Finance Minister Grant Robertson promises to deliver NZ's first 'wellbeing' budget

Finance Minister Grant Robertson. Photo / File

Finance Minister Grant Robertson has promised to deliver New Zealand's first "wellbeing" budget, telling a Productivity Commission meeting in Wellington that success as a country must include a social dividend and not just be judged on gross domestic product.

"Our focus on lifting wellbeing will require a different approach and different measures of success," Robertson said, according to his speech notes.

"We want to take a broader view of success and move beyond simple measures such as GDP, which, while an important measure of economic output, does not tell the full story of peoples' wellbeing."

Last week the Reserve Bank updated its forecasts, projecting GDP growth of 2.9 per cent in the year ending March 31, picking up to 3.3 per cent in the following 12 months. The bank cited accommodative monetary policy, a high terms of trade, government spending and population growth.

Robertson said the Budget on May 17 will take into account the Treasury's Living Standards Framework. The Treasury says some people used terms such as wellbeing and happiness in the way it uses the term living standards.

The minister said the framework measures the impact of policies on four capitals: human, social, natural, and financial/physical. "By placing wellbeing at the heart of what we do, we will be able to measure the extent to which our policies and investments are making real improvements to peoples' lives."

On productivity, Robertson said New Zealand's average 2.8 per cent GDP growth in the past 20 years was better than the OECD average, but more than half that growth reflected increased labour and hours worked as opposed to more being done in each hour.

"The portion of that growth which can be attributed to getting more from each unit of labour in producing goods and services has been 1.1 per cent of that 2.8 per cent over the past 20 years – that is, we are one of the weaker performers in the OECD," he said.

"Labour productivity in New Zealand – GDP per hour worked – is around 30 per cent below Australia."

Robertson said it was important New Zealand went through a "just transition" as it faced a rapidly changing world to ensure "affected industries and communities are given the support to find new sustainable growth opportunities," he said.

That included the government's commitment to a net zero carbon economy by 2050.

He cited the establishment of an Independent Climate Commissioner to establish goals and targets.

Under Labour's coalition agreement with NZ First, the government is targeting an increase in spending on R&D to reach 2 per cent of GDP in 10 years. "Officials say that this is an ambitious goal. We believe this can be done, with the government incentivising such vital work by the private sector," he said.

Minister for Research, Science and Innovation Megan Woods has begun work on overhauling New Zealand's R&D regime, he said.

Robertson called for "a renewed social partnership between businesses, workers and the government work, and cited Air New Zealand's "high performance engagement" model, which involved workers in strategic decisions and change processes, and had helped lift productivity and create a more harmonious workplace.