Treasury Secretary Caralee McLiesh and Finance Minister Grant Robertson

As part of the leadup to the Budget (set for May 19) the Treasury has unveiled its latest set of Living Standards Framework statistics.

The vast array of statistics that comprise the Framework will underpin the Wellbeing Budget that Finance Minister, Grant Robertson, is proposing to present.

Treasury Secretary Caralee McLiesh said yesterday that while it was still early days, the frameworks were being used across the budget process “and increasingly so.”

“We are requiring agencies to consider wellbeing impacts in their budget initiatives, and this is something that ministers actively consider in some of their decisions,” she said.

There was an overwhelming standout conclusion from the Living Standards Framework data, which is now available for the past 20 years, and that was the growing inter-generational divide in New Zealand.

McLiesh said there was a large and, in many cases, a growing gap between young and old.

“New Zealand is comparatively quite a good place to be old,” she said.

“Some older people, of course, are struggling, but most are doing well, particularly those who are partnered and who own their own home.

“On average, over 65s are more satisfied with life, have a higher sense of belonging, are less lonely and have more social support, experience fewer negative emotions and are more politically engaged volunteer more and also have more leisure time.”

While New Zealand leads the OECD in employment, we are only around the average in terms of the rates of young people not in employment, education, and training (NEETs).


“Our NEET rates continue to be higher among Maori and Pacific people,” said McLiesh.

“We see a similar intergenerational pattern emerging of knowledge and skills.

The picture looks best for adult skills, particularly in adult literacy and in problem-solving.

“By contrast, rates of childhood skills are in the middle of the OECD pack and appear to be declining over time.

“The gap between ethnicities is large and closing marginally  at best, and through a process of levelling down rather than levelling up.”

Young people were also doing less well and were more likely to rent homes, and  “we know that rentals are more likely to be crowded, less healthy and less stable.”

AS if to underline her point, Greens MP Chloe Swarbrick yesterday asked Education Minister Chris Hipkins if he was concerned by a University of Otago survey which showed students were more than twice as likely as the general population to be in damp and mouldy homes, with 79 per cent reporting being energy insecure and shivering inside of their home?

“Yes, I am,” said Hipkins.

“And actually, it’s one of the reasons why I’m very proud of the work that the Government has been doing since we became the Government, to ensure that the quality of our rental homes is improved.

“I particularly note—again reflecting on some historical experiences—that in some of those cities that have a higher proportion of tertiary students, the rental accommodation can often be of the lowest standard, and that isn’t acceptable.”

But McLiesh said New Zealand had among the least affordable housing in the OECD on many metrics, with renters paying a greater proportion of their income on housing on average.

She said housing also mattered for the role it played as a stock of wealth.

“Since the early 80s, house prices in New Zealand have increased more than fivefold higher rise than in any other country at that time.

“Back in the early 80s, seventy-three per cent of people in the early thirties owned a home.

“By 2018 census, it was down to 51 per cent, and the result is growing wealth inequality between the young and old.”

McLiesh said a baby born today could expect to live longer and two more years in good health than at any time in our history.

“But despite these increases in life expectancy and healthy life expectancy seem to be flattening out,” she said.

“The number of years that a baby can expect to live in good health is also flattened out.

And we’ve now fallen slightly below the obesity median; we also see increases in reported psychological distress, particularly in younger people.

“Loneliness is highest among those aged 15 to 24 and has increased substantially in recent years.

“Those under 25 are least likely to have a higher sense of belonging to Aotearoa New Zealand, are least likely to report that life is worthwhile and are  less likely to vote than young people in OECD countries.”

She said when all these, on top of other major trends like climate change, biodiversity, higher public debt, infrastructure gap, aging, population learning, all that together raised some big questions for intergenerational equity.

“For centuries now, human prosperity has grown, generation on generation,” she said.

“And so we need to address these challenges if our next generation is to be better off than we are today.”

McLiesh said Treasury’s Long Term Fiscal Statement explored how policy settings could affect intergenerational fiscal outcomes, and she offered a subtle warning about debt.

The statement shows that without substantial cuts to Government spending or an increase in tax revenue, then the debt to GDP ratio will begin to grow from around 2030 on.

And it is at this point that McLiesh offers a more conventional Treasury agenda for how to address the Wellbeing challenges highlighted by the Living Standards Framework.

Things like reforms to superannuation settings; health insurance, sustainable revenue to cover public expenditure; policies to adapt to and mitigate climate change; manage shocks, strengthen public financial management; these are all fundamental to sustainable debt and future wellbeing.”

“We are also currently advising on how fiscal targets can support intergenerational equity by providing incentives for current consumption to be paid for by current generations and also for prudent debt targets that balance the need for prudent investment where it will provide benefits for future generations.”

Interestingly McLiesh said that early evidence suggested the Covid virus and lockdowns had led to neither wealth nor income inequality increasing because of the pandemic to date.

“And in fact, in the year to June 2021, income inequality actually fell,” she said.[RH1] 

Nevertheless, inter-generational equality must surely be addressed in the Budget, given that McLeish’s data and conclusions are so strong.