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Developing a performance-based Living Standards Dashboard

Developing a performance-based Living Standards Dashboard

Media release: Today Loneliness NZ provided its updated response to the New Zealand Treasury’s request for submissions on the independent report “Treasuring Living Standards Dashboard: Monitoring Intergenerational Wellbeing”, and its proposed Living Standards Dashboard.

Background

The New Zealand Treasury is developing a world-leading framework for prioritising Government policy. Rather than Treasury focusing on a financial measure such as improving GDP per capita, the Treasury is developing the Living Standards Framework, which is based more broadly on improving current and future individual wellbeing. An important element of the Framework is to develop the indicators that make up the Framework’s dashboard. The Treasury commissioned Conal Smith of Kōtātā Insight to prepare a report recommending the indicators that make up the Living Standards Framework. The Treasury has put this report out for consultation.

Our view

We recognise that this is an important consultation for the Treasury, Government, and the wellbeing of all New Zealanders.  We agree with the Chief Economic Adviser, Tim Ng, that the independent report by Conal Smith is “world-class.”

In our view, however, the primary issue with the proposed Living Standards Framework and Dashboard is that it is not performance-based.  What we mean is that it is not focused on a specific measurable outcome.  Instead, it is based around a ‘warm fuzzy’ concept of wellbeing outcomes.  In particular, the Framework is a model of flows and the Dashboard is a categorised list of indicators within the model.  In our experience, this Framework and Dashboard will only achieve about 30% of what is possible if it were performance-based.  Given the likely poorer outcome in its current form, the Framework may in time become more of an academic model or even be disbanded.  That would be a great loss to New Zealand and all New Zealanders.

The good news is that the foundational work to create a performance-based Framework and Dashboard has been completed in parts by Conal Smith’s report, New Zealand Treasury, and Stats NZ.  In this submission, we show how to convert all this work into an integrated performance-based Living Standards Framework and Dashboard.

Our response

To create a performance-based framework, we recommend:

  • An optimisation function that gives clarity to Treasury and Government: To maximise current and future individual wellbeing, as measured by life satisfaction; and to make these subject to international law and conventions, including human rights and New Zealand law, as well as our strongly desired ethics and values.
  • A hierarchical structure of individual wellbeing domains that makes it clear which domains are the primary drivers of this objective function and which are the secondary drivers.
  • The primary domains of individual wellbeing are health, income, social connections, and housing, based on work undertaken by Stats NZ.
  • A hierarchical structure of the capital stocks that makes it clear how the different capital stocks fit together.
  • The framework and dashboard be broad based to capture all the key investments in capital stocks that drive future individual wellbeing – particularly Local Government capital.
  • Each of the labelled capital stocks have two primary capital stocks, i.e. natural capital (environmental capital and ecosystem capital), human capital (knowledge capital and health capital), social capital (social connections capital and trust capital), and produced capital (public capital and private capital).
  • Social connections capital is an intergenerational capital capturing the ease with which society facilitates meaningful social connections. It is made up of community capital, family capital, and friends capital. We identify 30 societal changes that have negative impacted social connections capital over the last forty years.
  • There be one indicator for each domain of wellbeing (we recommend each indicator) and one indicator for each capital stock (we recommend each indicator).
  • There be an efficiency indicator for investments in capital stocks.
The submission, which provides further rationale and the recommended indicators, can be found in Further information below.

Feature photo: Loneliness NZ.