Economics is changing. And in the face of systemic existential challenges like climate change and biodiversity loss, this change is imperative. In recent years, a small number of governments have begun to place wellbeing at the heart of economic decision making. Aotearoa, New Zealand, for example has five years of experience integrating a Wellbeing Approach and government at the national level. What can Australia learn from what is happening on the other side of the ditch?
For decades, New Zealand, like almost every country, has pursued economic growth as its major goal. Successive governments have striven for growth, and progress has been measured through gross domestic product (GDP). However, despite its affluence, the fruits of New Zealand’s economic growth haven’t been shared equally across society. We have seen skyrocketing rates of inequality and child poverty, not to mention some of the highest emission rates per-person in the industrialised world. In 2017, the New Zealand Labour Government started asking if they should be pursuing Wellbeing goals—implementing new measures and frameworks to sit alongside the traditional economic system. The following is a short summary of that journey.
The Wellbeing Approach was prompted by decades of questioning by citizens and experts of the primacy of GDP as the main measure of progress, and the renaissance of economic ideas such as Doughnut Economics and Ecological Economics. For many years, officials within the New Zealand Treasury had been developing the Living Standards Framework (LSF), a powerful tool which aims to better capture what is important to New Zealanders in relation to living standards, beyond just traditional economic metrics. The heritage of the Framework can be traced back to Australian thinking in the early 2000s and the Organisation for Economic Co-Operation and Development’s (OECD) How’s Life project.
This led to a quiet revolution in policymaking in Aotearoa. In 2019, the New Zealand Government delivered its first Wellbeing Budget. They declared,
The Wellbeing Budget signals a new approach to the way governments work, by placing the wellbeing of New Zealanders at the heart of what we do. This approach is a significant departure from the status quo. We are measuring our country’s success differently. We are not just relying on Gross Domestic Product (GDP), but also [on] how we are improving the wellbeing of our people, protecting the environment, and strengthening our communities.
The first Wellbeing Budget prioritised five key areas: mental health, child wellbeing, supporting the aspirations of Māori and Pasifika, building a productive nation, and transforming the economy. The LSF was used to provide wholistic advice and analysis on Budget bids, and for the first time agencies were encouraged to work together to develop a joint Budget bid to address family and sexual violence. Over the years, this approach has helped fund social programs, housing upgrades, free school lunches, and menstrual products for students, as well as a myriad of other initiatives which may not have been funded previously. One high-profile example of this was the Porirua regeneration project in Wellington, where consideration of a broader suite of outcomes secured funding. Since then we have seen four Wellbeing Budgets delivered, the country’s first national Wellbeing Report (published by the Treasury), and the development of new indicators and dashboards to measure progress.
Wellbeing Budgets, the Living Standards Framework, and other related developments have been positive for New Zealand, but it is important not to overstate their impact; they have been positive, but not yet transformational. New Zealand has seen a change in the language of government and the policy framework, but GDP growth remains prioritised. Upon reading last year’s Budget, I noticed how much new spending was focused on Failure Demand, patching-up avoidable problems caused by the existing economic system, rather than fixing them. The Parliamentary Commissioner for the Environment, Simon Upton, also highlighted how difficult it was “to slot the natural environment into a budget process dominated by short-term decisions based on financial terms and well-defined outcomes”. He points to how nature crosses multiple budget lines and areas of responsibilities and how a lack of environmental data and sophistication using discount rates acted as a barrier.
Despite significant international attention, the ‘Wellbeing Revolution’ in New Zealand is more tentative and fragile than perceived by many offshore. The New Zealand Productivity Commission warns that as the Wellbeing Approach is not yet fully embedded, it is at risk of eroding. Unlike the development of the Welsh Wellbeing of Future Generations Act, there has been no wide-spread and/or deep engagement with citizens and therefore the approach is seen by many New Zealanders as something the Government is doing, rather than something citizens, councils, and businesses are a part of. As the Office of Auditor General points out, in many ways, the accountability system has become too inwardly focused and disconnected from the public.
As citizens we know our communities best and empowering our collective wisdom will lead to better decision making. I believe current Wellbeing frameworks could better flow through to policy decisions, be applied to a broader range of entities, and most importantly be monitored more effectively to encourage accountability. There is also a lack of joined-up, anticipatory and participatory policymaking which prioritises wellbeing in the long-term; at the high level, despite joint Budget bids, there is still a siloed and short-term focus within Government. Greater leadership and support is needed across the public management system in order to address these issues and see the Wellbeing Approach thrive.
The next step in the evolution of Wellbeing Budgets surely must be addressing the root causes of social and environmental failure and moving from Wellbeing Budgets to a Wellbeing Economy. A Wellbeing Economy is structured so that the economy serves people and the planet, rather than being geared towards maximising profit only through economic growth at the expense of the planet; it is designed to deliver quality of life with dignity, purpose, fairness and participation whilst caring for nature.
I see signs of a Wellbeing Economy all around us. It can be seen in Indigenous approaches such as He Ara Waiora and in the Māori economy: Wakatū Incorporated and its 500 year strategy, Te Pae Tawhiti. It can be seen at work in businesses such as B Corps who are connecting environmental and social progress with profit; enterprises like Perpetual Guardian are encouraging a four day work week and farmers are taking up regenerative practices. Evidence that the Wellbeing Economy works can be observed in the sharing economy, be it through employee-owned enterprises and cooperatives, or tool and food share initiatives; it can be seen in citizen assemblies, circular design, and countless other places. These new ways of operating in the economy are in themselves contributing to new ways of thinking about the economy and contributing to national and international shifts.
As Australians look towards their first Wellbeing Budget, I encourage them to take heed of the lessons from New Zealand’s Wellbeing framework, but also to keep their eyes on the ball. The goal isn’t just a Wellbeing Budget, it's laying down new economic tracks so that the system delivers wellbeing by default.
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