Budget day, 2019, the coalition together

New Zealand’s “Wellbeing” Budget is already starting to attract serious international attention.

But what is clear is that as a “Wellbeing” project it is early days and that what was presented on Thursday is only a first step.

The Opposition may have a point when they question the lack of specific targets for all of the wellbeing outcomes except child poverty.

As a consequence, the Government may be in danger of over-hyping what it has done, and it risks (at the worst) ridicule for applying the “Wellbeing” label to a Budget which was on most pages pretty conventional.

Nevertheless, it would be wrong to question the Government’s seriousness of intent in moving towards using the “Wellbeing” frame, along with its underlying objective of happiness, informing the basis for economic policy in the future.

Praise for what has been done so far has come from the “Financial Times” Associate Editor and Economics Editor, Martin Wolf.

Wolf has been described by former US National Economic Council Director.  Lawrence Summers as the world’s pre-eminent financial journalist.

Writing on Friday about the New Zealand Budget, Wolf talked about how “happiness” is at the basis of wellbeing economics.

“Income explains a small part of variations in happiness, partly because relative income matters so much,” he wrote.

“Human relationships, especially partnerships, matter.


“Unemployment is very harmful.

“But mental health is the most important determinant of life satisfaction.

“The best predictor of happiness in adult life is emotional wellbeing as a child.

“That, in turn, is determined by the parents, especially their mental wellbeing (above all, of mothers).”

In Britain, the move to wellbeing as an economic measure was started in 2010 by Conservative Prime Minister, David Cameron.

“It’s time we admitted that there’s more to life than money and it’s time we focused not just on GDP but on GWB – general wellbeing,” he said.

As a consequence, there is now an all-party group of British MPs looking at how wellbeing might be introduced into British Budgets.

A report from them in February said: “We believe that improving wellbeing, therefore, should serve as a central goal for our society and the overriding aim of government policy.

“As such, this is what should determine the country’s spending priorities across all departments for the next Spending Round. “

And like New Zealand (and Martin Wolf) they too have singled out mental health as the top priority.

They are to meet NZ Treasury economist Nick Carroll next week. Carroll is currently based with the NZ delegation to the OECD in Paris and is the author of a number of papers on wellbeing.

Ironically a large amount of Treasury’s work on wellbeing  (including some of his papers) was actually begun under the previous National Government.

At the heart of the New Zealand wellbeing model is the Living Standards Framework Dashboard. (LSF)

This is really a complex map of various indicators showing how they all relate to each other.

But it defines the standards with real numbers; something that is conspicuously absent from the majority of the Budget’s wellbeing measures.

Based on the LSF, The Budget listed six wellbeing priorities:

  • Mental health
  • Child wellbeing
  • Maori and Pasifika aspiration
  • Building a productive nation
  • Transforming the economy
  • Investing in New Zealand.

Of these, the most developed was the Child Wellbeing stream which set out address child poverty and domestic violence with a $320 million package.

It is directly linked to the Child Poverty Report, which contains specific targets; children living in material hardship are expected to go down from 13.3% of the child population to six per cent by 2027.

But there is no Budget category for “reducing child poverty”; something that may be addressed in the future as legislation is adapted to accommodate wellbeing outcomes.

So in the meantime, each wellbeing outcome contains funding from a number of different votes.

And there appears to be some double accounting.

Thus two targeted homelessness initiatives; transitional housing and Housing First are allocated $296.2 million operating costs and $134.2 million capital costs in the Child Poverty part of the “Child Wellbeing” section of the Budget. 

But in the showpiece mental health section, the same two programmes with the same budget  allocations are included as a part of the overall  $1.9 billion mental health package.

And of the $1.9 billion only $455 million is subject to a specific target. That money will be used to provide mental health workers to work with general practice and it is expected to reach 325,000 people by 2023/24

But other wellbeing targets like Maori and Pasifika or the economic ones have no numbers alongside them.

The Opposition, understandably, is critical of this.

National’s Finance spokesperson, Amy Adams, says as it has turned out the Wellbeing Budget is little more than a marketing overlay, and the suggestion that it is a new approach to the Budget is “fanciful”.

“What we would absolutely want to have is a budget framework which holds Governments accountable for the impact of its measures,” she told POLITIK.

“One of the extreme letdowns for me is that they got rid of any clear accountability.”

Adams is not saying whether National would continue with the Wellbeing approach, but she does say that her party would set very clear targets in the areas prioritized by Labour so that people could see the progress that had been made.

In September last year, speaking at a conference on Wellbeing in Wellington, Finance Minister Grant Robertson said: “It is my aim to deliver New Zealand’s first Wellbeing Budget.

“This implies and requires a rigorous framework to understand wellbeing and to be able to report, measure and compare the tangible and the intangible.”

Robertson stressed that the Wellbeing process would evolve and in pre-Budget interviews, he repeated that.

But what is clear from Thursday’s Budget is that the Wellbeing outcomes are going to need tighter definitions than the explanations provided in the 144 page “The Wellbeing Budget.”