The Treasury applies both the Living Standards Framework and He Ara Waiora to explore wellbeing from different cultural perspectives, values and knowledge systems. We are increasingly using both frameworks to support our advice to Ministers and to support the Government’s wellbeing approach.
The Treasury has been developing and applying versions of the Living Framework Statement (LSF) for more than 10 years with the aim of increasing the quality of our advice. We are also working to apply He Ara Waiora increasingly alongside the LSF, to help us interweave and embed te ao Māori perspectives in our policy advice with integrity.
The current Government has clearly signalled that it wants to embed a wellbeing approach across the public sector. This involves moving to broader measures of progress, consideration of longer-term impacts, and a whole-of-government approach. The Government has asked the Treasury to use the LSF and He Ara Waiora to support this objective.
Below are some examples of how we have applied the LSF and He Ara Waiora to improve the quality of our advice and to support the Government in its wellbeing approach.
One of the key areas of focus for introducing a wellbeing approach has been the Budget. Budget 2019 was the first time a wellbeing approach was applied to the Budget process in New Zealand. This involved using wellbeing analysis and evidence to inform Budget strategy and priorities, requiring agencies to include wellbeing analysis and evidence in their Budget initiative submissions, and a new approach to the main Budget document.
New Zealand has continued to develop the wellbeing approach in subsequent Budgets, with some disruption from COVID-19 in Budget 2020. Agencies have been required to use the LSF domains as part of their value-for-money assessment since Budget 2019, and since Budget 2021 He Ara Waiora has also been gradually introduced into value or wellbeing assessments.
This wellbeing analysis is supported by fit-for-purpose cost benefit analysis, so the Treasury has also updated its cost-benefit analysis (CBAx) tool to include the intergenerational wellbeing domains. You’ll find more information here: A wellbeing approach to cost benefit analysis.
In 2020, the Public Finance Act (1989) was amended to require the Treasury to report periodically on the state of wellbeing in New Zealand, and the Government to report annually on its wellbeing objectives via the Budget.
The Treasury’s first Wellbeing Report will be produced in 2022, and must use indicators to describe trends in wellbeing in New Zealand, as well as the sustainability of, and any risks to, the state of wellbeing in New Zealand. The 2021 Living Standards Framework, LSF Dashboard and He Ara Waiora will be used to do this.
The Treasury also supports the Government in fulfilling its wellbeing reporting requirements. The Government is required to outline its wellbeing objectives in the Budget Policy Statement and explain how those wellbeing objectives have guided its Budget decisions in the Fiscal Strategy Report.
Strategic planning and performance reporting
The Treasury has developed a guide for agencies on how they can incorporate a wellbeing approach into their external planning and performance reporting: Applying a wellbeing approach to agency planning and performance reporting.
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 was a collaboration between the Porirua City Council, local iwi Ngāti Toa and multiple government agencies.
The business case applied the Living Standards Framework to capture the broad range of impacts expected from the investment from the perspective of the affected community. This meant looking at the regeneration as an investment in health, education, safety and economic prosperity that is enabled by housing, infrastructure and community development.
While much advice was provided at pace as the COVID-19 pandemic unfolded, the Treasury aimed to continue bringing a wellbeing perspective to its advice.
This included considering factors other than economic output in our macroeconomic stabilisation policy, including:
- maintaining the economy’s ability to withstand future downturns
- retaining human capital – minimising the impacts on wellbeing from unemployment or underemployment and the loss of skills associated with those, and
- achieving equity – considering the distributional effects of different policy options and mitigating the impacts of lockdowns on New Zealand households and businesses.
Considering this wider set of impacts supported our advice on the trade-offs that Ministers were grappling with, such as weighing the impact that an increase in public debt might have on our resilience to future downturns, against the ability of fiscal policy to offset some of the distributional and wellbeing impacts of the lockdown.
The Treasury also published a rapid evidence review of the potential wellbeing impacts of COVID-19, and the associated economic recession, in June 2020. The analysis used the frames of the Living Standards Framework and He Ara Waiora, and supported the Treasury’s advice about the economic response to COVID-19. You can read the rapid review here: He Kāhui Waiora: Living Standards Framework and He Ara Waiora COVID-19: Impacts on Wellbeing (DP 20/02).