Faking a wellbeing focus?

Dr Bryce Wilkinson
Insights Newsletter
8 March, 2019

The government is hyping Budget 2019 as a world-leading “Wellbeing Budget”. The December 2018 Budget Policy Statement proclaims the government’s key focus on improving the wellbeing and living standards of New Zealanders.

Do the public have any real evidence of any substance behind such froth? It appears not.

Government policies can be expected to improve overall community wellbeing if an authoritative analysis demonstrates that the benefits will exceed the costs to those affected, in some overall sense.

The government’s credibility concerning the wellbeing and living standards of New Zealanders suffered a crippling blow with its early on-the-hoof ban on offshore oil exploration.

That decision was not informed by any supportive wellbeing assessment worthy of the name. The New Zealand Institute of Economic Research’s (NZIER) subsequent analysis indicates a net cost of the ban to the community of perhaps $28 billion by 2050. I have no view about the accuracy of that estimate, but the NZIER has both expertise and a reputation to protect in such matters.

The Treasury’s CBAx tool seems to be at the centre of its hopes to get agencies to focus on New Zealanders’ wellbeing. Yet its 20 February 2019 Explanatory Note to a select committee states that agencies are not required to use the tool for budget bids. This is not encouraging.

One test for Budget 2019 will be whether the proclaimed intensive wellbeing focus has caused a reversal or modification of earlier policies, such as the exploration ban.

I do not expect it to, but it would be good to be proved wrong.

Another test is whether Budget 2019 will focus on measures to raise economic growth – in the sense of securing greater future benefit from given resources.

That also seems unlikely given the following rather disparaging comment about economic growth in the Budget Policy Statement:

... our recent history shows that focusing on it alone can be counterproductive and associated with poor outcomes such as greater inequality and pollution.

Our recent history cannot possibly show that. No earlier government has focused on it alone, if at all. Roughly $2 of every $3 of government operating spending is redistributive. Productivity growth has become anaemic. The large income gap with Australia continues.

Further, low growth can accompany worse environmental outcomes. Compare the pollution in East Germany under Soviet rule with that in West Germany.

Hopefully, Budget 2019 will be more than mere froth about wellbeing.

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