Mai Chen: Time to harness the economic tiger

2013 may be the year of the Life of Pi - harnessing the Government. Photo / AP

It is becoming clear that we need to be measuring the performance of government very differently.

We need to broaden the criteria against which we measure the progress of Government ... to include those non-material things, like happiness and equity. When a man called Barack Hussein Obama was elected for a second term as President of the United States, and used his inaugural speech to talk about individuals being happy, and being led by the Government to be happy, we can be confident that he has his finger on the pulse of an international trend.

Happiness and the sustainability of our economy are not just about income or GDP, but about non-material factors which contribute to our wellbeing, like safety, trust in others, education, the environment, civic engagement, health, and life satisfaction.

Obama is riding on the back of a great shift in international thinking about how we measure economic development and social progress, towards broader, multidimensional measures and away from conventional measures like income and GDP, which alone cannot paint an accurate picture of human wellbeing.

Over summer, in addition to moving to Auckland with my family, I met Dr Kerry Spackman and read his new book The Ant and the Ferrari. In his book, Dr Spackman recounts the horrific story of a brilliant Asian student violently assaulted in public, where no one came to his aid despite many bystanders except for those who robbed him of his wallet and the other valuable contents of his backpack. Spackman talks about the Moral Scale according to which we make decisions from Level 1= caring about ourselves, through to caring about important people in our lives, caring about people we know, caring about people we don't know, through to level 5 = caring about society.

None of us want to live in a society with this kind of senseless and selfish violence. But how do we ensure that we, as individuals, as businesses, and as a country through the Government which acts in our collective interest, make decisions which are not selfish, but operate to further the public interest consistent with level 5 decision-making? What do we think is in the public interest anyway?

Over summer I also watched the movie Life of Pi, and see evidence of our own tigers in NZ - things that could tear us apart if we are not smart, but that could also be the engines of our salvation if we can only learn how to harness them. For example, the global economy, acute environmental challenges, and the looming scarcity of resources such as water, as NZ society becomes more diverse, it is the "us and them" which creates fear and discrimination.

One of the greatest influences on our individual and collective thinking and behaviour is Government - it represents 40 per cent of the economy, is advised by thousands of civil servants who are paid for with our taxpayer dollars and also makes other spending decisions using the same; it creates, reviews and develops the policies, laws and regulations which govern and guide our behaviour.

So what indicators are we using to measure the performance of Government, given the influence it wields in shaping the society we live in? Will these measures give us the information we need to assess whether a Government is acting in the public interest or not? How do we keep politicians honest?

Do the measures we use actually match up with our experience of life on the ground? As former French president Nicolas Sarkozy has said: "Nothing is more destructive than the gap between people's perceptions of their own day-to-day economic well-being and what politicians and statisticians are telling them about the economy."

Our measures are important, because, as leading development economists Sen, Stiglitz and Fitoussi have noted: "What we measure shapes what we collectively strive to pursue - and what we pursue determines what we measure ... [and in this way debate on the appropriate measures of progress] may have a significant impact on the way in which our societies look at themselves, and therefore, on the way in which policies are designed, implemented and assessed."

In New Zealand, Treasury recently released a Living Standards Framework to guide its policy advice to government, which in addition to taking account of the usual suspects like impacts on income and GDP, also includes non-material factors like rights and freedoms, wellbeing and happiness, ethical concerns, the degree of trust in a society, the ability of people to work together for common purposes, efficiency and equity, sustainability of wellbeing for current and future generations, and civil society.

But frameworks are of little use if they lack public buy-in, and if governments do not commit to using them in policy and law-making and in public decision-making, and agree to have their performance measured against them.

When we put this together with the key trend of increasing expectations of accountability and transparency of government, and of business, which I identified in the Public Law Toolbox, it becomes clear that we need to be measuring the performance of government differently.

We need a Public Interest Index, led by an apolitical organisation, to further what Sir Owen Glenn has called a New Zealand Inc approach to our economy and government.

At a high level, it requires New Zealanders to agree on a vision for our society - the kinds of things which make New Zealand a place we want to live and raise our children. But the hard edge also requires that we measure our progress towards achieving that vision, and hold Governments to account on their performance against such measures.

So 2013 may be the year of "The Life of Pi - Harnessing the Tiger (Government)." The fresh thinking for 2013 is that we need to broaden the criteria against which we measure the progress of Government in achieving the public interest, to include those non-material things, like happiness and equity, which are critical to our future sustainability and wellbeing. Policies are needed across the economic, social and environmental sectors to achieve these goals. This is a particularly important year for influencing both central and local Government, as political parties work on their manifestos in preparation for the 2014 general election, and as local politicians look towards local body elections later this year.

That is why Dr Kerry Spackman will be announcing the Knights Institute today to lead the new thinking needed to action the Public Interest Index.

Watch this space.

Mai Chen is a partner in Chen Palmer and Adjunct Professor at the University of Auckland Business School.