Treasury still feeling way on govt’s wellbeing’ framework

Article – BusinessDesk

May 9 (BusinessDesk) – The Treasury is still feeling its way on the government’s ‘wellbeing’ framework and says getting departments to adopt and meaningfully understand the regime will be a multi-year task.Treasury still feeling its way on govt’s ‘wellbeing’ framework, investment statement shows

By Paul McBeth

May 9 (BusinessDesk) – The Treasury is still feeling its way on the government’s ‘wellbeing’ framework and says getting departments to adopt and meaningfully understand the regime will be a multi-year task.

The government’s financial adviser released the four-yearly investment statement in March and faced questions about it at a parliamentary select committee today.

The investment statement was the third so far produced and provides a snapshot of the Crown’s balance sheet and upcoming challenges, and providing an indication of the government’s high-level investment priorities over the short-to-medium term.

Officials led by the Treasury’s chief economic adviser Tim Ng fielded questions from MPs at Parliament’s finance and expenditure committee. National Party finance spokeswoman Amy Adams suggested officials “think a little more holistically” about how to overlay the wellbeing framework over a narrow accounting regime, saying the report seemed to be a hybrid “sitting uncomfortably between the old and new”.

Ng agreed that was a fair interpretation, with the statutory instruction to report on assets and liabilities at odds with the living standards framework.

“We have thought about it, but it’s not easy,” Ng said. “This was our first go at it and we hope as we learn more about how it works in practice, it will get richer.”

The Treasury started formalising its use of a broader set of ‘wellbeing’ measures early this decade under previous secretary John Whitehead, who in his final speech at the department said he wanted to make sure spending was “based on a recognition of the broad range of social and environmental benefits that result from government intervention as well as the costs” in what was then a tight fiscal environment.

That work was picked up and developed by his successor, Gabriel Makhlouf, who established the regime where financial and physical capital, natural capital, social capital and human capital are seen as the four components essential to current and future living standards, with economic growth, future sustainability, increasing equity, social infrastructure and risk management influencing those components.

The new Labour-led government has latched onto the LSF, with Finance Minister Grant Robertson expecting to have measures in place for the 2019 budget for a “major change in the way we identify what is success in the economy”.

Ng told MPs today that officials used the framework to push the 2018 investment statement beyond an accountant’s view of the balance sheet, including how to best improve agencies’ performance in a way that shows an investment is the best contribution to the wellbeing of New Zealanders.

“The next step, and it’s a step we’re taking, is to engage with agencies and have good conversations about how they think about their business that maps on to the framework,” he said. “That will be a multi-year process,” and Ng said Treasury will continue to push government entities to help them locate their businesses within the framework.

The government is using the ‘wellbeing’ phrase to underpin its policy direction, with Social Development Minister Carmel Sepuloni this week seeking feedback on investing in social wellbeing, something the previous administration dubbed social investment – a programme using an actuarial approach to determine the long-term liability of social ills and targeting spending to reduce that cost.

During her questioning, National’s Adams said the wellbeing framework had merit, but appeared to be too narrow in Treasury’s report as it didn’t look at the quality of New Zealand’s telecommunications networks, significant investment into assets that affect New Zealanders, or investment into the nation’s economic performance which delivers high-paying jobs.

(BusinessDesk)

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