Budgeting for Well-Being 

Prime Minister Jacinda Ardern, New Zealand’s popular and progressive leader, at a 2018 Cabinet swearing-in. Her “Wellbeing Budget” is considered a landmark of transparent and forward-looking fiscal policy that Canada would do well to emulate. Wikimedia photo

The thread linking Bobby Kennedy’s contention that GDP “measures everything but that which is worthwhile”, Jacinda Ardern’s “Wellbeing Budget” half a century later and all the efforts to humanize fiscal policy in between is well-known. What can Canada do to move closer to the quality-of-life budgeting model embraced by New Zealand and Scotland?

Helaina Gaspard and Emily Woolner 

The pursuit of the good life has been contemplated by philosophers and debated by politicians. Fostering an environment in which individuals can pursue the best possible versions of themselves can be one conception of the good life, based on the well-being of individuals. Organizations such as the Organisation for Economic Cooperation and Development have attempted to capture this well-being through a series of indicators, by measuring quality of life and opportunity in countries and cities.

In his post-election mandate letters, Prime Minister Trudeau tasked newly minted Minister of Middle Class Prosperity and Associate Minister of Finance Mona Fortier, to “better incorporate quality of life measurements into government decision-making and budgeting, drawing on lessons from other jurisdictions such as New Zealand and Scotland.” 

The pursuit of well-being may not be new, but budgeting for well-being has the potential to be a strategic shift in how money is used by placing results and accountability for outcomes at the centre of decision-making. This approach—when done well—requires strategic alignment among policy approaches, expenditures, and measurement.  

Consider New Zealand, which released “The Wellbeing Budget,” in 2019. The budget’s purpose was to focus on “five priority areas where evidence tells us there are the greatest opportunities to make real differences to the lives of New Zealanders.” These five priorities included: mental health, child well-being, supporting the aspirations of the Maori and Pasifika, enhancing productivity, and transforming the economy. Each of these action areas had associated programs to promote change.  

Preceding New Zealand’s well-being budget was their Living Standards Framework, (LSF) developed by the Department of Treasury. Drawing on a variety of measures of physical health, social health, general life satisfaction and work-life balance, the LSF was intended to provide ministers with advice on how to promote well-being. Leveraging a variety of data points, the LSF dashboard provides a detailed overview of indicators, progress and trends to capture well-being from a variety of perspectives (as no single data point tells the full story).  

Budgeting for well-being may seem indulgent to some and obvious to others. But consider for a moment that this government defined its policy priorities, aligned its expenditures and is attempting to measure the results, openly. As a citizen, it’s useful to have a clear understanding of a government’s conception of the good life and its potential implications for them. It just may promote better politics and policy development, too. 

In its pursuit of well-being, Scotland adopted a National Performance Framework with desired “National Outcomes,” measured through 81 indicators ranging from  children to economics to human rights and the environment. The framework is intended to guide budget and policy making by focusing on the country’s overall goals of a successful, inclusive, productive and happy country. To get a sense of progress overall or on any one indicator, the “Equality Evidence Finder” will generate graphs from a variety of data sources used for measurement. 

What New Zealand and Scotland share in their approaches is a clear vision for well-being in their societies, means of working towards it, and tools for measuring progress. While not perfect, they represent transparent and verifiable approaches against which to measure government action or inaction on nationally defined priorities. This is different than internal horizontal results management frameworks or even mandate tracker dashboards. These visions may very well extend beyond their current governments and focus on long-term well-being. 

Budgeting is about more than in-year deficits and surpluses; it defines priorities and actions. True public financial management encompasses sound fiscal discipline, with an alignment of spending to priorities, and a means of tracking results over time. None of this contravenes the realities of politics. In fact, it may represent a set of tools often unused to refocus action on national priorities.  

In Canada, a future budget focused on well-being would: 

1) Define a vision of the good life;

2) Present a roadmap for working toward that vision in the short-, medium-, and long-terms; 

3) Align goals to meaningful data that help to assess progress transparently along the way. 

Future attempts at budgeting for well-being would have to be gradual. The U.K.’s All Party Parliamentary Group on Wellbeing Economics released a report to the Chancellor of the Exchequer in May 2019. As a group of parliamentarians, their goal is to define a vision of well-being for the U.K. and to use that vision as a frame for policy decisions. Recognizing that targeted investments (approximately 8 billion GBP were proposed) are required in mental health, schools, continuing education, community facilities and justice, the group proposes a spending review focused on well-being to find the funds. The spending review would be an important tool to refocus priorities and align spending to desired outcomes. 

To obtain a full picture of how Canada allocates and spends public money for its programs and services, one must consult the budget (for in-year incremental spending), the appropriations (for a full portrait of spending) and the results reports (for a definition of program parameters and outcomes). Canada has the foundations to begin to rethink how government spends to focus investments on desired results for its citizens. Current spending can be reviewed and refocused, as was proposed in the U.K. With a defined vision, roadmap and measurable goals, Canada could feasibly work toward a well-being budget in the next fiscal year.  

Imagine if Canada’s next budget looked beyond merely the deficit number, and started to treat money like a tool for long-term progress (yes, beyond the next election) to support the sustainable growth and development of this country and its people. Wouldn’t that make budget day even more exciting?  

Contributing Writer Helaina Gaspard is Director of Governance and Institutions at the Institute for Fiscal Studies and Democracy (IFSD), at University of Ottawa, and Emily Woolner, a research assistant at IFSD, is a UofO graduate student.