Pattrick Smellie: Time to stop scoffing at wellbeing agenda?

Last week's OECD report makes crucial points about the difference between measuring wellbeing and having policies that promote it. Photo / File

COMMENT:

It takes a special kind of masochist to devote most of a weekend to a conference on reform of the Public Finance Act, but later this month that's exactly what a roomful of worthy scholars, bureaucrats and the occasional journalist will do.

Not to mention a few ghosts from the political past. One-time reformist finance ministers Sir Roger Douglas and Ruth Richardson will be among those reflecting on a core piece of legislation dating from the dying days of the Lange government.

The legislation was ground-breaking at the time for compelling the format that all governments should use to report the state of the government's books. It was the forerunner of the Fiscal Responsibility Act. This focus on transparency and uniform reporting is an unsung but vital part of the reason that New Zealand governments now routinely run fiscal surpluses and have low debt while most OECD governments pile up deficits year after year.

However, the conference is not simply a nostalgic weekend for the fiscal policy train-spotters. It will also be where the government lays out another significant, structural step in its agenda to embed 'wellbeing' policies at the heart of government activity.

In the same way that the 1989 Act embedded fiscal rectitude, so the revised system will require "every government to draw a connection between its wellbeing objectives and its fiscal policy, and … the Treasury to report on wellbeing indicators, alongside macroeconomic and fiscal indicators".

If what gets measured gets managed, then improving wellbeing should in theory be as achievable as budgeting for fiscal surpluses.

Giving wellbeing objectives the force of law is also tightly tied to the announcements last week from State Services Minister Chris Hipkins to reform the State Sector Act – another legacy of the fourth Labour government.

It will introduce a new mandate requiring multiple government agencies to band together to tackle complex issues that range across the gamut of policy-making activity. There are already examples from freshwater management to industrial transformation to tackling child poverty.

Whether new law will be powerful enough to break down the patch-protecting risk aversion that runs so deeply through the public service remains to be seen. But it is certainly a call to arms for a more activist and effective public service that directs its efforts to the broad target of 'wellbeing'.

The government's first Wellbeing Budget is attracting international attention. Photo / File

For all that our government's first Wellbeing Budget is attracting international attention, last week's country report on New Zealand from the OECD demonstrates that other countries have much to teach us about how to approach this potentially nebulous ideal.

In particular, the report makes crucial points about the difference between measuring wellbeing and having policies that promote it.

"Wellbeing measures in themselves say nothing about the policy settings necessary to improve outcomes," the OECD warns. "They provide diagnosis without prescription."

A "major research agenda" is required in New Zealand to decide what to measure and how to be sure that changes in those measurements reflect policies. The May Budget included an extra $20 million for the Treasury to deepen its Living Standards Framework.

The OECD suggests that research agenda "might benefit from initially being focused around a small set of priorities" and on "intermediate outcomes, which respond fairly rapidly to changes in policy systems but can be linked empirically to final wellbeing outcomes".

Identifying such targets "may prove pivotal" to whether the wellbeing approach takes root firmly not only in policy-making but also in the public imagination, where its political longevity will be determined.

The OECD raises concerns LSF, with its 64 measures, and the Stats NZ Indicators Aotearoa exercise, with 99 wellbeing measures, risks information overload while still missing some areas of wellbeing, and identifies other wellbeing indicators that aren't linked to either.

"The lack of coordination risks creating confusion among stakeholders and the research community tasked with generating the evidence base," the OECD warns.

It cites the previous government's so-called 'social investment approach' – a wellbeing approach by a fiscally flintier name – for its use of just 10 so-called 'mid-layer' indicators in its Better Public Services programme.

For example, it used rates of rheumatic fever in low income households as a red flag indicator for housing, income, health, education and welfare needs.

Changing public finance and state sector legal frameworks to drive "real change in civil service and parliamentary practice" will work best when the wellbeing agenda identifies "intermediate outcomes that would both respond to policy intervention over a reasonably short period".

Doing so makes it "possible to galvanise cross-sector teams through the momentum built" to achieve "real-life results of value to people".

That is the government's challenge. The institutional and legislative elements of the wellbeing agenda are now taking shape and one Budget has been assembled under a new regime that rewarded more joined-up thinking between minister and their agencies.

The quality of leadership and policy-making, along with the simplicity of its high level measures will be critical to its success.