New Zealand introduces new Budget guided by ‘well-being’ and not economic growth

New Zealand’s Prime Minister Jacinda Ardern has put out a national budget where spending is dictated by what best encourages the “well-being” of citizens, rather than focussing on traditional bottom-line measures like productivity and economic growth.

The government will put an emphasis on goals like community and cultural connection and equity in well-being across generations in what has been described as a “game-changing event” by LSE professor Richard Layard. As part of the framework Ardern has set aside more than $200 million to bolster services for victims of domestic and sexual violence and included a promise to provide housing for the homeless population. New guidance on policy suggests all new spending must advance one of five government priorities: improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific islands people, thriving in a digital age, and transitioning to a low-emission, sustainable economy.

“This budget is a game-changing event,” said Richard Layard, a professor at the London School of Economics who is an expert on life satisfaction across populations.

New Zealand is not the only country that is starting to rethink whether blunt economic measurements like gross domestic product are the best gauge of a nation’s success. But, Dr. Layard said, there has been “no other major country that has so explicitly adopted well-being as its objective.”

As a major example of what that new framework will produce, Ms. Ardern unveiled the biggest spending proposal to date in her coming budget: more than $200 million to bolster services for victims of domestic and sexual violence.

It is “the biggest single investment ever” by a New Zealand government on the issue, Ms. Ardern said at an event showcasing the initiative, and will tackle one of the nation’s “most disturbing, most shameful” problems.

Under New Zealand’s revised policy, all new spending must advance one of five government priorities: improving mental health, reducing child poverty, addressing the inequalities faced by indigenous Maori and Pacific islands people, thriving in a digital age, and transitioning to a low-emission, sustainable economy. The government is promoting the new framework as bringing much-needed clarity to the budgeting process. In the past, individual government ministers vied for the new money available in each year’s budget, and “relatively arbitrary” decisions were made about who got what, the country’s finance minister, Grant Robertson, said in an interview.

To the center-right political opposition, however, all this talk is nothing more than “slick branding” of longstanding shared policy goals. New Zealand governments of all political stripes, the opposition argues, have always tried to improve people’s lives through taxpayer spending.

“New Zealanders won’t benefit from a government that is ignoring the slowing economy and focusing instead on branding,” Amy Adams, a lawmaker in the opposition National Party, said in a statement. “We’re facing significant economic risks over coming years, but this government is focusing on a marketing campaign.”

While the country may indeed be facing some economic headwinds, New Zealanders have been among the most contented people on the planet, according to the World Happiness Report, which is produced by the United Nations Sustainable Development Solutions Network. The study ranked New Zealand in eighth place on its 2018 list of the world’s happiest countries, after the Nordic nations — led by Finland — Switzerland and the Netherlands.

And it remains to be seen just how different the budget will look this year. Liberals across the globe may have swooned this year when Ms. Ardern moved to ban semiautomatic weapons within days of the Christchurch terrorist attacks, but in reality her government is not a radically progressive one, said Arthur Grimes, an economics professor at Victoria University of Wellington and a former chairman of New Zealand’s central bank.

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