Jim Chalmers’ push for a wellbeing budget
When Jim Chalmers was a young political staffer working for the Rudd government, Ken Henry was the Treasury secretary. Henry led a department with a clear mission statement – to improve the wellbeing of the Australian people. And yet Henry and others in the department knew that the tools they had to measure their progress in this mission were strictly economic ones, mostly income per capita or gross domestic product. Even those trained in classic economics knew such tools were rudimentary at best when it came to measuring whether the Australian people were in fact “well” in the fullest sense of the word – secure and safe, productive and healthy with decent levels of life satisfaction.
Henry tasked a group of smart and creative public servants to come up with an effective framework for an approach that went beyond GDP to measure wellbeing. The outcome was the “capabilities” approach. Informed by the work of economist and philosopher Amartya Kumar Sen, this approach looked at the elements needed to allow Australians to choose “a life they have reason to value”.
The framework was applied to Treasury decision-making and taken up, to some extent, by other departments. And yet it was not given the time and political support to become an entrenched way of thinking across the public service. The government changed from Labor to Coalition with the election of Tony Abbott and the wellbeing framework was washed away with little fanfare, associated with Henry and a kind of “yoga mat” thinking about economics associated with progressive politics. The new government instead became obsessed with tools for cutting “red tape”, introducing regulatory impact statements with all new laws.
While it is now a footnote in history, Henry’s attempt to bring wellbeing into the decision-making process of Treasury was not wasted energy. Senior public servants, current and former, have told me the influence of the approach remains for those schooled in it who found it useful. The ACT now has a well-established wellbeing framework applied through its budget and Cabinet processes. New South Wales Treasury is considering its own as well. And of course, there are many international examples, with New Zealand’s model providing the key inspiration for Chalmers’ own, to be presented in the forthcoming budget.
Chalmers was no doubt exposed to the wellbeing approach when he worked with Treasury under Henry, enough to be converted to the thinking and then articulate his version of it before the most recent election, announcing his first budget would be a “wellbeing budget”.
Josh Frydenberg, then the Treasurer and now a private citizen, mocked Chalmers as a hippy using wellbeing as doublespeak for higher taxes and more debt – a predictable politician’s response in the face of an election. And yet, given he was running a government during an unprecedented pandemic, Frydenberg would have already known the truth at the heart of the wellbeing pitch. If people aren’t mentally and physically healthy, safe and secure in their homes, with green spaces and social support close by, their productive capacity is impaired.
The pandemic taught us what we have all known for some time: healthy people, healthy workforce, strong economy.
It is important to note that Chalmers’ intent, like Henry’s, is not to replace GDP but to encompass it with variables beyond debt and output, to include measures around health, environment, housing and social inclusion. In many ways, it is a more integrated approach and should, if it is effective and has time to be embedded, mean more holistic policy, giving structure and rigour to concerns and considerations already at play in the minds of political decision-makers and public servants.
What are the economic impacts of, for example, poor mental health, housing insecurity and social isolation? Instead of relying on think tanks to do economic modelling about how social problems cost taxpayers money in order to lobby government for reform, the government will have the impetus to consider these issues from the get-go.
I doubt there is any broad public appreciation that this budget will be novel in any respect, other than as the first budget of a new government. My focus groups and the sentiment surveys show people remain exhausted by the tail end of Covid and extremely worried about energy prices, cost of living, the continuing crisis in housing affordability and the general “WTF” geopolitical vibe. And yet a study released this week by 89 Degrees East, where I head research, reveals a foundation of public support for a wellbeing approach to the budget.
The research, commissioned by us and conducted in the first week of October, shows 69 per cent of the 1020 respondents support a wellbeing budget, where the majority have defined “wellbeing” as keeping your mind and body healthy. Moreover, the economic imperatives of a focus on wellbeing are not lost on the Australian public, given just over a third of respondents felt their mental and physical health was “just okay”.
Drilling down to where the government should concentrate its efforts, an overwhelming majority of respondents – 73 per cent – wanted housing to be the priority, just in front of mental and physical health (71 per cent) and job and income security (70 per cent). Women rated these factors and others, including prioritising education and environmental quality, as extremely important focuses for the government – a crucial message given the prominent role women played in effecting change in the last election.
Putting a policy lens on this result, Leanne Wells, director of policy and advocacy at 89 Degrees East, says the community should expect to see some changes in the way government goes about policy development. There is a strong alignment between some of the policy opportunities for progressive government action and the future mega-trends that the CSIRO has identified in this area. These mega-trends include adapting to climate change and forging a strong and fast path towards net zero, as well as “escalating the health imperative”, and addressing the challenges posed by an ageing population, chronic disease and mental illness.
In talking about wellbeing as part of the budget, Chalmers and his colleagues are trying to appeal to a community transformed by the impacts of a pandemic as much as by current economic turbulence. But they are also trying to speak to a range of groups they have relied upon for electoral success. The research we conducted shows that wellbeing as a preference is stronger among women and voters under 40. It is compelling to more-progressive voters and divides conservative ones. Unsurprisingly, conservative voters are less likely to agree with a statement such as, “we can’t be a successful nation if we only focus on economic growth”.
Chalmers must walk a delicate line between what a wellbeing budget is and why it actually amounts to prudent economic management in shaky times. Namely, he must show over the successive budgets of his first term how this approach delivers better results – actually lifts our quality of life and not just our pay packets. The focus must be on how it creates better decision-making and has impacts people can see, feel and understand.
Chalmers is no hippy. He’s a Queenslander. He’s worked in the Labor Party machine and for another notable non-hippy from Queensland, Wayne Swan. His PhD was in political science, about the brawler stylings of Paul Keating. He will need all the energy, guile and storytelling skill of his thesis subject to show the public that his budget is one that will deliver on its promise, not just of wealth but of wellbeing.
This article was first published in the print edition of The Saturday Paper on October 22, 2022 as "The incomparable rightness of wellbeing".
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