By Hannah Ormston, Ben Thurman and Jen Wallace from the Carnegie UK Trust
In 2019, New Zealand made headlines around the world when their government signalled a genuine commitment to improving New Zealanders collective wellbeing through their annual budget. Applauded for being “transformational” and a “world first”, the NZ Treasury outlined their ambitions to measure progress beyond economic indicators such as Gross Domestic Product. These indicators failed to capture the complexity of individual lives and, as NZ Prime Minister Jacinda Ardern said, “do not guarantee improvement to living standards” or “take into account who benefits and who is left out”.
Yet, as New Zealand announces its spending priorities for the next year, some have expressed disappointment, criticising the government’s lack of progress as well as a diminishing focus on wellbeing for which the NZ budget has become so well known. But are these claims missing the point: that in New Zealand the concept of wellbeing has shifted from something novel, to an approach that’s now embedded within the day- to-day decision making of government?
What makes a ‘wellbeing’ budget?
In his pre-budget speech, Finance Minister Grant Robertson outlined the three main goals for this term of government: continuing to keep New Zealand safe from Covid-19, accelerating recovery, and taking on the generational challenges with the economy and society: in particular focusing on housing affordability, climate change, and children’s wellbeing. These are undoubtedly wellbeing goals.
Sitting within a wider financial strategy, the ‘wellbeing’ specific component of the NZ budget consists of an allocated sum of money set aside to focus on prevention and improving collective wellbeing outcomes; policies and projects that better meet the needs of generations today, whilst also considering the long-term impact on generations to come. Spending from this ‘wellbeing pot’ is informed by a range of data that’s collected in a purpose built framework: the Living Standards Framework. It includes 12 areas of life that the government believe are critical for wellbeing, such as health; housing; social connections; and cultural identity.
Each year, the NZ Treasury uses the data in the Living Standards Framework to understand the issues that pose the biggest threat to wellbeing and inform decisions about where they should spend these funds. A wellbeing government understands that social, environmental, economic and democratic wellbeing have equal importance, and responds flexibly, by directing spending to the most urgent issues. In 2019, they chose to focus on improving mental health, child poverty, and family violence, while in 2020, their focus pivoted to the rapidly changing impact of COVID-19, and its immediate impact on people and communities.
This year, the NZ government’s continued commitment to a wellbeing approach can be seen through the recent amendment to their Public Finance Act. The Act now makes provision for the Minister of Finance to set wellbeing objectives to guide budget decisions. For the 2021 budget, the NZ Treasury has decided to focus its attention on the following objectives:
1. Securing a Just Transition to shift to a lower emission economy;
2. Enhancing productivity and enabling New Zealanders to benefit from the future of work;
3. Improving social and economic outcomes within Maori and pacific incomes, skills and opportunities;
4. Reducing child poverty and improving child wellbeing; and
5. Supporting physical and mental wellbeing for all, including keeping COVID-19 out of communities.
When assessing new policy and project proposals, their contribution to each of the above priorities is considered alongside their value for money, which is based on an assessment of their contribution to the wellbeing domains in the Living Standards Framework.
The priorities outlined in the 2021 recovery and wellbeing budget far from suggest a ‘move away’ from wellbeing. Rather, they show that their approach is holistic, and balances the health, wealth, and wellbeing of current and future generations in equal measure. It demonstrates a sophisticated understanding of the complexity of individual and collective lives, and that recovery from COVID-19 and collective wellbeing are not mutually exclusive.
What are the lessons from the NZ approach?
But what can other countries learn from New Zealand’s approach, and what are the opportunities to build on, wherever you are? New Zealand is one of several Wellbeing Economy Governments who have a shared understanding – and ambition – to build sustainable wellbeing economies which include Scotland and Wales. The National Performance Framework in Scotland, and the Wellbeing of Future Generations (Wales) Act 2015 each place a strong emphasis on prevention, intervention, integration and localism, similar to the NZ model.
And while 20 May marks the next wellbeing budget announcement in New Zealand, in the UK, exciting new legislation, which shares the ambition to embed wellbeing in policymaking for current and future generations, will receive its first reading in the new parliamentary session in the House of Lords. At the Carnegie UK Trust, we work to improve the wellbeing of people in the UK and Ireland, recently publishing ‘Gross Domestic Wellbeing’ as an alternative measure of social progress in England: so we’re clear that ensuring we all have what we need to live well now, and in the future, should be the ambition of any government. This could be an important moment as the UK takes its first steps towards doing just that.
Wallace, Ormston, Thurman et. al 2020. Gross Domestic Wellbeing: an alternative measure of social progress.
Kia ora! I’m Suzy Morrissey, one of the founders of the Aoteraroa New Zealand WEAll hub, and I recently gave ‘evidence’ to a special meeting of the UK All Party Parliamentary Committee (APPG) on the Green New Deal and the APPG on Limits to Growth.
The Green New Deal APPG was established to provide a cross-party platform for the development of a transformative Green New Deal for the UK and the Limits to Growth APPG is a platform for cross-party collaboration on shared and lasting prosperity in a world of environmental, social and economic limits. The APPG members are MPs and Peers and the session was chaired by Caroline Lucas MP and Clive Lewis MP.
I was invited to present ‘evidence’ for the consideration of the members of the APPGs ahead of the UK budget announcement, along with Lord Adair Turner (Institute for New Economic Thinking), Miatta Fahnbulleh (New Economics Foundation), and Robert Palmer (Tax Justice UK). The virtual session was also open to the public and over 100 people participated in the session.
In my evidence, I explained the limitations of using GDP to measure wellbeing, outlining how it ignores important elements and rewards negative behaviors. For example, unpaid work is not included in the calculation of GDP, but the sales of weapons are. Further, no adjustment is made for activities that negatively impact the planet, such as pollution or non-recyclable waste.
I also shared an example of an alternative approach from Aoteraroa New Zealand. The ‘Living Standards Framework’ measures wellbeing, using a stocks and flows based economic model, and a dashboard of elements. It draws on the OECD’s Better Life Index, with domains of current wellbeing (such as income, health, housing), and four capitals (natural, social, human, and financial and physical). The Living Standards Framework was devised by the NZ Treasury, to improve the quality of its advice, and provide a focus on inter-generational equity.
Shortly after the Labour-led coalition Government came into power at the end of 2017, they announced their intention to use the Living Standards Framework as a base for the world’s first ‘Wellbeing Budget’ in 2019, as well as to inform the 2018 Budget.
I worked at the NZ Treasury as Principal Advisor in the Office of the Chief Economic Advisor and was the policy and engagement lead for the Living Standards Framework. I shared my experience of determining the current wellbeing domains and capitals and finding suitable indicators to measure them . For example, although much of the Living Standards Framework draws from the OECD Better Life Model, we decided to include a new domain of current wellbeing called ‘cultural identity’ to measure features unique to Aotearoa (such as use of Te Reo Māori, the language of our first people). We also included ‘time use’ because it is so important, especially for gender analysis, even though it had been ten years since a national time use survey had been conducted by Stats NZ. Data gaps need to be highlighted so that they can be addressed.
I also discussed how the Living Standards Framework was applied by government to identify priority areas for the budget and to assess potential policies for funding. An initial assessment of wellbeing was undertaken using the measures and then ‘bids’ for funding from the national budget were assessed against the domains and capitals they were intended to improve.
I was delighted to be able to share Aoteraroa New Zealand’s world-leading work in bringing wellbeing economics to public policy.
Now my focus is back on building the Aoteraroa New Zealand WEAll hub and sharing the wonderful WEAll resources for policy makers and businesses on how to create a wellbeing economy. Contact myself, Paul, or Justin (emails on the Hub page here) if you would like to get involved.
You can watch the full APPG session below or on YouTube here:
A petition campaign is underway in the UK, demanding that the government at Westminster prioritises a shift to a Wellbeing Economy.
Launched by Brighton campaigner Laura Sharples, the petition seeks to garner 100,000 signatures by September so that the need for a Wellbeing Economy will be debated in Parliament.
WEAll’s Katherine Trebeck was part of the campaign launch event on 1 April, hosted by Caroline Lucas MP and featuring Beth Stratford (Leeds University), Clive Lewis MP, and Laura Sharples. You can watch the event below or here. The event was co-hosted by the All-Party Parliamentary Group on Limits to Growth, CUSP, the Wellbeing Economy Alliance, and Wellbeing Economics Brighton.
Laura Sharples said that she launched this petition campaign because “the economy is really about stories, but the mainstream narratives at the moment work to disempower us by disconnecting us from our communities and nature.
“The economy has been designed – and it can and must be redesigned.”
Caroline Lucas urged people to support the petition, saying: “The window of opportunity is open. That’s the exciting thing – we have a real chance for a fundamental economic reset.”
Katherine Trebeck affirmed this, saying: “This petition is so incredibly important. If we can get it to 10,000, or 100,000 signatures, it demonstrates to Government that there’s demand there, that this is what people want and they can be on the right side of history.”
The petition states:
“We urgently need the Government to prioritise the health and wellbeing of people and planet, by pursuing a Wellbeing Economy approach. To deliver a sustainable and equitable recovery, the Treasury should target social and environmental goals, rather than fixating on short-term profit and growth.More details
A narrow focus on GDP growth has led us to environmental, health and financial crises. The UK is the 6th largest economy in the world, yet roughly a third of our children live in poverty. Two thirds of the public want the Treasury to put wellbeing above growth. Scotland and Wales are already part of the Wellbeing Economy Governments alliance. As host of the COP26 climate summit, the UK Government should build and champion a Wellbeing Economy – at home and globally.”
If you agree, and you’re a UK resident, please sign and share the petition. Use the #WellbeingEconomyPetition hashtag to share.
Can you help amplify this petition to UK audiences? Comment below or contact us here.
The former Chief Economist of The Treasury in New Zealand has written a book examining the processes by which wellbeing-focused public policy objectives can be established, prioritised, funded, implemented, managed, and evaluated.
Professor Girol Karacaoglu is Head of the School of Government at Victoria University of Wellington and was previously New Zealand’s Chief Economist of The Treasury. Before then, he was the Chief Executive of PSIS (then Co-operative Bank of New Zealand) for nine years. His new book asks:
HOW WOULD WE DESIGN, IMPLEMENT AND EVALUATE PUBLIC POLICY IF IT WERE BASED ON OUR LOVE FOR FUTURE GENERATIONS?
For the philosopher Water Kaufman, ‘I love you’ means:
I want you to live the life that you want to live.
I will be as happy as you if you do; and as unhappy as you if you don’t.
Professor Karacaoglu said that ‘wellbeing is about the ability of individuals and communities to live the lives they value – now and in the future. This is their human right. It would be extremely unjust to prevent the enjoyment of lives centred on chosen values. Preventing such injustice across generations should be the focus of a public policy that has intergenerational wellbeing as its objective.’
‘Half of the net revenue from sales of this book will be donated to The Nest Collective, which gives baby and children’s essentials to families in need’, he said.
Tuwhiri publisher Ramsey Margolis said that ‘while humanity may well come to grips with the current pandemic in the foreseeable future, ballooning inequalities and injustice threaten to shred the fabric of our societies, and the climate emergency menaces all life forms on the planet.
‘In the face of these enduring humanity-induced catastrophes, we owe a special duty of care to future generations to overcome them, and to leave our successors with a safer, fairer world in which they may thrive. We need to express our care for coming generations in many ways, from changing own personal lifestyles, to choosing political representatives who advance cogent, long-sighted policies in aid of a better world.”
Find out more and order the book via the publisher Tuwhiri
A major report published this week calls for the Scottish Government to introduce wellbeing budgeting to improve lives for children as part of a radical systems change in the wake of the coronavirus.
The new report, Being Bold: Building Budgets for Children’s Wellbeing, by WEAll Advocacy and Influencing lead Dr Katherine Trebeck, with Amy Baker, was commissioned by national charity Children in Scotland, early years funder Cattanach and the Carnegie UK Trust.
It makes a series of bold calls focused on redirecting finances to tackling root causes of inequality and poverty as Scotland emerges from Covid. Key recommendations include:
- A post-Covid spending review, with all spend proposals assessed against evidence of impact on children’s wellbeing
- Training of the civil service to ensure effective budget development and analysis, and moving to multi-year budgeting aligned with wellbeing goals
- Establishing an independent agency, modeled on the Future Generations Commissioner for Wales, to support activity and scrutinise effectiveness of delivery of wellbeing budgeting by the government
- An overarching change to the ways of working in the Scottish Government budget process to ingrain greater transparency; cross-departmental working; and a participatory approach involving the public and the diversity of children’s voices.
The report argues that the Scottish Government’s stated aims of improving wellbeing across society and addressing the fact that one quarter of children live in relative poverty cannot be met unless we create conditions for our youngest children to be healthy and supported from the outset.
To do this, it makes the case for directing funds at root causes that diminish child wellbeing, rather than targeting symptoms ‘downstream’, which is inefficient, stifles implementation of policy and legislation, and slows ambitions for societal change.
First steps towards wellbeing budgets would involve holding a conversation with the public about budget-setting to absorb lived experience; interrogating data to ‘map’ the distribution of wellbeing in Scotland; and ensuring policy development was properly connected to evidence on what would actually change outcomes for children and addressing the root causes of what undermines their wellbeing.
The report’s lead author, Dr Katherine Trebeck, said:
“If the Scottish budget is to be a mechanism that brings about change, we need to create a context where children can flourish in Scotland. Then we need to think about a few fundamentals. The budget needs to be holistic, human, outcomes-oriented, and rights-based. It needs to be long-term, upstream, preventative and precautionary. Finally, a bold budget for children’s wellbeing needs to be participatory – children’s voices in all their diversity need to be at the heart of setting the budget agenda.”
Katherine speaks about the report in more detail in this short video:
Sophie Flemig, Chief Executive of Cattanach, said:
“This report shows why it is necessary to set out a high-level vision for wellbeing outcomes and hardwire it into government processes. Countries need to acknowledge that the economy is in service of wellbeing goals, not a goal in and of itself. Meaningful public involvement is key. Ministerial responsibility for wellbeing outcomes drives progress. And cross-departmental work is essential for success.”
Jennifer Wallace, Head of Policy at Carnegie UK Trust, said:
“This project has focused on one important lever of change – the finance system, the way that we think about money and spend in Scotland, asking: what is value for money when we’re talking about our children’s lives? We know it’s not a silver bullet, but we do think it’s important that we consider how we spend that money if we’re going to begin improving outcomes for children and putting our money where our mouth is when it comes to children’s wellbeing.”
As the election campaign approaches, and following Tuesday’s vote to incorporate the United Nations Convention on the Rights of the Child into Scots law, the report’s calls and the case for wellbeing budgeting informs Children in Scotland’s manifesto for 2021-26, backed by organisations across the children’s sector.
The report is published as Scotland takes stock of the damage the pandemic has done to individuals, families, communities, and the macroeconomy, and an increasing number of people recognise that we must not revert to pre-Covid ways of working.
Jackie Brock, Chief Executive of Children in Scotland, said:
“Now is the time for us to reset our economy and the way in which we prioritise our budgets. Katherine’s work gives us a real manifesto for how we will secure children’s rights and wellbeing. We call on you to read the report, particularly the section which identifies what the crucial next steps are. We don’t need any more research or evidence – we need to work together to put a budget for Scotland’s children into place, this year, and we look forward to working with you to make that happen.”
This content is reposted from Children in Scotland