Appears on New Zealand Hub page

New Zealand made headlines after announcing its first Wellbeing Budget in 2019. The country continues to lead the way in delivering wellbeing budgets, setting spending priorities to meet wellbeing goals.

Some economists continue to press for the traditional practice of developing strategies to promote economic growth. Justin Connolly is a founding member of the Aotearoa New Zealand hub of WEAll. He has responded to that criticism in a powerful article for the Newsroom

The article recognises that delivering a wellbeing economy will be hard work and will take time to deliver. This does not mean, however, we should return to the old ways. Instead, systems science can help us to deal with the complex issues of transforming to a wellbeing economy.

The article expands on this, drawing on The Fifth Discipline by Peter Senge. Senge has long championed a systems approach for dealing with complex problems. This approach is currently experiencing a resurgence across business and civic society.

WEAll and other global movements are also developing new insights on how to design policies to support a wellbeing economy. A good example is WEAll’s Wellbeing Economy Policy Design Guide.

Thus, New Zealand’s wellbeing budgets are part of this global movement towards wellbeing economies. They respond to the multi-faceted, inter-generational task of challenging how our economies fail to deliver wellbeing. Both for the planet and for us who live on it, now and in the future.

Justin concludes that wellbeing budgets in New Zealand will necessarily continue to evolve. So will how we measure and manage our current and future prosperity. We all are invited to engage in the discussion and help shape those future systems, recognising that this is a long-term game.

The full article can be accessed here.

New Zealand is aiming to adopt a wellbeing economy approach in its economic policy. The Government, for example, presented the world’s first Wellbeing Budget to Parliament on 30 May 2019.

Against that background, Paul Dalziel and Caroline Saunders prepared a Research Briefing in September 2020. It summarises lessons learned in the initial New Zealand experience with the wellbeing economy approach. The authors are the Deputy Director and Director of the Agribusiness and Economics Research Unit at Lincoln University, New Zealand.

You can access the Research Briefing from the Lincoln University archive here.

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. 

References: 

Wallace, Ormston, Thurman et. al 2020. Gross Domestic Wellbeing: an alternative measure of social progress. 

Photo by Gigin Krishnan on Unsplash

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:


Dr Girol Karacaoglu BA MBA Bogazici, PhD Hawaii 
Professor of Policy Practice, Victoria University of Wellington

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

New Zealand has been making headlines this week after announcing its new Wellbeing Budget.

The government of New Zealand says it is “is committed to putting people’s wellbeing and the environment at the heart of its policies, including reporting against a wider set of wellbeing indicators in future Budgets.”

The official website of the New Zealand Government goes on to state:

“The Budget provides an annual opportunity to review New Zealand’s performance across some high-level indicators, place the Government’s programme within the context of the economic and fiscal outlook, set out the Government’s strategy for the future and draw links to specific actions that have been, or will be, taken.

Budget 2019: The Wellbeing Budget, will broaden the Budget’s focus beyond economic and fiscal policy by using the Treasury’s Living Standards Framework to inform the Government’s investment priorities and funding decisions. The Government will measure and report against a broader set of indicators to show a more rounded measure of success, as a country and as a Government. This will be supported by Budget processes that facilitate evidence-based decisions and deliver the Government’s objectives in a cost-effective way. The Wellbeing Budget represents an important step towards embedding wellbeing in New Zealand’s public policy.”

Find out more about the budget on the website here.

Read The Guardian article about the new budget here.

New Zealand is one of the founding members of the Wellbeing Economy Governments initiative, alongside Scotland and Iceland.