The Treasury plays a key role in improving State sector performance and impact on New Zealanders’ wellbeing. This means we have a role to play in supporting the wider public sector response to the Government’s wellbeing approach.
The current Government has clearly signalled that it wants to embed a wellbeing approach across the public sector. The Minister of Finance has identified three things that are fundamental to the Government’s wellbeing approach:
- Moving to broader measures of progress and of impact;
- Consideration of long-term and intergenerational outcomes; and
- A whole-of-government approach.
The Government has asked the Treasury to use its Living Standards Framework (LSF) to support more robust wellbeing analysis across the public sector. The Treasury has undertaken a range of activities focused on embedding wellbeing in the public sector:
The Budget process
Budget 2019 - the first "Wellbeing Budget" - saw the Treasury use the LSF to introduce a wellbeing approach, for the first time, to the key phases of the Budget cycle:
- In the strategy phase, analysis of the indicators from the LSF Dashboard and other wellbeing evidence informed the development of the five Wellbeing Budget priorities.
- In the initiative stage, agencies were asked to outline and, where possible, quantify how their initiatives impacted on the relevant wellbeing domains of the LSF, as well as how they aligned with the Budget priorities. Click this link to learn more about a wellbeing approach to cost benefit analysis.
- The decision-making process was more collaborative, with senior officials groups identifying the focus for each Budget priority and Ministerial groups actively shaping development of Budget packages. At each stage, summary information on expected wellbeing impacts was included in advice.
- In terms of communication, a more accessible Budget document was produced in an annual report style, framed around wellbeing outcomes and the Government’s Budget objectives.
Strategic planning and performance reporting
The Better Business Cases (BBC) framework is designed to help agencies provide objective analysis and consistent information to decision makers, to enable them to make smart investment decisions for public value. BBC is designed around an internationally recognised best-practice standard, and includes relevant wellbeing/LSF guidance and links. Click this link to learn more about applying a wellbeing approach to agency external planning and performance reporting.
Embedding a focus on wellbeing in the Public Finance Act 1989
The Wellbeing Budget represented a significant step for placing wellbeing at the heart of government policy-making. Legislation currently before the House will amend the Public Finance Act to embed this approach.
The Bill requires the government to set wellbeing objectives and explain how those objectives guide its Budget decisions. It also requires the Treasury to report on the state of wellbeing in New Zealand at least every four years, using an appropriate set of indicators representing important facets of wellbeing for the environment, people and communities. This will complement our existing reporting on macroeconomic and fiscal indicators. Click this link to learn more about embedding wellbeing in the Public Finance Act.
The Treasury's first wellbeing report is due by the end of 2022. It will build on the next Statement of Long-Term Fiscal Position (due in 2020) and the planned refresh of the Treasury’s Living Standards Framework in 2021.
The Treasury led work underpinning a $1.5 billion investment in Porirua over 25 years, the first application of a wellbeing approach to assess the impact of this type of investment. The business case (a collaboration between the Porirua City Council, local iwi Ngāti Toa and multiple government agencies) goes beyond conventional economic and fiscal policy. It shows the broader picture of how outcomes in living standards and health, education and justice can be improved through investments in housing.
It is important to note that neither the LSF nor the LSF Dashboard report on the performance of Government. Nor do they prioritise Government spending on wellbeing outcomes – the Government makes those decisions, informed by advice from the Treasury and other agencies.