New Zealand’s Response to the Age-Old Question: Does Money Buy Happiness?

by Matt Condie and Steven Giallelis

In association with the David Suzuki Foundation, this article was written to inform the public of the shortcomings of GDP-oriented policy making and potential solutions to ensure the health and sustainability of our economy and citizens for years to come. Through public awareness, the policy community can develop action plans to identify the current social landscape and evolve to a wellbeing approach to governance and policy development.

One cannot resist questioning if having more financial resources could resolve a considerable amount of stress, increase happiness and improve overall wellbeing. 

New Zealand’s response to this challenge, however, appears to be the counter, contending that money does not entirely determine wellbeing. In May 2019 Prime Minister Jacinda Ardern and the New Zealand Government unveiled their first “Wellbeing Budget.” This budget goes beyond traditional government approaches towards the allocation of public resources and funding. 

This new budgetary framework stresses the importance of maintaining efforts to perpetuate economic growth, while acknowledging its shortfalls, including its failure to take into account living standards, and the quality of the economic activity itself. While New Zealand has experienced robust annual GDP growth of approximately 2.6 percent per year on average, the nation has faced high and increasing rates of suicide, homelessness, family violence and child poverty. It therefore becomes apparent that a sole focus on economic growth is inadequate, because it does not guarantee improved living standards, measure the quality of economic activity or take into account who benefits and who gets left behind.

New Zealand’s government identified major priorities through the Wellbeing Budget, including the following:

  • Supporting mental wellbeing for all citizens, with a special focus on those under the age of 24
  • Reducing child poverty and improving child wellbeing, including addressing family violence
  • Lifting the incomes, skills and opportunities of their Indigenous Peoples
  • Supporting a thriving nation in the digital age through innovation, social and economic opportunities
  • Creating opportunities for productive business, regions, Iwi (Indigenous tribes) and others to transition to a sustainable and low-emissions economy

Analyzing New Zealand’s goals proves to be highly meaningful, but also difficult to measure in terms of monetary value. How does one measure happiness, and how would the government allocate an appropriate amount of funding for areas in need of improvement? Luckily, Ardern and her Cabinet has put forth methods for measuring wellbeing.

Image retrieved from the New Zealand Government’s Treasury website

The most distinctive features include the introduction of collaboration amongst government ministers and the utilization of evidence-based wellbeing metrics. Ministers and government agencies are no longer siloed throughout the budgetary process and instead work closely together to address each priority topic. Additionally, ministers are now required to demonstrate how their proposed bids contribute towards intergenerational wellbeing while meeting key performance indicators of economic, social, environmental, and cultural significance.

Wellbeing in Canada?

Being one of the first of its kind, New Zealand’s wellbeing budget has attracted the attention of audiences internationally. This brings forth the question of whether such a budgetary framework could be adopted in Canada. 

Despite New Zealand comprising a constitutional monarchy with a parliamentary style of governance that varies from Canada’s constitutional federal system, the adopted methods nonetheless present findings that are certainly applicable and relevant to the Canadian context. This is especially evident in regards to New Zealand’s definition of “wellbeing” that is described as “improving the state of our environment, the strength of our communities and the performance of our economy,” with particular emphasis on mental healthchild poverty and domestic violence. By enshrining this broad definition, the New Zealand government asserts that this effectively establishes the means for individuals to lead fulfilling lives and provides an overall sense of balance amongst those within the nation. 

While incorporating such a definition within the federal government could be tailored to address nuanced implications that challenge Canadian wellbeing, there first needs to be the recognition of wellbeing deserving not only a place but a vital component within the public budget. Considering that New Zealand has done just this and made wellbeing its primary focus in determining how public resources will be allocated, a similar seriousness must as well be foretaken by any government that is interested in pursuing a wellbeing budget. Without the same prioritization, any policy efforts will likely not withstand nor adequately address the vital areas identified by governments that require improvement.

In addition to the requisite of prioritization, the viability of wellbeing in the Canadian context would likely be further complicated by the current parliamentary minority. In a minority government, the Liberals face considerable challenges in maintaining confidence amongst the House of Commons. With a large opposition present, contrasting views of a wellbeing budgetary framework are likely to arise. This landscape does not appear to be ideal for bringing forth such a significant modification to governmental framework. 

Although it appears unlikely to occur anytime soon, if wellbeing budgets acquire credibility after a period of evaluation Canada may adopt one. For now, however, it appears that Canada remains to look through the policy window rather than opening it, waiting for the appropriate political and social landscapes to arise.

Steven Giallelis is currently in his first year as a Master of Public Policy student at the Munk School of Global Affairs and Public Policy. He previously graduated from Ryerson University with an honours Bachelor of Arts in Criminology and Law. His policy interests include justice, immigration, environment, and labour policy.

Matt Condie is a first-year Master of Public Policy student at the Munk School of Global Affairs and Public Policy. He previously graduated from the University of Waterloo with a Bachelor of Arts in Economics and Business. His policy interests include environmental and health policy as well as economic development and public finance.

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