Budgeting happiness: New Zealand's approach


New Zealand’s Labour coalition government has created the world’s first ‘Well-being Budget.’ The 2019 budget marks a historic shift in how we view economic growth; it is only a means to an end and no longer the end goal for development. Considering humanity’s gravest challenges, New Zealand shows how governments can and must play a crucial role in ensuring the well-being of their people and the environment. Indicators such as Gross Domestic Product (GDP) have long played a hegemonic role in determining how governments set out their budgets. Yet, along the way, states have lost sight of who this growth is for. By seeking to generate not only financial capital but human, social and natural capital, this budget places New-Zealand back on track. It is a matter of urgency that other countries follow suit.

The budget outlines five key areas of investment: child poverty, Maori and Pacific people, mental health, economic development, and environmental sustainability. What stands out is the investment in mental health. With a cash injection of $1.25bn, this is a vital first step in helping tackle the highest suicide rate of all OECD countries, assisting the 1 in 3 New Zealanders suffering from a mental health condition. It is sobering to note how ill mental health is escalating in parallel to increasing economic growth in a country which is rated 8th in the World Happiness Report. Furthermore, a $320m package to address family and sexual violence is crucial in tackling the highest rate of domestic abuse in the western world. Although opposition leader, Simon Bridges, dubbed the budget ‘botched’ and said it does not serve the real needs of New Zealanders, these facts prove otherwise.

Economics professor Paul Hansen has commented how economic growth must always take precedence as it allows for government spending to be possible. Yet, this completely dismisses that this level of spending is necessary to ensure future financial growth and stability. Similar economic security cannot be guaranteed when the environment is not protected, and poverty and mental health levels are free to spiral out of control. Moreover, with $200m helping fund more apprenticeships and $300m to assist start-up businesses, it seems that growth is not a thing of the past, but is part of a bigger picture. Ultimately, it boils down to a matter of perception. Some view this budget as a frantic spending-spree; others view it as a series of wise investments. The latter appears to be based on facts and the former seems to be rooted in political ideology.

With the rise of populism, this budget has never been so timely. Whilst the budget takes an evidenced based approach for addressing people’s needs, populist parties appeal to emotions and anti-immigrant sentiments to appear as though they represent the people. Finance minister, Grant Robertson puts it even better saying that “this gap between rhetoric and reality, (and) between haves and have-nots...has been exploited by populists around the globe.” In light of the Christchurch bombings, it has become even more necessary to neutralise the populist threat, with this budget effectively helping to do just that.

In countries like the United States, a budget such as this is needed more than ever. A report by the World Economic Forum stated that, although the US has the largest economy in the world, this has come at the expense of a ‘weakening social fabric.’ The economic model of tax cuts and private enterprise demonstrates how after a certain point, growth does not mean progress. Carol Graham, an economics professor, pertinently terms this phenomenon as a ‘progress paradox.’ New Zealand offers a way out of this paradox.

Thus, Prime Minister Ardern and her government have proved that states no longer have to be servants to economic growth. Improving well-being is the next stage of development. Hopefully, other states will see the light that New Zealand has started to shine.

Image - Unsplash

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