In 2019, New Zealand’s Wellbeing Budget was heralded as a world first.
With a Prime Minister at the helm who’d promised to focus on kindness and tackle child poverty, the Government attempted to change the way economic success was measured.
Rather than focus solely on GDP, they picked five priority areas: climate and environment, productive work, Māori and Pacific opportunities, child wellbeing, and mental and physical health.
The shift came off the back of a staggering suicide rate and increasing child poverty.
But investment was needed to back up the new Government’s commitments of a mental health and addiction inquiry and child poverty reduction targets.
Then-Prime Minister Jacinda Ardern and her finance minister Grant Robertson spoke about the 2019 Budget being a world-first, and ahead of the May Budget, reporters were invited up to Treasury offices on The Terrace for a thorough briefing on why this approach was different, the priority areas, and how officials hoped to eventually measure success.
The so-called ‘Wellbeing Budget’, delivered a week later, included $1.9 billion for mental health, along with a boost in funding for school and hospital buildings, and climate projects under the headline of ‘just transitions’.
During an exit interview with Newsroom this week, Robertson said the failure to fully implement his vision for the wellbeing approach was on his list of unfinished business.
“The old saying is that the best thing for GDP is a war, and the second-best thing is a natural disaster, because your recovery from it creates activity in the economy – which is what GDP measures – but the quality of that activity is not measured.”
Robertson said he’d always believed GDP was “a wholly inadequate measure for the quality of life that we have”, but this political philosophy was sharpened when he became the minister of finance under Jacinda Ardern’s leadership.
What the government spent its money on should be decided based on something other than who could write the best proposal. There needed to be cohesion between spending and goals.
Robertson said his government was the first in the world to build an “end-to-end” wellbeing Budget. That meant, one where return on investment was measured in those priority areas.
“The economy is not an end in itself it is a means to an end.”
Grant Robertson
Robertson also canvassed his work on the Wellbeing Budget during his valedictory speech on Wednesday night, saying the approach was “world-leading”.
“This approach means that Budget initiatives must show value for money, but in all senses of that word, for people, for our environment, for our communities, and for our finances…
“We continue to report on how we are tracking fiscally but to do so myopically risks forgetting the very reason we are here,” he said.
“The economy is not an end in itself it is a means to an end.”
He noted that under his watch, Budgets had moved to multi-year capital allowances for better planning. And funding priority areas for three years, rather than one, so departments had clarity and consistency.
He said this work should be viewed alongside public service reforms brought in by former public services minister Chris Hipkins. Both pieces of work looked to break down the silos of government.
“These approaches are the way of the future,” Robertson said.
“The public that we serve do not care which agency funding comes from. They just want to know we are getting on with addressing the challenges and creating opportunities for the future.”
Just as the previous government was starting to find its stride, Covid-19 hit and the focus was ripped away.
Robertson said his full vision, which measured outcomes against the five priority areas, never fully materialised.
But the changes did make a difference to where and how the Government spent its money, giving the example of an historical investment in the prevention of family and sexual violence as a key way to meet child poverty reduction objectives.
Five years on from the heady pre-Budget briefings and global media focus on New Zealand’s first official Wellbeing Budget, it was hard to figure out what had really changed.
Despite changes to the Public Finance Act that required a report on child poverty alongside each budget, and measures enshrined in law, more children were living in material hardship.
Last month, Stats NZ released its annual child poverty statistics for the year ended June 2023, which showed one in eight children (12.5 percent) lived in households experiencing material hardship, meaning they were likely to go without fresh fruit and vegetables, doctor’s visits, or good shoes. That was an increase of 2 percentage points on the previous year.
And last month, the Auditor-General reported that despite the $1.9 billion spend in mental health, young people still can’t access services.
The ‘Wellbeing Budget’ label is still printed on the Budget documents each year, but the impetus has seemed to stall.
Now, the new Government has the opportunity to set its own path for how it wants its Budgets to look.
“The coalition Government will not be following my predecessor’s approach of branding each Budget as a Wellbeing Budget, Finance Minister Nicola Willis said.
“However, the ultimate objective of the Budget is to improve New Zealanders’ wellbeing by funding effective public services, helping build a more productive economy, and managing government finances in a sustainable way.”
Willis would outline her Government’s wellbeing objectives when releasing her Budget Policy Statement on Wednesday.
And while she may have different priority areas to her predecessor – and she may not call it a Wellbeing Budget – it’s likely her Government would continue in the long-held tradition of spending the most money in wellbeing-focused areas, including social welfare ($42.9 billion in 2023), health ($26.5b) and education ($4.9b).
“Spending money doesn’t lead to wellbeing. Spending money is just spending money.”
Arthur Grimes
Arthur Grimes, former chief economist at the Reserve Bank, and now a professor of wellbeing and public policy at Victoria University School of Government, said the rhetoric around the so-called Wellbeing Budget was over-hyped from the beginning.
He challenged Robertson’s claim that it was the first in the world, pointing to frameworks such as Bhutan’s Happiness Index, or the Welsh Wellbeing of Future Generations Act.
The Welsh legislation, passed in 2015, has seven legally binding wellbeing goals including social cohesion, resilience and health. The minister for each of the public bodies included in the Act have to set themselves targets, then report on those targets.
Despite the fanfare in New Zealand in 2019, Grimes said the Welsh model was a more concrete example of a wellbeing budget, given the clear targets and measurement.
“Spending money doesn’t lead to wellbeing. Spending money is just spending money,” he said.
In fact, Grimes believed the previous National government – under the John Key-Bill English leadership – had something closer to a true wellbeing Budget, in the form of its Better Public Service targets.
Grimes also disagreed with the assertion that the country previously only cared about GDP, citing the massive Budget spends in social welfare, health and education.
In order to achieve a true wellbeing Budget, a Government needed to set justified priority areas, partnered with specific, evidence-backed targets.
This Government has repeatedly said it is “ruthlessly focussed on outcomes”, and has already begun to set key targets in areas like health, so it’s part-way there.
And despite Robertson’s regret at not moving further towards measuring the impacts of his Government’s investments, there were already frameworks in place to measure key indicators.
The Public Finance Act set out a framework that required each appropriation in the Budget to sit alongside an explanation of how performance against that appropriation would be assessed.
Actual performance was reported in each department’s annual report.
Then those performance measures were collated by Treasury and laid out in its Living Standards Framework Dashboard.
While the official ‘Wellbeing Budget’ may be dead in the water, frameworks and priority areas that focus on wellbeing will live on. A wellbeing Budget, by any other name.
