Date posted: 31/10/2022

Federal Budget 2022-23: Measuring what matters

October Budget papers include a teaser on future wellbeing measures.

In Brief

  • The Budget papers include a new Statement 4: Measuring what matters.
  • This Statement indicates where Australia is positioned in line with the OECD Framework for Measuring Wellbeing and Progress
  • Treasury has commenced a consultation seeking feedback on how to make the OECD indicators relevant to Australia.

In the lead up to the Treasurer handing down his first Federal Budget on 25 October, much of the focus was on wellbeing and how that would be incorporated. Whilst this was not a ‘Wellbeing Budget’, the process has started to consider how wellbeing measures can be incorporated into future Budgets.

The Budget papers outlined clear consideration of the fiscal risks associated with climate change within Statement 3: Fiscal Strategy and Outlook. Importantly, they included a new Statement 4: Measuring what matters.

How does Australia stack up?

Statement 4 is positioned as being ‘the foundation of a conversation about how to measure what matters to Australians’. The Statement begins with an indication of where Australia is positioned with reference to the OECD Framework for Measuring Wellbeing and Progress. It notes that ‘Traditional macroeconomic measures such as GDP play an important role but they only provide a partial view of a community’s living standards.’ 

The Budget (figure 4.2, page 130, Budget paper 1) provides a chart of Australia’s performance against the OECD indicators, showing: 

  • 12 measures as green – indicating they are at or better than the OECD average and improving,
  • 6 measures as yellow - lower than the OECD average but improving.
  • 9 measures as yellow - at or better than OECD average but declining.
  • 5 measures as red - worse than OECD average and declining. This includes the list of threatened species, household debt and material footprint.

Across the Tasman

This concept is not new. New Zealand Treasury has been using its Living Standards Framework since 2011 to help it consider different dimensions of wellbeing in its policy work. In 2018, the Public Finance Act 1989 was amended to ensure that wellbeing objectives were included within the New Zealand Government’s Budget Policy Statement. 

Then in 2019, the Government outlined its five wellbeing objectives, which have remained consistent since. There is some criticism about the wellbeing focus to its Budget, relating to the lack of clear measurements to demonstrate progress in achieving most of the five objectives. 

A long time coming

CA ANZ has been part of shaping this conversation for years. In 2014, our paper, Is policy making measuring up? sought to start a conversation around how we measure the success of a nation. The publication concluded that despite other measures of progress being available, Gross Domestic Product (GDP) remains the dominant measure. This may be due to a preference for a single indicator that is measurable on a regular basis.

The difficulties with other measures, as experiences to date have shown, is that they require a scorecard approach and potential trade-offs between measures. Additionally, policy actions can take many years to show in the indicator. During the pandemic, the Australian Government was clearly considering a wider range of measures, focusing more on health than economic indicators. 

As former Senator Robert F Kennedy famously said about Gross National Product in 1968: ‘It measures everything, in short, except that which makes life worthwhile.’ 

Expectations are now increasing for businesses to consider and report on their performance in areas such as environmental, social and governance in addition to their financial performance. It is now time for us to view the progress of our nation through this much broader, multi-focused lens.

On Budget night, Treasury commenced a consultation seeking feedback on the OECD indicators and how to make them relevant to Australia. CA ANZ will be responding to the consultation, and we would welcome member feedback. 

Have your say 

Let us know your thoughts on how to make the OECD indicators relevant to Australia.

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