How New Zealand changed its priorities with a well-being budget

New Zealand has become the first Western nation to base its government budget on well-being priorities, with public departments measured on policies which improve the lives of citizens rather than generating revenue.

After more than a year in the works, on 30 May Prime Minister Jacinda Ardern formally launched a revolutionary state spending programme that promises billions for mental health services and child poverty, along with record investment in measures to tackle family violence.

Introducing the plan, Ardern pointed to New Zealand’s “rates of suicide, unacceptable homelessness and shameful rates of family violence and child poverty.

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“Growth alone does not lead to a great country. So it’s time to focus on those things that do,” she said.

What is in the New Zealand budget?

The Well-being Budget “sets out five priority areas that the government will address through generous public spending”, says Forbes: “the mental well-being of all New Zealanders, child poverty, Maori career prospects, digital innovation and the transition to a sustainable economy”.

Mental health services get the biggest funding boost on record, at $1.9bn (£984m). Child well-being will receive more than $1bn (£518m) - a spending hike that comes after Unicef found that 27% of New Zealand children live in income poverty.

A further $320m (£166m) is being invested in measures to combat domestic violence. New Zealand has one of the worst records for family and sexual violence of the 36 member countries in the Organisation for Economic Cooperation and Development (OECD), with police responding to a domestic violence incident every four minutes.

Have the changes been welcomed?

The Budget has received widespread praise from charities and other organisations in the relevant fields, says New Zealand’s state-owned broadcaster TVNZ. Reacting to the hike in spending to reduce child poverty, children’s commissioner, Judge Andrew Becroft said the new focus “could be a game changer for New Zealand's children”.

Alcohol Healthwatch said it was “fantastic” to see the government “invest in children, mental health and addictions”, while the Mental Health Foundation said the Budget “makes an excellent start in addressing our suicide rates”.

However, the opposition National Party has dismissed the spending programme as a “disappointment”, reports The Guardian. Party leader Simon Bridges said: “This budget is style over substance. It might have a glossy cover with nice pictures, but it’s hollow inside. This botched budget is not transformational.”

With the Treasury Department recently downgrading its gross domestic product forecasts amid a cooling global economy and slackening domestic consumption, critics point out that New Zealand needs an economic boost rather than an emotional onen, reports Reuters.

That view was echoed by conservative commentator Rita Panahi, who said: “This sort of silliness impresses some of the people sometimes for a little period but you eventually get found out.”

Kiwibank’s chief economist, Jarrod Kerr, added: “The aspirations in the Budget are grand, and respected, but it’s all about long-term execution in a short-sighted political world.”

However, Prime Minister Jacinda Ardern insists that her government must recognise that economic growth “alone does not guarantee improvement to New Zealanders’ living standards”.

Will other countries follow suit?

Similar programmes are in place already in Bhutan and the United Arab Emirates. Indeed, the latter has a Minister of State for Happiness and a National Programme for Happiness and Positivity.

Meanwhile, the UK is among several countries that have begun to officially track national levels of well-being, but with austerity cuts weakening many public services in Britain, the nation is some distance from emulating Ardern’s move.

The UK’s All-Party Parliamentary Group on Well-being Economics has drafted a report on how the upcoming government spending review should focus on alleviating unhappiness. This would include extra ringfenced funding to treat mental illness, boost well-being in schools, increase skilled employment, and improve social care for the young, old and disabled.

The Financial Times’ Martin Wolf argues that existing measures such as gross domestic product and producing public goods are defective and risk prioritising the wealthy.

Instead, a “shift in priorities toward alleviating the biggest harms” should be the “minimum goal for policy in a civilised and prosperous society”, he writes.