How good is New Zealand’s budget?
6 June 2019 at 7:20 am
New Zealand has shown how government can shift from previous budget practices to focus more on measures that reflect the reality of people’s lives, writes Community Council for Australia CEO David Crosbie.
“Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. …
“The Gross National Product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.” – Robert Kennedy, March 1968, Kansas.
Last week the New Zealand Finance Minister Grant Robertson delivered the New Zealand Budget. It was an event worth noting in Australia and around the world, not because of the numbers or the state of the New Zealand economy, but because of what was being prioritised and what was being measured.
In Australia, whenever a politician is asked about any issue to do with well-being in our communities, the standard response is to offer a list of government expenditures in that area, as though expenditure equals addressing the issue. It doesn’t.
I have watched on as a grieving parent asking a government minister about youth suicide was told that the government is already spending millions of dollars in addressing youth suicide through Headspace. It is as though the expenditure means we can all tick that policy box – youth suicide done. Headspace may be a very good program, but just relying on input data (how much has been spent), or even activity data (how many young people have attended a Headspace) falls a long way short of addressing youth suicide.
And herein lies the fundamental truth of government funding. The link between expenditure and impact is almost invariably based on assumptions, not evidence. Similarly, the link between policy goals (eg reducing youth suicide) and the actual reporting against policy goals (eg how many young people visited a Headspace program) is often grounded in tenuous generalisations.
It was Bill English, the former New Zealand minister of finance and prime minister, who decided many years ago that government policies and expenditure actually represented a form of investment in the New Zealand people. He encouraged the brightest minds in the New Zealand Treasury to dive deeply into the confusion and misinformation about exactly what the government was achieving through its expenditure. As a consequence, the New Zealand Treasury have spent many years building and refining a Living Standards Framework for New Zealanders that is now being incorporated into their annual budget.
The 2019 New Zealand budget is called the Wellbeing Budget and has a picture of two happy young women on the cover. This budget is the embodiment of the spirit of Robert Kennedy who over half a century ago clearly articulated that a country and its people are so much more than just their economic output.
The Wellbeing Budget extends the previous work of the Treasury to incorporate over 60 indicators of well being into the budget and it required that any new spending in the budget had to advance one of the government’s five priorities:
- improving mental health;
- reducing child poverty;
- addressing the inequalities faced by Indigenous Māori and Pacific island people;
- thriving in a digital age; and
- transitioning to a low-emission, sustainable economy.
This approach has forced a re-think in many areas of government and the community. There have been two immediate outcomes I think are important for all charities.
As part of the Wellbeing Budget, any request for new expenditure required the clear identification of both the priority area and the benefit that would be delivered. This generally meant working across and between government and non-government agencies outside of an individual department.
It will come as no surprise to people in the charities sector to learn that this requirement promoted an unprecedented level of co-operation between different ministers, their departments and community organisations in framing departmental budget requests.
A second important consequence can be seen in the kind of new measures that have been funded. There is an unusually high emphasis on prevention and early intervention. If we look at how priority one – improving mental health – translated into budget measures, we clearly see this shift in emphasis and expenditure.
In most countries, the biggest mental health expenditure is at the most acute end of the system, the provision of intensive hospital beds for the very unwell. The Wellbeing Budget shifted the focus back into the community through over half a billion dollars of new investments in local services for people requiring less intensive intervention.
Similar earlier intervention initiatives in areas like child wellbeing have been generously greeted by many in the charities sector.
The New Zealand Wellbeing Budget is far from perfect and has its critics. Even the minister for finance conceded: “This budget is just one step in a longer process of reforms …we do not claim perfection on this first attempt. But we do believe that this budget represents a significant step forward.”
CCA has been arguing for some time that if we are to achieve the Australia we want, we need to look beyond economic measures to indicators that reflect the kind of lives Australians are living. New Zealand has shown how government can shift from previous budget practices to focus more on measures that reflect the reality of people’s lives, and better link policy goals to government expenditure.
If we are to achieve the Australia we want, Australia needs a wellbeing budget. It can be done. What are we waiting for?
About the author: David Crosbie is CEO of the Community Council for Australia. He has spent more than 20 years as CEO of significant charities including five years in his current role, four years as CEO of the Mental Health Council of Australia, seven years as CEO of the Alcohol and other Drugs Council of Australia, and seven years as CEO of Odyssey House Victoria.
David Crosbie writes exclusively for Pro Bono News on a fortnightly basis, covering issues of importance to the broader not-for-profit sector.
