The “Wellbeing Budget” will be the first move in what will be the most transformational work programme of the Ardern government.
In many ways, it is the only the start of much bigger things to come
In the background are the proposed fundamental changes to the Public Finance Act which will embed wellbeing measures within it alongside traditional numeric economic indicators.
At the same time, substantial changes are planned for next year in the Public Sector Act which will attempt to break down the barriers between government entities.
At the Wellington Chamber of Commerce annual pre-Budget speech, Finance Minister, Grant Robertson yesterday offered some insights into how all these elements lock together.
Robertson suggested that there was a broader political motivation behind the whole wellbeing project and he linked it back to the populist movements we have seen in the United States and Europe.
He said that the use of the term “rock star economy” in 2017 was jarring for many New Zealanders.
“Sure, we had – and have – GDP growth rates that many other countries around the world envied, but for many New Zealanders, this GDP growth had not translated into higher living standards or better opportunities,” he said.
“How could we be a rockstar, they asked, with homelessness, child poverty and inequality on the rise?
“This gap between rhetoric and reality was in many senses the defining issue of the 2017 election, and what led to the formation of the Coalition Government.
“This gap between rhetoric and reality, between haves and have-nots, between the elites and the people, has been exploited by populists around the globe.
“It is a long-term view of mine, and the parties that make up this Government, that we need to close this gap in an inclusive, not exclusive way, because it is the right thing to do and because we need to do so to ensure the public keep faith and trust in Government.
“To do this, we need a different view of what constitutes success.”
And that is the politics of wellbeing in a nutshell.
Robertson said there were three fundamental elements to the Government’s wellbeing plan:
- A whole of government approach
- Consideration of inter-generational outcomes
- A need to move beyond narrow measure sof success
“It is important to note that the wellbeing approach is more than just the budget. Our job is to ensure that the whole system of Government is geared towards improving wellbeing and living standards
“We have to ensure our legislative framework, planning, reporting and accountability arrangements shift to support the wellbeing approach.”
It this priority that will reshape Government.
Last September, the Office of the Auditor General submitted to Treasury on the Wellbeing proposals.
At one point it said the use of a wellbeing framework had the potential to help ensure that decisions on where to direct government spending, public services, and other interventions would align with the higher level, and ultimate, objectives.
“Focusing on achieving wellbeing or high-level outcome objectives may help better focus the government’s attention on the reasons why we have a public service rather than on the delivery of outputs as an end in itself,” the office said.
“However the strategic use of wellbeing indicators will galvanise public spending and service delivery around those indicators only if there is a clear line of sight between them.”
Robertson yesterday listed the five areas where the Wellbeing Budget will seek to measure success:
- Creating opportunities to transition to a sustainable and low-emissions economy.
- Supporting a thriving nation in the digital age through innovation, social and economic opportunities.
- Reducing child poverty and improving child wellbeing, including addressing family violence.
- Supporting mental wellbeing for all New Zealanders.
- Lifting Māori and Pacific incomes, skills and opportunities.
Those goals have been derived from the data in Treasury’s Living Standards Framework as well as other advice.
Robertson said that he wanted the Wellbeing approach to be sustainable across changing governments and therefore when the Public Finance Act is amended to accommodate it, the rewrite would be done in such a way that any government could choose what it wanted its wellbeing targets to be.
There will be two pieces of legislation which will deliver the Wellbeing framework, the Public Finance Act and the Public Sector Act — both are currently being rewritten.
So how much is Robertson able to achieve without the legislation changes? In particular, how can he get “joined-up government” when the functions and limits imposed on Government departments are set out in legislation.
“The legislation certainly helps with the incentives and the framework,” he said.
“We have the ability as Ministers to work with and request of the Chief Executives and agencies to work together.
“We can still do it. We can make the changes, but we do need the legislative framework to embed them for the future so they will come.”
But it would appear that Robertson for this Budget is following the advice of the Auditor General who suggested that the first Wellbeing Budget would be something of an experiment.
“We suggest a minimalist approach to embedding the new initiative in legislation; by this, we mean carefully considering how much of the wellbeing initiatives can be introduced without needing to change legislation, proposing changes to the Act only when absolutely necessary and, in those matters for which legislative authority is needed, considering whether it would be desirable to legislate less on content than on process
“Allowing a good degree of flexibility in the formative stages of this initiative would enable improvements based on experience and learning to be more easily made.”
And Robertson appeared to echo that yesterday.
“The Wellbeing Budget is our own first attempt,” he said.
“ We are not going to get things 100% right the first time around.
“Governments have been preparing budgets the same way for decades, so this is a significant change.
“But we are learning throughout this process and will look to improve it over years to come.”
Ironically, this year is the 30th anniversary of the passage of the Roger Douglas and Treasury-inspired Public Finance Act which forced government departments to focus on outputs. The purpose of the Wellbeing reforms is to shift that focus to outcomes.