Prime Minister Jacinda Ardern explains what her 'Wellbeing Budget' means

The Prime Minister has explained how her Budget next week will focus on fostering economic strength but not at the expense of people's wellbeing.  

In a speech to the business community in Auckland, Jacinda Ardern talked up New Zealand's "solid rates of GDP growth", but questioned the "quality of that economic activity and how it has been shared". 

"Nobody wants to live in a country where, despite a strong economy, families are homeless, where our environment is being rapidly degraded and people with mental health issues do not receive the support they need."

She condemned the country's "shocking levels of family violence and child poverty" and said Budget processes need to change because the traditional cost benefit analysis of them "is often short term". 

Ardern said that's why Budget 2019, dubbed the Wellbeing Budget, will focus on "areas where the evidence shows we have the greatest opportunities to make a difference to New Zealanders' wellbeing". 

As an example, she pointed to one of the first significant dilemmas she said her Government faced when it came into office in 2017: the run-down Waikeria Prison in the Waikato. 

Prime Minister Jacinda Ardern delivering her pre-Budget speech to the business community in Auckland.
Prime Minister Jacinda Ardern delivering her pre-Budget speech to the business community in Auckland. Photo credit: Newshub

"The prison was run-down, no longer fit for purpose and an earthquake risk. At the same time, we also had a prison population that was projected to grow."

Ardern said Treasury's preference was a mega-prison with 2500 beds, because a simple cost benefit analysis showed that provided the cheapest per bed option.

"But what if we considered a preventative approach?" Ardern asked. "What if we knew for instance that one of the issues relevant to reoffending rates was inadequate housing options for released prisoners? Or mental health issues?"

She said the Government opted to replace Waikeria Prison with the same inmate capacity, but with a forensic mental health unit and additional funding for housing. 

"A higher expense in the shorter term, but greater savings in the long run," Ardern said, adding: "And that is essentially what we are trying to do with the Wellbeing Budget."

Ardern said the Budget has been developed using the Treasury's Living Standards Framework, evidence from experts and the Government's Science Advisors, and through collaboration with ministers and the public sector. 

The Living Standards Framework, a dashboard of roughly 60 indicators of how well the environment, New Zealanders and the economy is faring, will form the basis of the approach.

Ardern said the Government came to the conclusion that the greatest opportunities to make a difference to wellbeing will cover five areas. 

  • Investing in businesses, regions, iwi and others to transition to a sustainable economy 
  • Investing in digitisation as well as social and economic opportunities
  • Reducing child poverty and addressing family violence
  • Supporting mental wellbeing but with a focus on under 24-year-olds
  • Lifting Māori and Pacific incomes, skills and opportunities
National's finance spokesperson Amy Adams.
National's finance spokesperson Amy Adams. Photo credit: Newshub

National's finance spokesperson Amy Adams criticised the Government for adopting the Treasury's Living Standards Framework and dropping National's "rigorous investment criteria". 

"National's 2017 Budget saw the most rigorous investment criteria ever used to ensure funding went to evidence-based proposals that delivered long-run benefits for vulnerable people.

"The Government has talked up how transformational this Budget will be, in reality, they've dropped our rigorous investment criteria and adopted the Treasury's Living Standards Framework which values having contact with your neighbour over avoiding diabetes."

When putting the Budget together, Ardern and Finance Minister Grant Robertson have said the Government looked at whether it will have intergenerational benefits. 

Adams argued that's hardly a new approach. She said that was "the very definition of National's Social Investment Approach". 

The National-led government's 2017 Budget recognised the growing crisis in mental health, pumping $224 million into what was described as the Achilles heel of the health sector. 

However, the then-government was criticised at the time as a "failure on social investment" by the Salvation Army. It was accused of distracting people with tax cuts. 

Ardern said Budget 2019 will seek to "tackle our long-term challenges" such as homelessness, family and sexual violence as well as mental health. 

She pointed to solutions such as rolling out Housing First into more centres, and Sunday's announcement of a $320 million package to fight family and sexual violence.

Ardern said while the initiatives are "designed to save money, and lives, we also have to make sure we have the resources to deliver them". 

The Prime Minister promised New Zealand: "And we do."

The Wellbeing Budget will be released on May 30.