Wellbeing - it’s set to engulf gross domestic product (GDP) to become the main way to measure the success of government policy.
Treasury released a paper exploring the concept in 2011, yet it’s taken until now for a government to fully endorse a wellbeing framework.
While the National-led Government’s targeted social investment approach aligned with it, the Labour-led Government has gone so far as to saying it will assess bids for spending against a wellbeing framework in its 2019 Budget.
This will be a world first.
Treasury has accordingly drawn on the OECD’s How’s Life? analysis to create a Living Standards Framework. By the end of the year it intends to develop a dashboard of indicators - social, human, natural and financial - that policymakers will need to consider.
Consulting economist, Julie Fry, and New Zealand Institute of Economic Research principal economist, Peter Wilson, have just published a book - Better Lives: Migration, Wellbeing and New Zealand - that explores how a wellbeing framework would change the way migration policy is made.
Speaking to interest.co.nz in a Triple Shot Interview, they say considering a wider range of factors, in addition to GDP, would see a different mix of people immigrate to New Zealand.
Elderly migrants and international students
Currently we welcome young, healthy, trained migrants who can contribute the most to the labour market, Fry explains.
We try to avoid letting their elderly parents in because they don’t pay tax, but need superannuation and have greater healthcare needs.
A wellbeing framework would recognise the value this group of people could add. For example grandparents could help with childcare and encourage their families to stay connected to their home cultures and languages.
Wilson explains a wellbeing framework would also see us take a different approach towards international students.
“The previous government really increased the number of international students coming in, because again, they’re young, they don’t use healthcare, they don’t get benefits, but they pay a lot for their education.”
A wellbeing framework would consider the impact of our migration policy on the students themselves.
Recognising the fact many students come to New Zealand with unrealistic expectations around getting citizenship, Wilson says, “You’d want to make sure that the students were getting a very good education - so quality education as opposed to some of the short-term language schools.
“And that they’ve really got a prospect of genuine employment afterwards.
“So you’d target more on their wellbeing after education, rather than just thinking of them as a cash cow that’ll boost the economy while they’re here.”
Wilson says the key thing with using a wellbeing framework is that you can’t cherry pick which indicators you do and don't want to meet. In other words, only consider the impact international students have on the housing market.
“You’ve got to put it all together."
Transparency and predictability
He says the value of the framework is that it makes the trade-offs policymakers need to make more transparent and predictable.
The Government’s decision to ban new offshore oil and gas exploration permits is an example of the fact it already considers more than GDP when making decisions.
Yet Wilson says a wellbeing framework would encourage ministers to say, We do put more weight on the environment than the previous government, so that explains our decision.
Generally speaking, he maintains the decision-making process is opaque.
"You don’t know what is influencing ministers and they should make that more transparent...
“It also makes it easier… to hold the government to account. To say, Hang on, last time you said the environment was important. This time you’ve put more emphasis on jobs. What’s happened? What’s changed?”
Complexity a price worth paying
Asked whether policymakers would realistically have the time (or inclination) to report back on how they've considered a broader range of impacts of their decisions; the Government’s call to ban new offshore oil and gas exploration being an example of a thorough consultation process being skipped, Wilson answers yes.
He says lots of decisions are made on the basis of white papers and consultation processes.
Yet he warns a wellbeing framework shouldn’t be seen as a checklist.
“It does make decision-making more complex, but we think it leads to better, more transparent, more accountable decisions…
“At the moment we primarily focus on GDP impact, and sometimes we think about labour market impacts and sometimes we think about housing impacts, but we don’t do that in a systematic way. We don’t think about all the things that people care about when they’re living a life they value…
“That means we are setting policy that isn’t based on the things that matter. We’re missing out on important things.”
Wilson acknowledges trade-offs will still always need to be made.
“The book’s called Better Lives for a reason. It’s not Perfect Lives. What we’re looking for is an improvement on the current process.”