Wed Oct 26

Chalmers hasn't delivered a wellbeing budget, but it's a step in the right direction

Written by Warwick Smith, Research economist, The University of Melbourne

It was billed as Australia’s first wellbeing budget. But, five months into a new government, with so many economic fires to fight, Treasurer Jim Chalmers’ first budget was never going to be that.

Instead, he’s taken the first step: to get a sense of what we want for society and measuring how we’re doing. The budget papers ^[1] refer to this as “measuring what matters”:

Indicators that measure broader quality of life factors should be considered in addition to, not instead of, traditional macroeconomic measures. When policy processes consider these outcomes, they facilitate more holistic discussions of the type of economy and society Australians want to build together.

The main commitment is to produce a “Measuring What Matters Statement” in 2023 that will lay out the government’s proposed wellbeing measures, drawing on international frameworks ^[2] established over the past half-century.

A holistic wellbeing approach enables us to look at the root causes of problems, instead of simply devising policies to treat the symptoms (vital though that is in the short term).

For example, measurable improvements in mental health can have profound implications for the justice system, and mental health in turn is affected by circumstances such as poverty, domestic violence and joblessness.

Reforms based on a wellbeing approach would look to reorient the economy so that poverty, domestic violence and joblessness are reduced. This would reduce the need for police, courts, prisons, mental health support and welfare.

Treasury is thankfully moving slowly on this. I say “thankfully” because establishing an effective wellbeing approach is complex and will take time – particularly if ordinary people are to be included in the process.

Consulting diverse communities

The initial consultation on the Measuring What Matters Statement announced by Treasury ^[4] is so far restricted to written submissions. Such a process will attract the usual suspects: think tanks, academics, unions, social services organisations, and so on.

Ideally, the process will be broadened, with officials going to a diverse range of communities to learn what’s important to people and places.

The Australian Capital Territory government ran consultations like this in 2019 and 2020 when developing its Wellbeing Framework ^[5]. The Victorian Council of Social Services this year conducted a Listening Tour ^[6] of 12 communities with similar goals in mind.

Building from this, the Victorian Health Promotion Foundation has published How to create a wellbeing economy ^[7], which explains the systemic changes to which a wellbeing budget can contribute. Closing the Gap ^[8] is another relevant Australian framework that can inform Treasury’s work.

Australia's Treasurer Jim Chalmers and Prime Minister Anthony Albanese hug after Chalmers delivers his first budget speech in parliament, October 25 2022.

Australia’s Treasurer Jim Chalmers and Prime Minister Anthony Albanese hug after Chalmers delivers the budget speech in parliament on Tuesday night, October 25 2022. Mick Tsikas/AAP

Learning from others

It is encouraging the budget papers focus on the lessons we can learn from wellbeing budgets and wellbeing economy frameworks internationally.

Rather than starting from scratch, Australia can build on what has been developed by the OECD and governments such as Scotland, New Zealand, Wales and Canada, avoiding their mistakes and emulating their successes.

One of the key lessons from these international efforts is that measurement alone does not bring about change. We also need high-level goal-setting and explicit plans for how government agencies can contribute to achieving those goals.

What makes a wellbeing budget

The Albanese government’s first budget contains many measures that may contribute to increased wellbeing.

These include resurrecting the gender budget statement (introduced by the Hawke government in 1984 but discontinued in 1997 under the Howard government), increasing paid parental leave and child care subsidies, resourcing for a referendum on an Indigenous voice to parliament and a truth-telling process, and funding for climate change mitigation and adaptation.

But a budget containing items that improve wellbeing does not make a wellbeing budget. A genuine wellbeing government approach will have the following characteristics:

• It will take a holistic approach to policy development, assessment and implementation. This means breaking down silos between government departments and between levels of government.

• It will take a long-term view. Wellbeing approaches consider not just the wellbeing of people alive today but also future generations. This means considerations of wellbeing inherently include environmental sustainability and nature conservation.

• It considers upstream drivers of wellbeing rather than treating the symptoms caused by an economy that is not serving the interests of people and planet.

But immediate action is needed too

This “upstream” approach to policy design and service delivery has the potential to improve wellbeing and reduce the need for public expenditure in many spheres.

Chalmers’ first budget is an encouraging beginning of what is hopefully a meaningful journey to reform. A new measurement framework will inform systemic change.

There is, however, much that can be done right now to improve the lives of millions of people in Australia.

At its most basic level, wellbeing requires safety, food, health care, housing, connection to community and opportunity to contribute. We know many who lack these basics. They include those surviving on JobSeeker paymments, well below the poverty line, forced to skip meals and live in their cars ^[11]. They include Indigenous women lacking basic physical safety ^[12].

A wellbeing approach, looking at the drivers of these problems in an attempt to reorient society and the economy so they do not occur, must be coupled with more immediate action.

Hopefully the next budget can deliver both progress towards a more complete wellbeing framework as well as immediate action that will improve the wellbeing for those in dire need.