'Wellbeing' budgets are a ruse that fail to deliver progress
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Wellbeing budget

‘Wellbeing’ budgets are a ruse that fail to deliver progress

So Australia will follow New Zealand’s ‘lead’ in introducing a wellbeing-focused budget. Labor has been flagging the desire to adopt this approach for years now.

It’s not hard to see why: the primary purpose of shifting to wellbeing budgeting is to elevate Labor spending priorities — especially in health, education, environment and culture — over ‘outdated’ or ‘traditional’ measures like GDP, unemployment and inflation.

It is perhaps unfortunate for those championing this approach that those economic measures are probably going to be the most important influences on wellbeing for the next few years.

Of course, it is important to note that the NZ wellbeing budget does include those economic measures as well. It just puts them at the bottom of the document so they comes after all the spiel about the government’s priorities and initiatives.

This may be more progressive budgeting, but the system overall makes little or no progress. The biggest problems with Australia’s budget process will be untouched, while some important metrics will be de-emphasised or obscured in favour of fashionable phrases and faddish buzzwords.

Our budget emphasises macro-economic indicators like GDP, inflation and unemployment for both good and bad reasons. The most obvious reason is that the budget is foremost an economic statement, and these are the key economic measures.

The other reason the budget focuses so heavily on these factors is that, for decades following the Keynesian revolution, the budget was primarily a tool of macroeconomic management.

Government policy explicitly targeted the trade-off between unemployment and inflation, with expansionary fiscal policy aimed at boosting GDP or contractionary policy aimed at constraining excess consumption and inflation.

However, by the late 1990s, the emphasis in government policy had shifted to supply side, microeconomic reform. Our current budget process now represents a weird mashup of macroeconomic predictions and microeconomic policy.

Unfortunately a by-product of this shift is that the budget has become the default place to announce policy initiatives across every area of government. This is both a corruption of the process and globally anomalous.

Rather than removing economics from the budget, you would be far better off if we stripped the budget of some of its significance.

A related problem with a budget process where the government announces most of its policies at once, is that many of them avoid the level of scrutiny they would get otherwise.

Some of the key initiatives get aired in the press, but by the end of budget week the press has moved on to other stories. Instead of being held to account by the public on the policy choices, the government just has to manage ‘the vibe’ of the budget.

No better example exists than the 2014 budget, which had a genuine laundry list of policy initiatives. Rather than even attempt to understand what was happening, the debate settled into a tug-of-war over whether the budget was ‘fair’ overall.

In fact, it is even worse than it seems, because a significant portion of post-budget commentary is devoted to critiquing Treasury’s forecasts and predictions — for which the government really bears little or no responsibility.

Not only do we see a focus on the ‘vibe’ at the expense of the detail, to the extent there is any focus on detail it is limited to the cost of initiatives, often aggregated.

Such a focus is useful — it is a budget, so the ledger matters — but not if it comes at the expense of any real consideration of whether the proposals will be effective or deliver any tangible outcomes.

In effect, the debate becomes exclusively about outputs rather than outcomes. This is one of the biggest problems in Australian policy as a whole.

Arguably, this is not the purpose of a budget; but because the budget is the centre of policy discussion, it becomes a flaw in the budget process.

It is at its most egregious when governments trumpet their infrastructure spending, which is constantly presented in terms of the amount spent, and almost never in terms of what the infrastructure will deliver for that ‘investment’.

You will no doubt be pleased to know this remains a key part of wellbeing budgets.

This is why recent initiatives, like the wellbeing focus, seem likely to make the problem worse rather than better. The order of the categories are shuffled, but the laser-like focus on output remains.

The NZ wellbeing budget mostly emphasises how much is being spent under each of the wellbeing headings. To the extent the issue of what that spending will actually achieve is canvassed, it is typically done qualitatively.

This too is perhaps the biggest flaw of ‘women’s budget’ statements. They focus almost exclusively on spending initiatives theoretically aimed at women, coupled with a smattering of gendered statistical observations.

It is not just that these measures generally ignore the effect of existing spending commitments — which distorts things significantly. The key point is ineffective spending is meaningless symbolism.

If school spending increases but results go backwards, the government shouldn’t get credit for having the right priorities. It should get the blame for failing to deliver. Rather than grading the government on how much more is spent on childcare, assess how much costs will fall for parents.

Of course, this might show costs are rising as a direct result of government policy — or that any benefits are negligible. Even where benefits can be found, we should consider whether they actually outweigh the costs.

If a wellbeing framework did any of these things, it would be a welcome change to the budget process, even if you have to wade through a bunch of government speak to get to it.

The fear is that this is merely the latest way to justify government spending as inherently good rather than a means to an end.

Simon Cowan is Research Director at the Centre for Independent Studies.