Budget must boost wellbeing
Wellbeing is a hot topic right now, in New Zealand and globally. Faced with serious problems such as global climate change and rising inequality, governments everywhere are turning to policies that aim to promote wider visions of personal and community wellbeing beyond the traditional focus on economic growth.
We see this trend in New Zealand. The Government is introducing new policies to address child poverty and environmental damage, for example, and has announced that the 2019 Budget will be called the Wellbeing Budget. It’s a great start. But how do we walk the wellbeing talk? Is it really possible to shift economic policy to promote greater wellbeing? And what is the role of business?
Answers to these questions can be found in a policy framework called wellbeing economics. It is based on an idea introduced by Amartya Sen, for which he received the Nobel Prize in Economics in 1998. The idea is called the capabilities approach to prosperity.
People want to prosper. Every day we make decisions and actively engage in our personal wellbeing, but also the wellbeing of our families and communities. Policy-makers need to understand these motivations and provide policies that harness that energy to create more opportunities for people to lead the kinds of lives they have reason to value.
Like a pair of coloured glasses, we must put on wellbeing shades to look at our economic policies with a wellbeing lens and ask: How can we increase the capabilities of people so that all of us can flourish?
It’s not just governments that ask this question. Community organisations, business enterprises and government agencies all have distinctive opportunities for expanding capabilities for wellbeing, within regions and countries, and also on a global scale.
The question begins to be answered at school, where the New Zealand curriculum is explicitly designed to help students develop capabilities for living and lifelong learning. The Mental Health Foundation promotes five evidencebased ways that are capable of improving personal wellbeing: Connect, Give, Take notice, Keep learning, and Be active.
Businesses can expand capabilities enormously, when markets and firms operate well. This is a key element in the wellbeing economics framework. As BusinessNZ chief executive Kirk Hope recently said: ‘‘When business is going well, it affects the wellbeing of our economy, our environment, our jobs, our communities, our families and our futures.’’
New Zealand is leading the way in wellbeing economics. We always have. This year we are celebrating 125 years of women achieving the right to vote. The Social Security Act of 1938 was world-leading, as was the Accident Compensation scheme introduced in 1972.
New Zealand’s businesses are also taking leadership in promoting wellbeing. Perpetual Guardian has lauded its four-day working week trial for its 240 staff, reporting that staff are more engaged and satisfied and that productivity hasn’t dropped, and making it a permanent option for staff from November. Te Hono is a movement founded by John Brakenridge at New Zealand Merino, where more than 200 chief executives and primary sector leaders are transforming companies from volume to value.
Nevertheless, there are wellbeing issues that we must face as a country. Research by the Treasury in 2014, for example, looked at the wages of the principal earners in households with two adults and dependants. It found that one in four was on a wage below the living wage. This is a major cause of New Zealand’s serious child poverty problems.
The implication is that the Government will not be able to make inroads into issues affecting wellbeing unless it recognises and supports the unique capabilities of business to contribute to flourishing lives. This is particularly important in a country that relies on international trade for its economic prosperity, in a world of increasing global uncertainties.
Consequently, the 2019 Budget must include a strong vision for government and business collaboration that aims to increase value created by private enterprise and support the creation of jobs that pay above the living wage. There were hints of this in the 2018 Budget, but greater detail will be essential if the Wellbeing Budget is to be worthy of its name.
Professor Paul Dalziel is Professor of Economics at Lincoln University. He is lead author of the Open Access book ‘‘Wellbeing Economics: The Capabilities Approach to Prosperity’’, published by Palgrave Macmillan in Great Britain.