World’s first ‘wellbeing budget’ broadens focus from GDP

By on 06/06/2019 | Updated on 24/09/2020
New Zealand’s PM Jacinda Ardern has broken new ground on wellbeing, putting it at the heart of her budget (Image courtesy: Ulysse Bellier/flickr).

The New Zealand government announced details of their much-anticipated ’wellbeing budget’ last week, shifting the focus away from economic growth to include quality of life and public wellbeing.

Rather than structuring the budget entirely around GDP and financial issues, the wellbeing budget also measures success against a set of human, social, natural and financial metrics, “which together represent New Zealand’s economic capital,” the Treasury said.

According to the New Zealand Herald, in her budget speech prime minister Jacinda Ardern said: “One message I want to repeat is this – I have always said that politics is all about priorities. You have a limited budget and you have to try and balance the need to grow the economy, create jobs, balance the books, and look after our people and our environment.

“This budget shows that you can do all of those things.”

Looking wide, looking long

As well as taking more factors into consideration than simply GDP, the wellbeing budget also takes a longer-term view, forecasting how public policies and spending decisions will improve people’s lives beyond the spending period and impact future generations.

New Zealand’s Treasury has developed a set of wellbeing indicators – a ‘Living Standards Framework’ (LSF) – “to help analyse and measure intergenerational wellbeing.”

“We’ve developed our Living Standards Framework (LSF) to help us advise successive governments about the likely effects of their policy choices on New Zealanders’ living standards over time. By adopting the LSF, we are aligning our stewardship of the public finance system with an intergenerational wellbeing approach,” it said.

The budget includes a NZ$2bn (US$1.3bn) funding boost for mental health services as well as further investment for domestic violence services, homelessness and child poverty.

Picking up the baton

Addressing parliament during his budget speech, the Guardian reported, finance minister Grant Robertson said: “Success is about making New Zealand both a great place to make a living, and a great place to make a life.”

New Zealand will be watched closely by other countries around the world, which are considering a similar approach. A recent report by the UK’s All-Party Parliamentary Group on Wellbeing Economics, which was written by former UK Cabinet Secretary Gus O’Donnell, urged the government to put personal wellbeing rather than economic growth at the forefront of spending decisions.

O’Donnell told the Guardian: “Britain led the world in measuring wellbeing. It should lead the world again in making wellbeing the goal of government policy.”

Whilst in government, O’Donnell managed to persuade then-prime minister David Cameron to begin measuring wellbeing. And the new report argues that wellbeing should become the key metric for measuring success.

“Improving wellbeing should serve as a central goal for our society and the overriding aim of government policy. It is what should determine the country’s spending priorities across all departments for the next Spending Round,” the reporrt says. “We say this because wellbeing is what people care most about, which is why it determines how they vote. The evidence is now clear. The main determinant of whether a government gets re-elected is the level of wellbeing – and not the level of employment or of economic growth.”

Lost or stolen?

Controversy marred the run-up to the much-anticipated New Zealand budget, after some of its content was released two days early by the opposition National party.

Outgoing Secretary to the Treasury, Gabriel Makhlouf, said publicly there had been a sustained hacking attempt to access confidential budget material, and referred the matter to the police. However, the police later confirmed that hacking was not the cause of the leak, saying the material had in fact been obtained by using the website’s search function. 

According to the New Zealand Herald, state services commissioner Peter Hughes said on Tuesday there will now be an official investigation into Makhlouf’s claims. Hughes said in a statement that the investigation will look into Makhlouf’s “actions and public statements about the causes of the unauthorised access to Budget material.”

“The investigation will establish the facts in relation to Mr Makhlouf’s public statements about the causes of the unauthorised access; the advice he provided to his Minister at the time; his basis for making those statements and providing that advice; and the decision to refer the matter to the Police,” he said.

Makhlouf is due to leave his current role on June 27 for a new job heading up the Irish Central Bank.

About Natalie Leal

Natalie is a freelance journalist whose work has been published by The Sun Online, The Guardian, Novara Media, Positive News, and Welfare Weekly, among others. She also writes reports and case studies on global business trends for behavioural insights agency, Canvas8. Prior to working as a journalist Natalie worked for the public sector in social services for several years. She switched careers in 2013 after winning a fully funded NCTJ in a national writing competition. She holds a Masters degree in social anthropology from Sussex University where she specialised in processes of social change and international conflict and reconciliation processes.

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