Well-being from the centre of government and well-being “on the ground”…

The Leaders Integrity Forum in late November was fascinating. We had central and local government representatives, each talking about the fundamental importance of well-being to New Zealanders but taking quite different perspectives.

John Ryan chaired the session, suggesting that the changes being discussed might be looked back on as the moment that New Zealand took a significant step forward in terms of what we measure and what we officially value – an initiative as much about hearts as it is about minds. Noting that the move is towards reporting on well-being, John’s view was that this shouldn’t become a compliance exercise; instead it’s a real opportunity to better measure how we’re doing as a country.

So, we had Tim Ng from the Treasury making the case that well-being is essential to our economy and therefore worth valuing and measuring – hence the Living Standards Framework and plans for a well-being budget in central government. It’s all about better outcomes; a healthy, productive population enjoying high employment rates is good for the nation’s economy.

Why does this matter? Because there’s more to a thriving nation than GDP. As well as our economic measures, the Treasury has been working on a framework for measuring all the different dimensions of life that matter to New Zealanders and contribute to our quality of life – the state of our environment, our families, education, the arts and culture, sports, as well as our social capital (the rules and norms of behaviour that bind us as a society) and our resilience.

The Treasury’s work and policy advice centres on value for money, and the Living Standards Framework is an effort to be clearer about what that means. What do New Zealanders value, what dimensions of our lives matter more to us than others? How do we, as a nation, manage the resources that we have to support our well-being and how do we protect them?

For the Treasury, this makes a big difference to the advice given to the Government about prioritisation. For government departments, it should mean proposals for funding that are coherent, use a common language about well-being, are transparent, and are supported by evidence – making it obvious how the decisions the department is making and the actions it is taking will improve outcomes for New Zealanders.

And for Ministers, making policy decisions involves making trade-offs, and proposals that are clear about the effects on different aspects of well-being help support Ministers to make better decisions.

The Treasury is clear that this Living Standards Framework will survive changes in government only if it’s valued and useful, which means putting a lot of effort into getting it right. After consultation feedback, Tim and his colleagues are working hard to make sure the well-being framework better represents children’s well-being, better reflects te ao Māori, and better captures New Zealand’s unique cultural identity.

The challenges Tim and his colleagues are grappling with include translation (making it all make sense to people), evidence (how to prove a connection between an intervention and the outcomes), and durability (how to make sure this framework is credible, useful, and valued enough to last for decades rather than years).

Meanwhile, in the local government arena, we had Malcolm Alexander from Local Government New Zealand making a case for well-being as inextricably connected with strong local democracy.

Councils have long been considering well-being; the Local Government Act 2002 originally required councils to promote the well-being of their communities. Although this emphasis was removed in subsequent amendments to the Act, the current government is changing the Act again so that the role of a council is to promote the social, economic, environmental, and cultural well-being of its community.

Given this experience in thinking about and planning for well-being, Malcolm advocated for more significant change. On behalf of Local Government New Zealand, Malcolm argued that the current system limits New Zealand’s growth. Rather than continue with the trend toward increasing centralisation (with local government responsible for less and less), Malcolm argued that our nation’s future well-being would be rosier if we did what other countries do and empowered local democracy.

Other countries have quite different patterns of money allocation. Malcolm shared some OECD data showing that, on average, countries have central government managing 46% of a country’s total public spending. In New Zealand, it’s 88%. In Switzerland, which has a solid economy and high levels of well-being, it’s 13%. So in Switzerland, local government is managing 87% of the whole country’s public spending – and here it’s 12%. In Malcolm’s view, central government’s lack of trust in local government is disempowering communities and limiting the nation’s potential.

Reference was also made to a recent publication about how fit for purpose New Zealand’s government might be. The data Malcolm shared shows that in 1900, central government was collecting 7.1% of the country’s GDP in tax, and in 2017 the figure was 29%. In comparison, local government’s figure back in 1900 was 1.8%, and now it’s 2.1%.

Malcolm’s point was that New Zealand is highly centralised, and the income from taxes is largely given to central, rather than local, government to spend.

So how does an increase in the money and authority given to local government improve well-being? Because if you tax people locally, you have to provide an environment that they want to live in – which means taking good care of their wants and needs, a healthy environment, and a strong local economy. If councils can’t provide that, people will move.

For the record, Suzanne Snively (the chairperson of Transparency International New Zealand) took my breath away when she opened the meeting by telling us that corrupt practices account for 35% of the cost of doing business in Malaysia. Talk about a powerful reminder of how important it is that we protect the largely clean practices we have here…