Budget nods to wellbeing matters

It’s been more than two years since Josh Frydenberg stood in parliament and derided Jim Chalmer’s penchant for wellbeing budgets.

Somewhat incredulously, he mused: what would be Dr Chalmers’s preferred yoga position when he arrives in parliament, “fresh from his ashram deep in the Himalayas, barefoot, robes flowing, incense burning, beads in one hand, wellbeing budget in the other”?

Nowadays, Mr Frydenberg is a private citizen, $260 million pledged to remove a level crossing in his former electorate has been axed, and Dr Chalmers has his hands on the public purse strings.

What a difference two years can make.

At the time, Mr Frydenberg had returned to the government benches after months earlier delivering a budget which proudly proclaimed a budget surplus of $7.1 billion.

His preference for ‘back-in-black’ rhetoric, coupled with income tax reform enacted by Scott Morrison during his time as treasurer, was a hit with the electorate, while Labor, determined to enact supply-side reforms that would have affected a fairer redistribution of wealth away from a primarily older, asset-owning class, was narrowly bested.

Data from the Australian Election Study on the 2019 poll made as much clear, showing 24 per cent of Australians saw management of the economy as the most important issue to them.

That was more than the combined percentage of those who named the environment or global warming as their pet issues. Separately, those issues came out below taxation, which rated as the third most important matter for voters (health and Medicare was second, at 22 per cent).

Much has already been written about the COVID-19 pandemic and resulting $213.7 billion blowout in public finances.

In the aftermath of the most recent election, though, economic management barely rated a mention outside of errant complaints from the Coalition which, mired in the pandemic, left government with a $78 billion budget shortfall.

Climate action by comparison was the driving force behind a series of wins that toppled Liberal incumbents in blue-ribbon heartland, Kooyong included.

So, too, was the expansion of childcare.

Prime Minister Anthony Albanese has made clear he would like to see this become his government’s signature reform, and, with the bare majority needed in the lower house and a compliant crossbench helmed by the Greens in the Senate, he’ll likely get it.

None of which is to say his plans will come cheap.

Labor’s cheaper childcare policy alone will cost $4.7 billion over four years.

That’s minor when stacked up against the $36.9 billion deficit the government will run in FY23, but may end up proving politically difficult to justify if, as projected, that figure blows out to $49.6 billion in four years’ time.

In that case, the wellbeing budget could provide some perspective on the quality of that spending.

Curious readers will find the long-touted wellbeing statement isn’t actually part of tonight’s budget do-over.

Treasury officials are inviting feedback ahead of the statement appearing in next year’s budget when the government plans to unveil a standalone ‘Measuring What Matters’ statement.

Some indicators, measured against the Organisation for Economic Development’s wellbeing and progress framework, are included as a stopgap, and do provide some preliminary commentary on the matter.

Those figures show Australia is at or better than the average on about two-thirds of the OECD’s measures, including household income, wealth, employment and capital base.

And while Australia is below the OECD average on gender parity outcomes in politics, overtime hours for full-time employees and greenhouse gas emissions per capita, the trendline is up.

The trend is down on more intangible fronts, with a declining performance across life satisfaction, social support and secondary school test scores against the OECD average.

Household debt and labour underutilisation is also far below pace.

Treasury officials acknowledge the shortcomings of this framework. Greenhouse gas emissions per capita has reduced over the past 20 years, they note, but that doesn’t reflect whether Australia’s performing well against its targets.

To that end, Labor’s first budget suggests its own framework be implemented, drawing on the OECD to complement similar, existing specialised reports, such as Closing the Gap.

There are plenty of frameworks to draw on, including Canada and Scotland, but New Zealand is frequently named as an influential wellbeing budgeter.

As of 2019, its budgets have included a wellbeing statement which, among others, outlines the country’s efforts to reduce child poverty, improve outcomes for its Indigenous peoples, and combat climate change.

Pandemic spending inclusive, that country has gone from a $3.5 billion surplus to a $23.1 billion deficit in FY21, improving to a $15.1 billion shortfall as of May.

Finances may not have been impressive, but overall wellbeing certainly has been, with the nation’s mortality rate low, life satisfaction high across ethnicities, growth above pre-pandemic levels and rising household incomes and wealth.

Critics of the wellbeing budget have understandably raised concern with budgets being retooled as broad policy statements.

Earlier this year, The Centre for Independent Studies research director Simon Cowan opined in The Canberra Times that the exercise could just serve to justify Labor’s spending priorities, rather than reflect whether Australians are better off because of government spending.

“The fear is that this is merely the latest way to justify government spending as inherently good rather than a means to an end,” he said.

Perhaps a fair point, if the Treasurer’s accompanying speech to parliament wasn’t already an exercise in justifying government spending in blatantly political terms.

Indeed, budget night, replete with the theatre of prime-time television and media lockups made increasingly redundant through curated drops to chosen outlets, is at least partly a political exercise as much as it is about budgeting or macroeconomic policy.

Not to mention much of the Coalition’s additional spending announced as part of the May budget has been unceremoniously, if not loudly, stripped from Labor’s redo of it.

Committee for Economic Development of Australia chief economist Jarrod Ball was among the chorus of voices to weigh in on the budget in its aftermath.

While he called for a refresh of the Charter of Budget Honesty Act to ensure the quality, transparency and scrutiny of federal finances, he reserved some positive words for the wellbeing statement, calling its potential to address the economic benefits of spending on preventative healthcare “promising”.

To that end, Dr Chalmers’ decision to revive the wellbeing budget has more than an air of Robert Kennedy’s famed maxim that GDP is effective at measuring everything except that which makes life worthwhile.

Sometimes derided as post-materialist in nature, the sentiment barely bothered Dr Chalmers when yesterday asked by Australian Broadcasting Corporation Brisbane’s Rebecca Levingston whether GDP was still an important measure.

“I think it’s important, but it’s not enough,” he said.

“[I]t is a very useful indicator and it’s a good way to compare against history and compare with countries around the world but like any stat, it has got its own limitations and I want to just build it out a bit.

“I want us to think about GDP and wages and unemployment, but I also want us to think about the state of our environment and the state of our health, our mental health.

“I want us to think in a quite hard headed way about what progress looks like in those important areas as well because we want our economy to be strong, but we want our society to be strong as well and I’ve always seen those two things as complementary and not at odds.”