INCLUSIVE GOVERNANCE:
THE NEW ZEALAND LSF EXPERIMENT
Given below is a fascinating New Experiment
by New Zealand in its Annual Budget
Exercise: The LSF - Living Standards
Framework. {The following 2 paragraphs have been taken from the article “A
Well-Being Fiscal Budget, Business Standard, 17th July 2019,
cross-verified and added on by an article from theconversation.com titled “New
Zealand’s well-being approach to budget is not new, but could shift major
issues”. I have further accessed a report presented by the Office of the Chief
Economic Adviser The Treasury & Office
of the Government Statistician and Chief Executive, Stats NZ}
An approach to national budgets which is
radically different, and yet intuitively logical... it has 5 priorities:
1)
Transitioning to a Sustainable
& Low-Emissions Economy
2)
Boosting innovation,
and social and economic opportunities in a digital age
3)
Lifting Maori /
Pacific Incomes Skills & Opportunities
4)
Reducing Child
Poverty & Family Violence
5)
Improving Child
Well-Being, Supporting Mental Well-Being with a special focus on under
24-year-olds.
These were then broken up into measurable
criteria. Regarding Micro-Economic Criteria they have looked at, as an
example, environment, Life Expectancy,
Educational Attainment of Adults, Housing cost... they also looked at Macro E
factors like income etc; as well as social indicators like Safety, Social
Network Support etc
The LSF Framework recognizes that Capital is
essential, and recognizes 4 kinds of Capital whose growth distribution and sustainability
have ramifications on inter-generational well-being. These capitals are
interdependent and work together to support well-being. These 4 are :
1)
Natural Capital :
natural environment including land, soil, water, plants and animals
2)
Social Capital :
Trust, Rule of Law, Cultural Identity, Connections between people and community
- the norms and values underpinning
society. In it are embedded the rudiments of preservation of Maori culture
3)
Human Capital : Skills,
Knowledge, Physical / Mental Health – enablement to work, study and enjoy
recreation
4)
Financial and
Physical Capital : Houses, Roads, Buildings, Hospitals, Factories, Equipment,
Vehicles – having direct roles in supporting incomes and material living
conditions.
This is what the New Zealand Prime Minister
stated : Wealth is about so much more
than […] dollars can ever measure. It’s time we admitted that there’s more to
life than money, and it’s time we focused not just on GDP, but on GWB - general
well-being. – and the treasury : The
ultimate value of the well-being framework is that it improves the quality of
Treasury’s policy advice to government, through helping to identify the
important trade-offs for well-being, and providing a consistent basis for
understanding their impact. In introducing the LSF, the New Zealand
Treasury stated: There is more to well-being
than just a healthy economy. That’s why the Treasury has developed its Living
Standards Framework (LSF) – it helps us advise governments about how the policy
trade-offs they make are likely to affect everyone’s living standards.
As per Suzy Morrissey & Eleisha Hawkins, The
Treasury’s LSF draws on OECD analysis of wider indicators of wellbeing – and
amends it for New Zealand. The starting point is answering three questions:
1)
What are current
outcomes?
2)
Will these outcomes
be sustained or improved?
3)
How resilient is the
system
The Well Being exercise was implemented by
looking at 3 inter-related domains – Our People, Our Country and our Future.
The current status was identified on 12 parameters in the current outcomes
section : Civic Engagement & Governance, Cultural Identity, Environment,
Health, Housing, Knowledge 7 Skills, Income and Consumption, Job and Earnings,
Social Connections, Subjective Well-Being , Time Use. These lead to the desired
outcomes as given in the 4 Capital Domains
Natural, Social, Human, Financial as listed in the sections above .
A SHORT ANALYSIS
At first glance, this seems intuitively
logical; then your brain kicks in, and tells you Economics and Budgets are
about Financial Numbers – where are the numbers and the finances here? Where
are the duties, the outlays etc? After a more detailed study, your intuitive
judgement only gets strengthened with conviction. Well, just this once, in my
opinion – we should let our Brains go for a walk, and let the intuitive parts
of our consciousness rule the roost. When we are ready, we can recall Mr Brain
from its holiday for a more detailed study.
Why do we create a Budget Exercise? The
reason, the core reason has to be proper optimal outlay of available resources
towards a defined end-objective, which is the betterment of the people? Thus, isn’t
it completely logical to use the betterment
of the people as a starting point, and dig deeper from there? After all,
your finances, your infrastructure, your factories, your services are only the
means to an end; the said end-objective is living a fulfilling life as citizens
of our country. And, if you define Well Being properly, then the parameters
have to include People, Culture, Environment, Skills and Education, Focus on
the downtrodden or the poor or both, so that all people can partake in
betterment.
Further, this approach assumes a powerful movement
once you factor in Sustainability to the exercise as a predefined necessity; if
you consider the Environment as a core part of the planning, then you cant go
wrong without subverting the process on this parameter. You can laugh at this exercise, you can deride it – but you cannot
ignore it. You cannot deny that at least some community is thinking out of the
box for an approach that seeks to answer questions not currently attended to by
mainstream Economics. And, given the increasing failure rate of mainstream solutions,
I think it is time we looked elsewhere.
At this stage, saying anything definitive
about this, either positive or negative, is premature. We need more time; this
may yet fail, for the critics points {which I assume will be the difficulty in
getting agreement on priorities, short term vs long term trade-offs, hard to
transpose to diversified populations and so on} may be well right, it may well
be too early for Humanity. And, in diverse populations and larger nations such
as our own India, this will pose decided questions. But that doesn’t mean we don’t examine it to learn from it, and see how
we can change ourselves. For example – it may not be doable at a national
level, but at the State Level, mandated for all states – this can be thought
of. We need to ask ourselves what can done to improve people’s well being,
and how we can effective invest to achieve these, as the NZ Treasury
Spokesperson stated. Isnt that the entire objective of Governance?
Bibliography
1) A Well-Being Fiscal Budget, Business Standard, 17th
July 2019
1) A Well-Being Fiscal Budget, Business Standard, 17th
July 2019
2) Report presented by the Office of the Chief Economic
Adviser The Treasury & Office of
the Government Statistician and Chief Executive, Stats NZ}
Comments
Post a Comment