While new governments often come in with lots of changes to individual policy areas, that all have implications for our sector, our current government actually plans to change the goal-posts - and in a (potentially) good way.
Snuck in amongst announcing the new Child Poverty targets, Prime Minister Jacinda Ardern also announced in her first major speech of the year that by the 2019 Budget, the government would introduce a tool and framework to include wellbeing of New Zealanders and not just report on economic measures, like GDP.
While this might sound like a boring bit of bureaucratic tinkering only of interest to public finance geeks, it has the potential to shake the foundations of public policy. After all its a well-established principle that any organisation does more of whatever it measures - for better or for worse. It is perhaps no coincidence that she gave this speech at an nonprofit (St Peters, Wellington) to an audience filled with people from our sector.
And for years (internationally) we have been measuring the wrong thing, with our GDP fetish. As a recent UK blog asked: what does heroin, a ‘paper’ cup that wont biodegrade for 500 years and Kim Jong-un’s smart new collection of intercontinental ballistic missiles have in common? They all contribute to growth of GDP.
- GDP only measures things that are bought or sold, so doesn’t include really important things like voluntary work, housework and caring, increased (or reduced) leisure, etc.
- And it counts everything that is capable of being bought or sold - so spending more on prisons, fatal car crashes, or oil spills all add to our measures of ‘progress’.
- Its over-simplified averages hide how the wealth is (or is not) shared out. A very small elite may be reaping a disproportionate share of the growth, and the vast majority of citizens can be no better off in a highly “successful” economy measured by GDP.
- And the price paid is the only measure of progress, so a bloated US healthcare system with lots of inefficiencies, inflated by private profits, parasitical insurance companies and unnecessary procedures and litigation means healthcare makes up a whopping 17% of GDP, though America is lower on most measures of health status than New Zealand, where healthcare adds less than 10% to GDP.
- And perhaps most bizarrely of all, it doesn’t take into account using up or depleting natural assets. The value of minerals dug up and sold add to GDP, but the fact that we have lost them forever isn’t recognised. The loss of clean air or clean rivers is invisible to GDP. Its almost like only worrying about how much you spend and not caring whether you are running down your savings in order to do so!
Criticism of this crazy system is not new. In fact, one of the first people to put this issue on the international stage in 1988 with her classic book: “Counting for Nothing: What Men Value and Women are Worth” was the young Kiwi, Marylin Waring. And a fascinating article by two more kiwis, Caroline Saunders and Paul Dalziel, updates what has happened since then, in “Twenty-Five Years Counting for Nothing: Waring’s Critique of National Accounts”.
Nor is this a marginal ratbag interest. For some years now august international institutions like the OECD and the International Monetary Fund have been pushing member states to take a broader view of progress. In particular the OECD has developed a sophisticated Compendium of Well-Being Measures , which probably give us the best preview of the kinds of indicators the special unit set up in NZ Treasury might come up with.
Take note: done well, this could have a really big impact on public policy, with big implications for our sector, which may as well be called ‘the well-being sector’.