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Govt ponders enduring wellbeing measures, new oversight agency

Wednesday 12th September 2018

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Embedding specific wellbeing indicators into Public Finance Act may provide short-term certainty but could prove less durable if those yardsticks change over time, the government says.

The Labour-led coalition is planning to incorporate wellbeing measures in the 2019 budget, but also wants to see them become a cornerstone of the Crown's long-term planning to complement and inform the government's economic targets.

Treasury is working with Statistics New Zealand to build a broad framework to measure wellbeing, but the government is not sure including those measures specifically in the Public Finance Act would be effective.

"This would embed a specific view on what matters for wellbeing," according to a discussion document issued by Finance Minister Grant Robertson and his associate James Shaw today.

"It would provide the most certainty about what is reported, reflecting our understanding today about how to best measure wellbeing, using currently available data. It is also the most inflexible option and potentially the least likely to endure if future governments find that the prescribed set of indicators is too constraining for how they wish to present and discuss their wellbeing objectives."

Other options could include: legislating a narrower set of core indicators, which are more likely to endure; giving Treasury discretion to select the best indicators and report against them; or limit that discretion by specifying the process Treasury must use for selecting indicators or by requiring a series of indicators across a range of domains - such as environmental or social measures.

"Without legislative change, there will be no enduring requirement for future governments to consider wellbeing objectives explicitly within the annual budget cycle, or for the Treasury to report on wellbeing indicators," the document said. "The proposed changes are expected to improve both transparency and accountability by requiring successive governments to draw a connection between their wellbeing objectives and their fiscal policy, and for the Treasury to report on wellbeing indicators, alongside macroeconomic and fiscal indicators." 

The paper is among a string of initiatives the government is undertaking to try and improve the focus of government agencies on long-term community wellbeing including quality of life, and the health of the environment and the country's natural resources.

Future governments will be required to report on child poverty in future budget documents. Treasury and Statistics New Zealand are developing a framework to measure wellbeing, called Indicators Aotearoa New Zealand, or Ngā Tūtohu Aotearoa. Robertson wants to have some of those measures incorporated into next year's budget. 

The government is also looking to establish a new independent fiscal institution (IFI) to monitor performance against government fiscal strategy and to provide comment on Treasury forecasts and long-term fiscal sustainability and risks. It could also provide costings to political parties for pre-election policy formation and government formation.

In a second discussion document issued today, the government is seeking feedback on whether such an institution would improve the country's fiscal framework, what its mandate should be what type of structure it should have.

The paper notes that 27 of 36 OECD states have similar bodies, although their structures and mandates vary. It observes that New Zealand is a small country and the skills required to operate an effective IFI are likely to be limited domestically. Establishing a new agency also has resource implications, it noted

Structural options for such a body could include running it from within Treasury, to setting it up as an independent Crown entity or establishing it as a new officer reporting to Parliament.

The wellbeing consultation is open until Oct. 12. Submissions on the independent fiscal institution close on Oct. 24. 


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