SEP 2019  
Special Feature
Sustainable Budgetary Policies for Well-Being: The Kiwi Way

The New Zealand government presented its novel ‘well-being budget’on May 30, 2019, shifting the focus away from economic growth to include quality of life and public well-being. Rather than structuring the budget entirely around gross domestic product (GDP) and financial issues, the well-being budget seeks to measures success against a set of human, social, natural, and financial metrics, ‘which together represent economic capital’.

The budget requires that any new spending must advance one of five government priorities and all new spending should go towards five specific well-being goals: bolstering mental health, reducing child poverty, supporting indigenous people, moving to a low-carbon-emission economy, and flourishing in a digital age.To measure progress towards these goals, New Zealand will use 61 indicators tracking everything from loneliness to trust in government institutions, alongside more traditional issues like water quality.

The well-being budget is founded on the idea that financial prosperity alone is not a sufficient measure of the quality of life.The Well-being Budget’s intent is to focus beyond just the normal economic and fiscal measures that a budget would normally be judged against, and to use the Treasury’s ‘Living Standards Framework’to inform the Government›s investment priorities and funding decisions. Simply, this is about measuring and reporting against a broader set of indicators to show a more rounded measure of success, rather than just focusing on GDP. The ‘four capitals’in the Living Standards Framework - natural, social, human, and financial/physical - are central to this new way of measuring.

Natural Capital: All aspects of the natural environment that support life and human activity. It includes land, soil, water, plants and animals, minerals, and energy resources.

Human Capital:The capabilities and capacities of people to engage in work, study, recreation, and social activities. Includes skills, knowledge, and physical and mental health.

Social Capital: The norms, rules, and institutions that influence the way in which people live and work together and experience a sense of belonging. Includes trust, reciprocity, the rule of law, cultural and community identity, traditions and customs, and common values and interests.

Financial/Physical Capital: Financial and human-made (produced) physical assets, usually closely associated with supporting material living conditions. Includes factories, equipment, houses, roads, buildings, hospitals, and financial securities.

In order to quantify social and environmental concerns, the New Zealand  Budget has taken  a more holistic approach to measuring well-being. It developed the Living Standards Framework  (LSF) as a practical set of meaningful well-being indicators to guide policy advice. Overall, there are 12 domains that describe and capture how New Zealanders experience well-being.These are: (i) civic engagement and governance; (ii) cultural identity; (iii) environment; (iv) health; (v) housing; (vi) income and consumption; (vii) jobs and earnings; (viii) knowledge and skills; (ix) time use; (x) safety and security; (xi) social connections; and (xii) subjective well-being.

Ideas about measuring and promoting well-being aren’t new. Frameworks are already in existence, while some nations, including Bhutan and the United Arab Emirates, have already incorporated them into government policy. The UAE has a Minister of State for Happiness and a  National Programme for Happiness and Positivity. Its agenda is based on three pillars: inclusion of happiness in the policies, programmes and services of all government bodies and at work; promotion of positivity and happiness as a lifestyle; and development of benchmarks and tools to measure happiness. Bhutan measures  Gross National Happiness over nine domains: psychological well-being, health, education, time use, cultural diversity, good governance, community vitality, ecological diversity, and living standards. It is used to support policy-making and track the effectiveness of policies over time.

The ‘well-being’budget approach  prioritizes  well-being over economic growth. It makes a decisive  shift  from GDP as the sole indicator of prosperity. GDP is a good measure of economic growth but doesn’t reflect about the quality of the economic activity or the well-being of  people. Also, GDP doesn’t tell us whether people are struggling to meet basic needs or if everyone has access to health care, healthy environment, and education. Neither does it give insight into whether people have social connections, feel safe.

Economic indicators, notably GDP, do not track well-being. A correct economic assessment is not just financial costs and benefits but  also environmental and social costs, including distributional issues, because these things all bear on well-being. It offers no insight into quality or state of environment or renewable sources. GDP  has many other shortcomings. It  only takes into account measured market activity. GDP excludes unpaid work. It excludes activities that occur outside the market. This means, for example, work performed by rural women in farming, rearing cattle is excluded from measured GDP. However, if you hire a person to do the same job it will add to the GDP.

There are also other pitfalls in GDP data. There’s no negative value assigned to the likes of pollution with ‘good’activity counted in the same way as ‘bad’. For example, the pollution generated by a factory’s operation doesn’t subtract from GDP, but the output produced by that factory adds to GDP. New innovations such as water harvesting which add value to an economy in non-traditional ways are not accounted for in official GDP statistics. For example, value generated in terms of  use of resources by the switch away from non-renewable source of energy to renewable, or the switch away from using printed map books which use wood pulp to Google Maps on a smart phone.

The other major drawback  of GDP is that it captures  flow activity in the economy, not the stock of resources in an economy. The flow of activity over a certain period of time (as measured by GDP) can add or subtract to the stock of resources available over time. This stock of resources can then influence living standards in the future. For example, the destruction of forests or buildings in a natural calamity  has no impact on GDP but reduces the stock of resources available in the economy. In contrast, rebuilding activity following the calamity will add to GDP for a time.

New Zealand has taken an important step. Other nations, including India, should take a cue or two from New Zealand. 

Dr Kartikey Hari Gupta obtained PhD degree in Law from Kumaon University. He practices as Advocate in High Court of Uttarakhand. In the past, he has authored books on sustainable development.

© TERI 2020

Nominations open for CSP Today India awards 2013

The inaugural CSP Today India awards ceremony takes place on March 12, and CSP developers, EPCs, suppliers and technology providers can now be nominated.

CSP has made tremendous progress since the announcement of the Jawaharlal Nehru National Solar Mission in 2010. With Phase I projects now drawing closer to completion, the first milestone in India’s CSP learning curve is drawing closer. CSP Today has chosen the next CSP Today India conference (12-13 March, New Delhi) as the time for the industry to reflect upon its progress and celebrate its first achievements.

At the awards ceremony, industry leaders will be recognized for their achievements in one of 4 categories: CSP India Developer Award, CSP India Engineering Performance Award, CSP India Technology and Supplier Award, and the prestigious CSP India Personality of the Year.

Matt Carr, Global Events Director at CSP Today, said at the opening of nominations that “CSP Today are excited to launch these esteemed awards, which will enhance the reputation of their recipients. I am particularly excited to launch the CSP India Personality of the Year award, a distinguished honor for the industry figure deemed worthy by their peers.”

All eyes will be on the CSP Today India 2013 Awards when nomination entry closes on February 4 and the finalists are announced on February 11. The awards are open to all industry stakeholders to nominate until February 4 at or by e-mail to [email protected]

Matt Carr
+44 (0) 20 7375 7248
[email protected]