Australian Bureau of Statistics and Statistics New Zealand

The analysis of wellbeing economics begins with time-choices made by people (Reference Dalziel, Saunders and SaundersDalziel et al., 2018, ch: 2). The Australian Bureau of Statistics (ABS) undertook its first nation-wide time use survey in 1992. The survey came from a growing interest in the unpaid work carried out in the home and community: ‘Work in the home makes a strong contribution to the social and economic well-being both of the families and individuals living in these homes and of the society as a whole’ (ABS, 1994: 1). In New Zealand, the Ministry of Women’s Affairs commissioned the country’s first time-use survey, which Statistics New Zealand carried out between July 1998 and June 1999 (Reference Murphy and SatherleyMurphy and Satherley, 2000).

In 2002, ABS published its first report on Measuring Australia’s Progress. The Australian Statistician, Dennis Trewin, explained in the foreword that the report was part of a growing consensus around the world that ‘countries and governments need to develop a more comprehensive view of progress, rather than focussing mainly on economic indicators such as Gross Domestic Product’ (ABS, 2002: v).^{Footnote 1} The report adopted the ‘four capitals’ approach, introduced with the following observation (ABS, 2002: 1):

In its broadest sense, Australia’s wealth is made up of various stocks of assets that include:

• • Human capital embodied in the knowledge, skills and health of individual Australians;

• • Social capital embodied in the ways we live together;

• • Natural capital embodied in our land, air, fresh waters, seas and flora and fauna;

• • Produced and financial capital embodied in machinery, houses, buildings and other assets.

Statistics New Zealand similarly published a 2002 report under a heading of Monitoring Progress towards a Sustainable New Zealand (Statistics New Zealand, 2002).^{Footnote 2} Strongly influenced by United Nations’ guidelines, it organised its collected data under six themes. Further work led to Statistics New Zealand’s Framework for Measuring Sustainable Development in 2009. This adopted a capitals-based approach, with indicators organised under three target dimensions: environmental responsibility, economic efficiency and social cohesion (Statistics New Zealand, 2009: 2).

Research on wellbeing indicators continues in both agencies. After a national consultation in 2011–2012, the ABS refreshed its Measures of Australia’s progress to present indicators under broad headings of Society, Economy and Environment, with a fourth domain of Governance to cover themes of trust, effective governance, participation, informed public debate, and people’s rights and responsibilities (ABS, 2014). The New Zealand government commissioned Statistics New Zealand to develop a new collection of statistical indicators of wellbeing and sustainable development, named Ngā Tūtohu Aotearoa – Indicators Aotearoa New Zealand. It publishes more than 100 wellbeing indicators, covering 22 topics, on a dedicated website.

Both the ABS and Statistics New Zealand have engaged with Indigenous views of wellbeing. The ABS has developed a structured framework to reflect Indigenous wellbeing concepts such as the interaction of individuals with their social, cultural and economic environments, organised under nine fluid and interacting domains (ABS, 2010). Statistics New Zealand has developed a statistical framework for Māori information needs, called He Arotahi Tatauranga (Statistics New Zealand, 2014a). In 2013, Statistics New Zealand carried out its first survey of Māori wellbeing to provide statistics on four areas it recognised as important in a Māori worldview (Statistics New Zealand, 2014b): wairua (spirituality), tikanga (Māori customs and practices), te reo Māori (the Māori language) and whanaungatanga (social connectedness). A second wave of this survey took place in 2018.

The Australian Treasury’s wellbeing framework

In October 1997, the Australian Treasury adopted a new mission statement that began: ‘to improve the wellbeing of the Australian people …’ (Australian Treasury, 2013: 5). This led to a process of internal discussion and debate on what wellbeing might mean for policy analysis and advice, resulting in the creation of a formal wellbeing framework in 2001 (Reference Gorecki and KellyGorecki and Kelly, 2012; Reference Henry, Henry, Van Halderen and DaleyGrattan Institute, 2010). It focused on five dimensions describing aspects of wellbeing most relevant to Treasury’s responsibilities (Australian Treasury, 2004: 2). Opportunity and freedom were at the centre of the framework, drawing on Reference SenSen’s (1999) capabilities theory in his book Development as Freedom (Australian Treasury, 2004: 7–8; Reference Gorecki and KellyGorecki and Kelly, 2012: 32; Reference Henry, Henry, Van Halderen and DaleyGrattan Institute, 2010: 6–7; Reference HenryHenry, 2006: 6).

The second dimension was consumption possibilities, which was viewed as a wider concept than consumption expenditure in the national accounts: ‘it includes both material and intangible things, and it includes non-market goods and services such as personal and professional relationships, the physical environment, health, and leisure’ (Reference HenryHenry, 2006: 7; see also, Australian Treasury, 2004: 8–9).^{Footnote 3} The next two dimensions, complexity and risk, were also judged from the perspective of citizens, on the basis that public policy should incorporate the capabilities of people to cope with the complexity of public life and with economic risks more generally (Australian Treasury, 2004: 1–12; Reference HenryHenry, 2006: 7). Finally, the wellbeing framework addressed the distribution of these opportunities, freedoms, consumption possibilities, complexities and risks. The distribution was not only among different population groups, but was also intergenerational (Reference Gorecki and KellyGorecki and Kelly, 2012: 38; Reference Henry, Henry, Van Halderen and DaleyGrattan Institute, 2010: 4).

The New Zealand Treasury’s LSF

Work to develop the New Zealand Treasury’s LSF similarly came from a desire to clarify the institution’s vision, which in New Zealand is to be a world class Treasury working for higher living standards for New Zealanders (Reference Gleisner, Llewellyn-Fowler and McAlisterGleisner et al., 2011: 6–7). Treasury had long recognised that measuring living standards meant going beyond GDP, with the capabilities approach being an important influence (Reference Gleisner, Llewellyn-Fowler and McAlisterGleisner et al., 2011: 1–13). The initial version had five dimensions (economic growth, reducing risks, social infrastructure increasing equity and sustainability for the future) and the four capitals (Reference Gleisner, McAlister and GaltGleisner et al., 2012: 230, Figure 12).

There is overlap in the frameworks of the two Treasuries, but there are also important differences. The starting point in the New Zealand framework, for example, was the traditional measure of economic growth, deliberately placed at the top of the diagram (New Zealand Treasury, 2015: 15). Reference Gleisner, McAlister and GaltGleisner et al. (2012) explained that this dimension ‘is important for living standards and stands at the core of the Treasury’s role’ (p. 229). Furthermore, the New Zealand framework placed more emphasis on the capital-stocks approach compared with its Australian counterpart, reflected in the ‘four capitals’ being placed at the centre of the diagram (Reference Gleisner, McAlister and GaltGleisner et al., 2012: 216). Indeed, the New Zealand Treasury (2015) argued that the dimensions at the points of the pentagon ‘are important only because they build up the capitals in the middle’ (p. 5).

After the 2017 election, Treasury revised its framework, moving it to an adaptation of the wellbeing framework created by the Organisation for Economic Co-operation and Development (OECD) for its Better Life Index (Reference King, Huseynli and MacGibbonKing et al., 2018; New Zealand Treasury, 2018). Following the OECD (2017: 22, Figure 1.1), the LSF now distinguishes between domains containing indicators of current wellbeing and the four capitals providing foundations for future wellbeing. The OECD has 11 domains, whereas the New Zealand framework has 12:

• • Civic engagement and governance;

• • Cultural identity;

• • Environment;

• • Health;

• • Housing;

• • Income and consumption;

• • Jobs and earnings;

• • Knowledge and skills;

• • Safety;

• • Social connections;

• • Subjective wellbeing;

• • Time use.

The extra domain is cultural identity, defined as ‘having a strong sense of identity, belonging and ability to be oneself, and the existence value of cultural taonga’ (New Zealand Treasury, 2018: 5, Table 1). This is a genuine innovation in the practice of wellbeing economics in public economics. It has been a feature of wellbeing dashboards in New Zealand for nearly two decades. The Statistics New Zealand framework for sustainable development, for example, included a section on culture and identity, observing that ‘New Zealand needs to acknowledge cultural issues as an explicit part of sustainable development’ (Statistics New Zealand, 2002: 84).

Table 1. Attributes of successful agri-food global value chains.

Source: Reference McIntyre, Wilson and SaundersMcIntyre et al. (2019: 20–24).

Treasury describes the dashboard of statistical indicators released in December 2018 as the first version in an iterative process. It acknowledges some gaps in the current version and is committed to a formal review of the whole LSF in 2021 (New Zealand Treasury, 2018: 14). The following section reviews these gaps and explains that there is a strong Australasian literature in each case. There is an opportunity for a distinctive Australasian contribution to the understanding of wellbeing economics in public policy.

Family wellbeing

The LSF reflects the overarching conceptual and philosophical influences of the OECD wellbeing framework (New Zealand Treasury, 2018: 8). The OECD (2017) framework puts individuals and households at the centre of the assessment (p. 23). Hence, the current dashboard does not include measures of family wellbeing, such as the quality of family relationships (New Zealand Treasury, 2018: 16). There are also no direct measures of wellbeing of children and young people, despite the focus on intergenerational wellbeing (New Zealand Treasury, 2018: 17).

The absence of measures for family wellbeing echoes the way in which the United Nations System of National Accounts (UNSNA) sets boundary conditions for what counts as economic activity, which excludes most work within families. The UNSNA is ‘the internationally agreed standard set of recommendations on how to compile measures of economic activity’ (United Nations, 2009: 1). It, therefore, provides the rules for the calculation of GDP, which it describes as ‘the most frequently quoted indicator of economic performance’ (United Nations, 2009: 1).^{Footnote 4} Reference WaringMarilyn Waring’s (1988) book criticised the patriarchal assumptions in the UNSNA definitions of what does and does not count as economic activity, reflected in the title of her book If Women Counted.

Reference WaringWaring (1988: 15–16) presented four vignettes to illustrate the application of the production boundary rules in the UNSNA. Tendai was a young girl in the Lowveld, Zimbabwe, whose day starts at 4 am to make a return walk of 11 km to fetch water for the family. Cathy was a young, middle-class North American who spent her day caring for her children and managing the household. Ben was a member of the United States military, whose role was to wait with a colleague for an order to fire a nuclear missile. Mario was a pimp and a heroin addict in Rome, who spent a large part of each day engaged in illegal market activities.

It is not difficult to place these human activities in the conceptual framework of Figure 1. Tendai and Cathy’s activities took place within families and households, while Ben acted for the nation state and Mario was a market participant. At the time of Waring’s book, the UNSNA stated that the activities of Ben and Mario are included in the measurement of GDP, but the activities of Tendai and Cathy are not. Despite some revisions since 1988, the rules continue to exclude activity involving the care of children or old people within a person’s own household (Reference Saunders and DalzielSaunders and Dalziel, 2017: 209–210).

Because analysts use GDP to evaluate economic performance, these boundary rules have implications for the design of economic policy. Waring described this from her experience as a Member of Parliament between 1975 and 1984:

Her call for creative change (Reference WaringWaring, 1988: 326) resonated around the world. This included Australia, as Reference Grace, Craig, Bjørnholt and McKayGrace and Craig (2013) have observed,

Grace and Craig have themselves been an important part of the Australian research on family wellbeing.^{Footnote 5} Their tribute also emphasised the contributions of Ironmonger and of Bittman, along with their various colleagues.^{Footnote 6} Another important contribution is the research led by Smith on the lifetime contribution to wellbeing made by mothers who breastfeed their children.^{Footnote 7} The production of mothers’ milk meets the inclusion requirements of the UNSNA, but does not appear in any country’s national accounts. Other notable contributions on family wellbeing in economic analysis include Reference HillHill (2009), Reference Apps and ReesApps and Rees (2018) and Reference Austen and JeffersonAusten and Jefferson (2019).

Natural and cultural capital

Waring’s book analysed a second feature of the UNSNA rules, which is the way in which they exclude important impacts of human activity on the environment. Thus, the most recent manual states, ‘those natural resources that are not capable of bringing economic benefits to their owners are outside the scope of assets in the SNA’ (United Nations, 2009: 19). Those natural resources include the atmosphere and the high seas (United Nations, 2009: 7) despite the key role these resources are playing in the global climate crisis (Intergovernmental Panel on Climate Change (IPCC), 2014). It is possible to address this issue in the conceptual framework of Figure 1 by recognising the impact that human activity has on natural capital and the value that ecosystem services provided by natural capital contributes to human wellbeing. This is the approach taken by Reference Costanza, d’Arge and de GrootCostanza et al. (1997), for example, in their often-cited estimate that the economic value of 17 ecosystem services for 16 biomes is greater than the world’s annual GDP.

Waring strongly opposes reducing the environment and its eco-systems to a ‘capital’ (Reference WaringWaring, 2018: 30). In contrast, another Australasian researcher advocates the capitals-based approach. Reference Gleeson-WhiteJane Gleeson-White (2014) analyses the work of the International Integrated Reporting Council (IIRC) in identifying six types of capitals as the conceptual basis for value creation: financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital. When market firms report on the impact of their activities using all six capitals, this ‘makes clear what was previously shrouded’, but Gleeson-White concludes this will not save the planet while corporations privilege financial capital, the only metaphoric wealth in the list (Reference Gleeson-WhiteGleeson-White, 2014: 280, 282). That conclusion is consistent with Reference WaringWaring’s (2018) objection to treating all capitals like financial capital.

It is possible to combine the first three forms of capital in the IIRC list under the label of economic capital, so that Gleeson-White’s analysis covers the standard four capitals found in many wellbeing frameworks. Outside that tradition, David Throsby is an Australian world authority on cultural economics (Reference Ginsburgh and ThrosbyGinsburgh and Throsby, 2013; Reference ThrosbyThrosby, 1994, Reference Throsby1999, Reference Throsby2001, Reference Throsby2010; Reference Throsby and PetetskayaThrosby and Petetskaya, 2016). Throsby observes that culture is an important example of a long-lasting asset providing services that people use to create wellbeing. Consequently, he is an advocate for placing ‘cultural capital’ as a component of a nation’s total wealth (see, especially, Reference ThrosbyThrosby, 1999). That argument finds support in New Zealand by Reference De Bruinde Bruin (1999), Reference DalzielDalziel (2019) and Reference Dalziel, Matunga and SaundersDalziel et al. (2006, Reference Dalziel, Saunders and Savage2019). The New Zealand Treasury has considered this argument, but currently treats culture as ‘cross-cutting with respect to all the domains and capitals’ (New Zealand Treasury, 2018: 57).

Indigenous worldviews

Reference TaylorTaylor (2008: 112) has observed there is likely to be a range of Indigenous views on appropriate wellbeing indicators, which in all probability ‘will stand outside, and therefore be excluded from, more mainstream indicator frameworks’ (see also Reference ProutProut, 2012). Reference Yap and YuYap and Yu (2016) comment that a strength of Sen’s capabilities approach is that it does not prescribe capabilities, allowing space for Indigenous worldviews. Based on the lived experience of the Yawuru people in Broome, Western Australia, they suggest five essential dimensions for Indigenous wellbeing (Reference Yap and YuYap and Yu, 2016: 317–318):

• • Indigenous autonomy and self-determination, including respect for Indigenous world views, is a basic human right that is also instrumental in pathways towards other aspects of wellbeing.

• • Indigenous people’s connection to country, culture and their environment are strongly linked to many other aspects of wellbeing.

• • The central importance of family and kinship, transcending the boundaries of immediate blood relations, cannot be over-emphasised.

• • The interconnections between dimensions of wellbeing are as important as the individual parts, so that an integrated approach is essential.

• • Conceptualisations of health and wellbeing cannot be meaningfully separated from the context of colonisation and its consequences.

Consistent with those dimensions, Reference Biddle and SweeBiddle and Swee (2012) analysed data collected in the 2008 National Aboriginal and Torres Strait Islander Social Survey to report a positive relationship between the sustainability of Indigenous land, language and culture and an Indigenous person’s subjective emotional wellbeing. This supported earlier research by Reference DockeryDockery (2010) using the 2002 survey, which provided evidence that cultural attachment is positively associated with a range of socio-economic outcomes.

In New Zealand, researchers have created several influential frameworks of wellbeing that embed Indigenous cultural values. These frameworks include the following:

• • Te Whare Tapa Whā created by Reference DurieMason Durie (1998: 68–74);

• • Te Pae Māhutonga created by Reference DurieMason Durie (1999);

• • The Fonofale model created by Fuimaono Karl Pulotu-Endemann (Reference Crawley, Pulotu-Endemann and Stanley-FindlayCrawley et al., 1995: 11–12);

• • A model of the relational self for mental wellbeing (Reference Tamasese, Peteru and WaldegraveTamasese et al., 2005);

• • Pacific Operating Model 2018 (Reference Thomsen, Tavita and Levi-TeuThomsen et al., 2018: 13–14);

• • He Ara Waiora prototype model (Reference O’Connell, Greenaway and MoekeO’Connell et al., 2018: ch. 3).

A discussion paper by Te Puni Kōkiri and the Treasury (2019) argues that Indigenous worldviews on family wellbeing are universally applicable. It, therefore, proposes a wellbeing framework using seven outcomes that guide the government’s Whānau Ora (family wellbeing) programme (Te Puni Kōkiri, 2016):

• • Whānau are self-managing and empowered leaders;

• • Whānau are leading healthy lifestyles;

• • Whānau are participating fully in society;

• • Whānau and families are confidently participating in Te Ao Māori (the Māori World);

• • Whānau and families are economically secure and successfully involved in wealth creation;

• • Whānau are cohesive, resilient and nurturing;

• • Whānau and families are responsible stewards of their living and natural environments.

Market participation

A feature of the wellbeing framework in Figure 1 is that it puts market participation at the centre of human actions for wellbeing. As the distinguished New Zealand economist, John McMillan, observed, ‘markets are the most effective means we have of improving people’s wellbeing … but only where they work well’ (Reference McMillanMcMillan, 2002: 13). McMillan regarded the caveat as crucial, and indeed a recurring motif of research reported in this journal is that disadvantage in market employment is an enduring barrier to wellbeing.^{Footnote 8} This means that wellbeing economics in public policy must pay attention to social justice in the marketplace, which is a central theme – perhaps the central theme – of another distinctively Australian contribution over the last five decades: the research of Halevi, Harcourt, Kriesler and Nevile, recently collected in Reference Halevi, Harcourt and KrieslerHalevi et al. (2016).

Teece is a New Zealand born economist with an international profile for his capability theory of the firm; see, for example, Reference TeeceTeece (2019). That theory resonates with Sen’s capabilities theory (Reference Dalziel, Saunders and SaundersDalziel et al., 2018: 94–96). Firms operating in the market economy are able to combine different types of capital to create specialist capabilities for supplying goods and services valued by their customers. This greatly expands the capabilities of people to create lives they have reason to value, at least for those who can access the market economy.

Two examples drawn from Australia and New Zealand can illustrate the importance of market participation for wellbeing. The first comes from Australian research on employment skills codification and industrial skills ecosystems, including the notable contributions by Reference Hall and LansburyHall and Lansbury (2006), Reference Junor, Hampson, Ogle, Bolton and HoulihanJunor et al. (2009), Reference Cooney, Jerrard and DonohueCooney et al. (2010), Reference Buchanan, Jakubauskas and BrysonBuchanan and Jakubauskas (2010), Reference Hampson and JunorHampson and Junor (2015), Reference Smith, Smith and HampsonSmith et al. (2015) and Reference Buchanan, Anderson, Power, Buchanan, Finegold and MayhewBuchanan et al. (2017). This research highlights how skills in employment depend on social processes well beyond the control of any individual worker. Thus, it is possible for individuals to find themselves trapped in low-paid jobs, either because employers do not recognise the skills they bring to the occupation or because the industry has settled into an equilibrium characterised by low training, low skills and low wages.

The second example comes from research in New Zealand on agri-food global value chains, including recent contributions by Reference Trienekens, van Velzen and LeesTrienekens et al. (2017), Reference Dalziel, Saunders and SaundersDalziel et al. (2018), Reference SaundersSaunders (2019), Reference Tait, Saunders and DalzielTait et al. (2019) and Reference McIntyre, Wilson and SaundersMcIntyre et al. (2019). This research is distinctive because among OECD countries, New Zealand is unusually distant from high-value markets in Europe, Asia and North America and also has an unusually high proportion of its merchandise exports devoted to agri-food products (72% in 2014 – Reference Dalziel, Saunders and SaundersDalziel et al., 2018: 490). Consequently, wellbeing in New Zealand depends on creating value from its natural and human capital. Table 1 illustrates that combination, reporting 11 attributes of successful agri-food global value chains recently identified by Reference McIntyre, Wilson and SaundersMcIntyre et al. (2019).