Lessons from New Zealand: It’s not all about the money

One of the challenges of policy making is understanding the likely impact of following a particular course of action. Policy makers analyze policy proposals and do their best to project who might be affected, how they might be affected, and what this means in terms of the policy’s intent. Unfortunately, it is famously difficult to forecast impacts, and this is especially true of things that are intangible, such as quality of life.

This uncertainty means that the fiscal elements of policy proposals – which can be more easily calculated by teams of government actuaries – tend to become the bottom line. This can lead to greater emphasis on policies that create short-term fiscal gains at the expense of policies that create better social and economic outcomes in the long-term.

This is a challenge that the New Zealand Treasury is taking leadership on. The Treasury has developed a Living Standards Framework that “acknowledges that living standards are broader than income alone, and are determined by a wide range of material and non-material factors.”

The Framework recognizes five key elements:

  • A broad range of material and non-material determinants of living standards (beyond income and GDP);
  • Freedoms, rights and capabilities are important for living standards;
  • The unequal distribution of living standards across different groups in society is an ethical concern for the public, and a political one for governments;
  • The sustainability of living standards over time is central to ensuring that improvements in living standards are permanent; and
  • Measuring living standards directly using self-assessed subjective measures of well-being provides a useful cross-check of what is important for living standards.

This is a simple but practical model that reminds policy makers of the interconnected nature of seemingly unrelated policy spheres. And it is a good step towards building comprehensive analysis of the social determinants of health into policy making.

The Treasury provides an interesting example of using the Living Standards Framework to inform policy advice on reforming the New Zealand welfare system (which I’ve blogged about previously):

This example demonstrates that even tools that provide a simple, high-level overview of the broader impacts of policy options can lead towards advice that prioritizes long-term outcomes over short-term, knee-jerk responses. This is something that the Ontario government should consider in its review of social assistance, but also more broadly in all policy areas.

This tool should also be refined to include an equity lens to more fully take into account the needs of vulnerable populations. The Wellesley Institute has a range of tools, including a Health Equity Impact Assessment tool and work on complex systems thinking, that can guide governments in building equity in.

The overall message that we in Canada can learn from New Zealand is that the complexity of policy challenges should not stop governments from acting. Think big, but get going.