Living Standards Framework: Background and Future Work

The New Zealand Treasury is the Government's lead economic and financial adviser, driven by our vision to be a world-leading Treasury working towards higher living standards for New Zealanders. In alignment with this role and vision, we have developed the Living Standards Framework (LSF) to improve the depth, breadth and quality of our advice. The LSF is a high-level framework for measuring and analysing intergenerational wellbeing, covering current wellbeing, future wellbeing, and risk and resilience across a range of economic, social and environmental outcome domains. It sits alongside and does not replace more sector-focused or subpopulation-focused wellbeing frameworks used in the public sector. The LSF builds on 30 years of New Zealand and international theory and evidence on wellbeing, including discussions with a range of New Zealanders and consultation with domestic and international experts. The LSF also draws on the Organisation for Economic Co-operation and Development's (OECD's) wellbeing approach to enable international comparability. To support the implementation of the LSF, we have developed a Dashboard of indicators that provide an integrated system for measuring wellbeing: the LSF Dashboard. The selection of indicators has been informed by valuable public feedback and consultation with a range of experts in New Zealand and overseas, including within government agencies. The LSF and its Dashboard add to the Treasury's toolkit strengthening the quality of our fiscal and economic advice to Governments, in order to ensure responsible fiscal management and stable macroeconomic policy to support sustainable growth. We have begun the process of augmenting existing Budget management tools, such as Cost Benefit Analysis (CBA), to include the LSF. We have also started using the LSF Dashboard to assess social, economic and environmental circumstances in New Zealand for the purposes of advising on government priority-setting. It is not prescriptive about whether or how governments should intervene in response to the wellbeing situation the LSF Dashboard depicts. The LSF Dashboard aims to capture a comprehensive and balanced range of important wellbeing outcome indicators, within a practical and manageable structure. By doing so, it intends to accommodate a range of worldviews about what matters for wellbeing in New Zealand. Of course, it is clear that no single set of indicators can ever capture all that matters for each person, family, whānau and community in New Zealand. This first version of the LSF Dashboard is a positive early milestone amid a long-term work in progress. As can be expected, there remain a number of limitations and gaps, partly reflecting data availability and quality limits, and partly a need for the Treasury to better understand the relevant concepts. Further work is needed on, for example, fuller and richer representations of Te Ao Māori perspectives, children’s wellbeing and New Zealand cultural identity. We plan to undertake a comprehensive review of the LSF and its dashboard in 2021. The Treasury will keep developing the LSF Dashboard as we gain a deeper understanding of what is important to the people of Aotearoa, as scientific knowledge about wellbeing increases, and as we learn more about how the tool can be used most effectively in practice as we work towards higher living standards for New Zealanders.