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Public Health

The NZ living standards framework and well being budget

Note of seminar from Dr Tony Burton on putting the NZ well being budget into practice . The Living Standards Framework (LSF) has been developed by the New Zealand Treasury to consider the collective impact of policies on intergenerational wellbeing. This presentation will give an overview of the Treasury’s approach to understanding and measuring living standards and how this relates to policy decisions and the challenges in implementing the new approach.

The seminar focused on the question of how NZ govt had developed and implemented the NZ Treasury led process of building well being into a core part of budget processes

My take on key points

A. Background

1) The state of well being policy

Why hasn’t the academic work not yet made a difference to the way govt operates

Academic narrative is in the space of high end Aston Martin

What we probably need traction wise = robin reliant

2) Beyond GDP is the goal

But don’t think GDP is simplistic, it is not simple

GDP Designed with specific policy problems in mind

Basis of national accounts

720 pages of detailed tec guidance

Tec process, run by a technically competence international organisation

Part of the institutional framework (OECD)

Apolitical

3) 4 attempts to build well being in to processes of govt in NZ

2002 – based on Heckman. Lifecycle. Too abstract

2011 – Build in the OECD approach. Sen, Stieglitz, Fitoussi for NZ. Low capability in govt actors and immature international context

2012 – the pentagon. High level objectives based on tax review

2014 – blend of pentagon and OECD

B Integrating the thinking into the standard operating procedures

1) What are the Goals

Focus on the REASON for committing money, not the money

Economic growth

Sustainability for the future

inequality

Growing social capital

Reduction of macro econ vulnerability

2) Sorting out what we ARE doing

A number of elements

Worldview – overarching philosophy. Sen. Capabilities approach

Elements – conceptual elements of well being framework, derived from the worldview

Indicators – what measures to assess

Data – technical definition and data set for the indicators

Single indicator vs multiple metrics. Sorting out what we are NOT doing. Metrics to reflect. Macro, meso and micro measures. Same to policy

3)Focus on The 4 capitals

Natural

Social

Human financial and physical

4) Institutional support

Influence the hearts and minds and systems of individuals in all levels of government. All of them.

Hearts and minds

And how does the transaction work in terms of daily grind

Key, absolutely key, is institutionalising – big structural long term changes in the way government operates, but done incrementally.

5) Focus on specific things and cohorts, but…….

What impact, what cohorts. Need to describe

Currency of what counts as well being is far more difficult and diffuse to define than say discussions about tax and benefit system

Environmental sustainability is exceptionally difficult to define and conceptualise

Population impact is a key concept

6) Build wide appeal

The pentagon reads like a mission statement of a left of centre think tank

Needs to be institutionalised

Also needs a narrative that appeals to right of centre, and appeals to civil service

Talk to people who don’t agree with you. Especially if you want this to be part of institutions.

Classic mistake of many – talk to your usual crowd.

Break out of this

7) Ensure Credibility

Engage with public, test ideas, incorporate feedback

Actively draw in critics. Talk to people who think GDP has answered all questions

Identify where work has been done, build on it

Be up front about gaps and what we don’t know

8) Link the work needed and the goal to someone’s day job

Initially HMT fiscal modelling, but on change of govt it was core budget

Clear that key problem is efficiency of what govt does, and improving how agencies work collaboratively

think hard about the mission, the strategy and the task

Always a challenge to turn thinking into changing someone’s day job

9) Who’s job are you trying to change

What systems and processes are you trying to change

What level, what level of ‘interference’ or disruptive innovation are you trying to impose on different actors across govt, at what level

What kind of “evidence” is appropriate for the job at hand

This process needs to be managed.

Transformational leadership. Are you clear what it means.

We talk on this

But people want to know what tasks I need to do tomorrow. People default quickly to what they know – silo and transactional

10) Living Standards Framework

Framework aimed at improving the quality of the Treasury policy advice

Frame in OECD analysis and amend it to NZ context

3 question – what are current outcomes, will these outcomes be sustained or improved, trajectory changing interventions what are they

Living Standards Framework

11) Build into institutional mechanisms

Select committees

Scrutiny

Cabinet decision making

Opposition politicians

12) Incorporating into a budget process makes it really dull, but institutionalises

Priorities – cabinet agreed, informed by LSF process

Bids – identify impacts of well being, CBA model

Budget docs – sets out how budget supports well being objectives

Living Standards Framework – LSF – underpins all

NZ Treasury says what matters for well being

13) five priories for 2019

Low emissions

Digital participation

Maori – esp education, skills and opportunity

Child poverty, DV, child well being

Supporting mental well being

C. Other considerations

1. Risks inherent in the process

Overselling state of knowledge

Capability – public service needs wider capability

Multiple interpretation of well being

Service line agencies see wellbeing as a justification for what those depts currently do. Seek to change the trajectory

Credible use of international institutions (OECD) – technical leadership independent of political pressures

Get the measurement and data straight

Strong steer on the broad approach to intervention, principles on which it is based

2. Aggregate across different aspects of well being

Live satisfaction vs PM10. Can’t really. CBA might be able to do this, but in the end a political process

3. Lots of different people think this will solve all their problems tomorrow

Huge range of competing demands on govt, can’t all be addressed

This becomes a mechanism on how to prioritise the institution of government to achieve socially useful goals, esp those that are not well covered by GDP and traditional measures of progress.

D. Where next

In many respects it is quite simple, focussing back on the purpose of the money, not the money (Dave Buck)

Potentially the most powerful thing in the process would be getting Treasury to change their CBA modelling approach – a hard example of changing the questions we ask.  Certainly something that would feel like a big deal in this country – I have the sense that the current Treasury understanding of value is problematic in a range of ways.

Maybe it goes without saying there’d be a need to change the accounting system – longer term, explicitly quantification of externalities over generations and across sectors

 

Need to address the relationship between finance and the rest of the govt, nationally and locally. Often locally it doesn’t play out in a way that’s analogous to govt depts. there is no CBA approach that we apply to spending decisions. Maybe we should but the technical, method and capacity challenges are large.

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