Following our visit to Wellington last year, Progressive Centre had the opportunity to sit down with New Zealand’s Finance Minister Grant Robertson, and discuss New Zealand's first wellbeing budget. Here’s what he had to say.
How does the Wellbeing budget differ from previous budgets?
The 2019 Wellbeing Budget is a significant change from how Budgets have previously being designed, developed and presented. At the core of this is the decision to consider broader measures of success than Gross Domestic Product. Of course GDP is still an important measure of how New Zealand’s economy is performing and it will continue to sit at the heart of Government accounting, but this Budget considers other measures like the state of the environment, community connectedness and the health and wellbeing of New Zealanders. The other fundamental differences are taking an evidence based approach to getting priorities, a focus on inter-generational outcomes and joined up Government.
What are the new metrics used in place of economic growth?
New metrics have been included, but are not replacing measures of economic growth. As I said earlier, GDP and other economic measures continue to be part of the Government’s core fiscal accounting. The Treasury has developed the Living Standards Framework which provides a structure for 2019 and future Budgets. It includes 61 indicators spread across four capitals: Natural Capital, Human Capital, Social Capital and, Financial and Physical Capital. Examples of these indicators include: Household net worth, total Crown net worth, multifactor productivity growth, sustainable food production, life expectancy, trust in government institutions and having access to clean drinking water. In addition to data from Living Standards Framework, evidence was drawn from Stats NZ Official Statistics, the OECD and specialist advice from agencies and experts, like the Government Science Advisors.
What do we gain from measuring outcomes beyond economic growth?
By including other outcomes than just economic growth we get a much broader picture of success. At times when New Zealand’s GDP was higher than it is now, there were still children living in poverty, homelessness and rivers and lakes that New Zealanders could not swim in. This said to us as a Government that the traditional measures of success needed to be updated and reassessed because not everyone was benefiting from economic growth.
A specific example of this is child poverty reduction. In 2018 the Government passed the Child Poverty Reduction Act to make sure that this Government and future Governments are held to account for decisions that have impacts on children living in poverty. The 2019 Budget included the first Child Poverty Report which indicates that, due to our policies, by 2020/21 we will reduce the number of children in poverty on the before housing cost measure by between 41,000 and 66,000 children, and between 50,000 and 74,000 children on the after-housing cost measure.
What are examples of changes in spending caused by the Wellbeing Budget?
The whole process for determining budget investments was different this year. Using evidence from the Living Standards Framework five Budget priorities were determined: Supporting Mental Health, Reducing Child Poverty, Supporting Māori and Pasifika Wellbeing, Transforming the Economy and Building a Productive Nation. In the past Ministers would make bids with a focus solely on their own portfolios, but this year Ministers had to show how their bids would achieve the wellbeing priorities. This meant working together in a more collaborative way as they focused on the priorities which in many cases stretched across a range of portfolios.
A good example of this is the Budget 2019 family and sexual violence package. Through the Wellbeing Budget process, ten government agencies have taken shared responsibility through a joint venture, developing a single, whole-of-government package of indicatives to address New Zealand’s long-term record on family and sexual violence.
Is there a risk of missing out on economic growth by measuring social indicators instead?
As I said earlier, social indicators are not replacing measures of economic growth, so no there is no risk of that. We still care about growing New Zealand’s prosperity, but we also care about who shares in that.
How can future Wellbeing Budgets build on this one?
The 2019 Budget sets the framework for future budgets to build upon. The wellbeing indicators provide a baseline for success to be measured against, but they are being added to over the coming year to include Te Ao Māori perspectives, more indicators for child wellbeing, New Zealand cultural identity and risk and resilience. They will also be aligned with a set of indicators being developed by Stats NZ.
Changes will also be made to the Public Finance Act to ensure wellbeing remains a focus in future Budgets. The State Sector Act will be amended to make it easier for public agencies formulate joint Budget bids focused around wellbeing priorities.
About the author
Grant Robertson is the Finance Minister of New Zealand, and the Labour MP for Wellington Central.
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