In search of Eudaimonia
In just over a month, Finance Minister Grant Robertson will deliver his first Budget. Most of its contents are broadly known. The big bang announcements were last December, with the rejigging of National’s tax cuts to produce the July 1 Families Package. If there are signs of strain in this year’s Budget process, they’re in the stories about just how tight the Government’s finances are, despite Wednesday’s confirmation of a bigger than forecast surplus and lower government debt as a result. The fact is that although retiring former National Party Finance Minister Steven Joyce over-egged his claim of an $11.7 billion ‘‘hole’’ in Labour’s preelection fiscal plan, there is a hole of some magnitude, and the outlines of are becoming clear. On operational spending, there are large groups of public sector workers – nurses, teachers, police for example – who have reasonable expectations of a catch-up pay round. The size of catch-up they have in mind wasn’t in Labour’s plan. Nor was any pay equity settlement in the public sector, beyond that already agreed for aged care workers. Juggling those demands is one of Robertson’s biggest headaches, partly because any increase this year gets baked into future years as well. Also creating fiscal pressure is the string of reports, exemplified by the state of Auckland’s Middlemore Hospital, demonstrating urgent need for more investment in public infrastructure. This is one-off capital spending, so the impacts don’t directly affect the annual budget deficit or surplus, except to the extent that any new borrowing attracts interest, and that the Government is bound by strict Crown debt reduction targets so can’t borrow much extra anyway.
Robertson is determined to make his mark as a pioneering Labour finance minister by making Budget 2019 the first to make policy based on the Living Standards Framework that the Treasury has been working on since 2011. Very much in its infancy around the world, few countries have more than a decade’s experience of practically applying ‘‘well-being’’ economics to policymaking.
For example, the backroom boys and girls at the OECD earnestly write about the pursuit of ‘‘eudaimonia’’ as a guiding concept. Defined by Psychology Today as ‘‘a state of having a good in-dwelling spirit or being in a contented state of being healthy, happy and prosperous’’, eudaimonia is a term unlikely to be overheard in parental banter on the sideline of weekend sporting fixtures.
However, this tongue-curling concept is as important a guiding principle for this Government as balancing the books.