other and continue to evolve and improve their economic policy making processes. Hopefully the spirit of competition on the sports field can also encourage a healthy race to eliminate poverty and homelessness and urgently build a zero-carbon economy in both states.

A transformation is still needed to go from Wellbeing Budgets to a true Wellbeing Economy that delivers for people and planet.

2 Replies to “Wellbeing Budgets across the Tasman Sea”

  1. Well being for who? A healthy biosphere needs all of nature included. Not just unlucky people, but all fauna. Great start, but let’s see if NZ can take the lead again.

  2. “Current settings aren’t delivering a socially-secure, high-wage, low-carbon economy, so vast sums are spent addressing symptoms and avoiding causes. The LSF can measure the progress, or lack thereof, but ultimately Budgets are intensely political documents and reflect the decisions of government politicians”

    The LSF is a great start, but government departments dont have the neccasary processes, systems and capability to measure their affect on change from their intiatives to understand the impact they are having on the LSF.

    Ultimately government departments should be measuring their own change over time due to their spend/investments and using the LSF as the benchmark.

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