I haven’t seen much discussion of a new report called Working Towards Higher Living Standards for New Zealanders. No, it’s not from the Labour Party or the Greens. It’s a paper from the hard-nosed New Zealand Treasury … the folks we associate with measuring economic performance and talking tough about the budget and the bureacracy.
But in this report, Treasury explores and advances the notion that ‘living standards’ represent a far more robust collection of factors, including availability of leisure time, a sustainable environment, health and skill levels, and levels of social trust … to name just a few. Treasury is adopting this more robust framework and argues that government must consider all aspects of financial/physical, human, social and natural capital in formulating policy.
Here’s how Treasury describes its effort:
“Over the last 18 months, Treasury has undertaken research and analysis to improve its understanding of living standards. This work is part of internal efforts to enhance policy advice and is also a response to external criticisms about the lack of clarity surrounding Treasury’s vision.
The result of this work is the development of a ‘Living Standards Framework’ (the Framework). The Framework is intended to help Treasury consistently provide Ministers robust, theoretically-grounded and evidenced-based advice that aims to improve the lives of all New Zealanders.”
And here’s what Treasury says about natural capital:
“Natural capital provides a flow of environmental services. For example, the natural environment absorbs waste products, up to its absorptive capacity, which would otherwise cause pollution damage and endanger people’s health. In addition, natural capital provides services that contribute to economic activity. This is especially true in New Zealand, where the primary sector (which includes agriculture, mining, forestry and fisheries) accounts directly for about 7% of New Zealand’s GDP, while tourism, which trades off New Zealand’s ‘100% Pure’ image, accounts for another 10%. Furthermore, consumers in New Zealand and overseas are placing a higher value on environmentally-friendly production technologies and in some markets, environmental sustainability is becoming the price of entry for New Zealand’s exports.”
After noting some worsening NZ trends with respect to soil, freshwater, fish stocks and biodiversity, the paper recommends:
“It is critical that governments efficiently allocate and properly account for the depreciation of stocks of natural capital, to ensure their sustainability and the sustainability of the flows of services and amenities they generate.”
Amen! Nice language to hear and a remarkable, important report from a powerful voice in government. Let’s hope it gains some traction.