A Wellbeing Budget in name only

The recent well-being budget was a profound disappointment. It will weaken the cause of those well-intentioned campaigners who are fighting for improvements in the quality of life of all Kiwis. Why? Since it did little to strengthen the factors which actually support well-being in this country.

New Zealand has long ranked highly in terms of national well-being. For many years, it achieved first place out of 149 countries on Legatum’s “Prosperity Index”, falling to second place in 2018. It has been consistently ranked as a top ten country in the World Happiness Report.

On the other hand, New Zealand rates poorly in terms of productivity growth. The result has been a large gap in GDP per capita opening up over the past several decades between this country and Australia, as well as the US.

In other words, the economy has performed like a B-list musical act, political rhetoric from John-Key-types notwithstanding. But in terms of measured well-being, the nation could claim “rock-star” status, even on the world stage. The characterization of NZ as a place that does well in the financial stakes, and yet has neglected quality of life, is just plain wrong.

However, the country is at a cross-roads. The living standards of many Kiwis now lie under severe threat. The nation will likely find itself, in a decade’s time, as still having weak productivity growth, but combined with lower levels of well-being than we have enjoyed in the past.

The reasons for these trends are growing. First, commuting times and traffic congestion, which are associated with reduced happiness and increased stress, are rising in cities like Auckland. Low paid teachers are finding it hard to get to their jobs on time. Kiwis now spend longer at work than the OECD average to make up for their low productivity, a good way to depress well-being, if the research of a Nobel Prize winning psychologist is to be believed.

Second, an important component of the quality of life in Legatum’s “Prosperity Index” is the “right to one’s own person” and “freedom around what information they can publish and consume”. If anything, the new government has moved to reduce these kinds of freedoms. There are many studies linking higher well-being with higher levels of political and civil liberties.

Third, a key factor upholding New Zealand’s high well-being has been its number one world ranking in terms of “social capital”, which refers to people having trust in one another, having the support of friends and family, volunteering their time for community work and engaging in charitable giving.

Consequently, maintaining this position should be a priority. So how come the government scrapped the benefit sanction on solo mothers who would not name the father of their child? Whatever the moral argument behind this change, there is a powerful well-being argument that government policies should strengthen the family unit, not weaken it. The budget also dis-incentivises school donations.

Fourth, home owners report themselves as being happier across many surveys. However, our political classes have been unable to fix the housing problem. National didn’t see it coming and Labour can’t seemingly effect a change. The well-being budget comes at a time when home ownership rates are falling.

Fifth, achieving a higher quality of life depends on the strength of our health system. Yet our politicians are unable to find a way to meet expected future health-care costs, due to an ageing population. How can “corporate welfare” subsidies be made to businesses in a budget that was meant to focus on health and well-being? Those funds would have better been directed into new health savings accounts for every Kiwi.

In summary, it turns out that NZ has got along in the past as a happy place, even though our GDP per capita has not been impressive. But the times are changing. A drop down the well-being league tables is occurring. It may end up mirroring NZ’s drop in the GDP per capita rankings that began in the 1970s.

The government’s well-being agenda should build on the country’s strengths. It should sharpen the incentives of private individuals to maintain the social fabric of the nation. It should uphold the interconnectedness and trust that fellow Kiwis have found in one another, together with the freedoms they enjoy. It should resurrect our eroding status as a spacious and affordable country which is easy to travel around. The budget achieved few of these things.