NZ Wellbeing Budget: It all comes down to the measurement
At Huber Social we always applaud the recognition of wellbeing as the measure for the progress of humanity, and last week’s release of the New Zealand Wellbeing Budget is certainly a milestone to celebrate. The 2019 budget is the latest in series of global initiatives to move beyond Gross Domestic Product (GDP) as our primary measure of success.
Although not an entirely new approach, France, UK and Australia all attempting similar initiatives over the past decade[1], arguably NZ has gone further and done a better job to package up their Wellbeing Budget; delivering a global call to action that sets a new standard for what ‘value’ an economy needs to account for.
In his speech introducing the Wellbeing Budget, Hon Grant Robertson made the point “the things New Zealanders valued, were not being sufficiently valued by the government. Because they were not being valued, they were not being measured, and because they were not being measured, they were not being done. So today, in this first Wellbeing Budget, we are measuring and focusing on what New Zealanders value.”
© RNZ / Dom Thomas. Grant Robertson with the 2019 Wellbeing Budget.
Measuring Wellbeing
This begs the question, how is New Zealand going to measure the wellbeing of their people? Not only in the selection of indicators, but also the rigour of evidence and analysis to ensure measurement is driving the right outcomes.
To this aim, the government has developed the Living Standards Framework (LSF), which tracks progress across three sections: (1) our people, (2) our country and (3) our future. In the spirit of driving global uniformity, and international comparability, the framework adopted the approach of the Economic Co-operation and Development (OECD) and the UN Sustainability Development Goals.
Summarily, the approach was to select indicators from OECD Better Life Index, and aligned to the SDGs, that are also particularly relevant to New Zealanders. This approach infers that, if we improve across the selected indicators, we are in a position of better wellbeing. What it fails to do is to tell us overall if we are actually in a better position of wellbeing; where we go up against some indicators, but down in others, what is the impact?
Elevating Social Value Metrics to the Standards of Financial Value
In the financial value system, where we often expect strong financial gains because of positive measures against indicators such as employment rates and income levels, we don’t always see positive economic growth. There is no single recipe for success, it’s about how all the inputs work together to deliver the value. Acknowledging this, Treasury has recognised that “the diversity of New Zealanders means no single set of wellbeing indicators will capture all that matters for each person, family, whānau and community[2]”. As with economic growth, there is no single recipe for social progress in terms of wellbeing.
The advantage of the financial value system is that it has one universal measure of progress; GDP. It is a global, standardised metric, that provides an overall picture of the state of the economy and allows for better informed decision and policy making. In an attempt to mimic financial value, Treasury is even adopting annual reports to track progress in terms of wellbeing. In terms of the social value system, what sits at the bottom of the social value statement? And how do we know if investment in areas that may be parts of Wellbeing, are actually working together to have a positive impact?
To provide the full picture, we require a single unit of measure for wellbeing. Whilst this may seem impossible, it is actually quite straight forward. Value is subjective, the one overall measure of our wellbeing is our own assessment on our life; subjective wellbeing. To contend otherwise is to give the right of your wellbeing determination to another person based on what they observe, i.e. a set of objective indicators. Would you be comfortable to relinquish the most personal right?
Speaking at the Human Capability Association conference in South Africa in 2017, UNDP Director, Poverty Practice, Selim Jamal declared; “the goal is to create an environment where people can reach their full potential. A life they value. The rest becomes inputs. Economic development is a necessary element of human development, but it is not sufficient”.
If we want to elevate wellbeing to the same level as GDP, the same rules need to apply. We need a universal measure of wellbeing, subjective wellbeing, measured to standard and independently verified that delivers actionable insight for targeted investment.
[1] Grimes, A, ‘New Zealand’s Wellbeing approach to budget is not new, but could shift major issues’, The Conversation, 6 May 2019, online: https://theconversation.com/new-zealands-well-being-approach-to-budget-is-not-new-but-could-shift-major-issues-116296
[2]New Zealand Treasury, ‘ Introducing the Living Standards Framework’, online https://treasury.govt.nz/publications/tp/living-standards-framework-introducing-dashboard-html