OPINION PIECE - ECONOMIC GROWTH AND WELLBEING - 4 DECEMBER 2020

OPINION PIECE - ECONOMIC GROWTH AND WELLBEING - 4 DECEMBER 2020 Main Image

PETA MURPHY MP
MEMBER FOR DUNKLEY


ECONOMIC GROWTH AND WELLBEING

 

In a speech to the University of Kansas in 1968, Senator Robert F Kennedy noted that:

… the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. (Kennedy 1968)

As this article is being written, Australians are waking up to the confirmation that we’re experiencing the worst national account figures since the 1930s. There’s no doubt that reviving economic growth and creating jobs are critical challenges facing Australia’s leaders and will be for many years to come, but, as we imagine post-Covid (or Covid-normal) Australia, are the traditional measures of national income, such as GDP, sufficient indicators of our progress? My argument is that they’re not, because, as economist Simon Kuznets said, ‘the welfare of a nation can scarcely be inferred from a measurement of national income.’[i]

While economic prosperity, fairly shared, must play a central role in our national agenda, in order for Australia and Australians to truly thrive, it should be embedded in a larger story of wellbeing—of people, of communities and of the places we live in and love. Arguably, the failure to see national wellbeing and national economic growth as indivisible explains why, as The Economist observed in 2011, while we’re at our best in a crisis, our history is one of failing to take full advantage of prosperity.[ii]

Prior to 2020, Australia experienced an extraordinary 28 years of economic sunshine. During that time, annual GDP growth peaked at 5% and troughed at 2% (World Bank 2019). Yet, that long economic summer has left many people in the shade. Inequality has risen, wages have stagnated and more people on low and precarious incomes are being left behind. The natural environment is in a fragile state, struggling to withstand the relentless demands of human production, consumption and population, as the more frequent natural disasters we experience attest. The mining boom, while contributing to Australia’s economic growth, has left wider cultural and environmental legacies for the nation.

In July 2020, the latest index for the UN Sustainable Development Goals ranked Australia third globally for our management of the Covid crisis, but 37th for our long-term direction (Sachs et al. 2020). Perhaps that reflects that in recent times, individuals, organisations and governments have struggled to deliver more than the introduction of piecemeal or temporary reforms and have failed to build powerful community support for a creative national vision or long-term agenda. That failure hasn’t always been the hallmark of Australian politics—and it doesn’t have to continue to be so.

In the years between becoming a nation in 1901 and World War I, Australia built a thriving democracy based on a living wage supplemented by an age pension, an interventionist state and a nearly universal franchise that included votes for women (although not most First Nations people). After World War II, legislators renewed the Australian compact by committing to full employment, mass migration, a huge expansion of housing and, later, the broadening of tertiary education. From the 1980s, Australia introduced sweeping reforms that deregulated and opened our economy while expanding the ‘social wage’ with Medicare, family support and superannuation, and better protecting our environment.

Those times of profound national change had characteristics in common with each other and with where we find ourselves in 2020. Most obviously, they all followed crises that threatened health, wealth and wellbeing. They all required leaders from the political, social, business and civil spheres of society to put down their cudgels—at least temporarily—in order to achieve the nation’s larger goals. In all instances, in the urgency of the moment leaders took one step back to forge a simple, compelling narrative that the population could rally behind. By thinking larger and looking longer, leaders of those periods built a legacy that would endure—they created a nation, they built a nation in which everyone had a job, and they opened our nation to the world. We need equivalent vision from our leaders today.

Finally, those moments of upheaval occurred at roughly 40-year intervals. That might be a coincidence, or it might suggest that every generation renews the nation in its own way, finding answers that respond to the urgency and need of its time. Nearly 40 years since the last period of major change emerged, we can view the health, social and economic damage wrought by Covid-19 as also providing the conditions for reimagining and renewing Australian society—captured by the oft used phrase, ‘Build back better’.

In 2020, Covid-19 has illustrated starkly and painfully that it’s impossible to separate the wellbeing of our people from the health of our economy, society and environment. We knew before the pandemic that Australians care about their physical and mental health and that of their families and friends, their connections to their communities, the health of the natural environment and the planet their children will inherit, and whether their society is broadly equal and fair. But Covid-19, and before it the devastating summer bushfires, have stripped bare the fragility of almost everything we hold dear. It has raised the spectre of an entire generation of young Australians who may now face a future more difficult, less prosperous and less secure than the future their parents once faced.

Australians today have a once-in-a-generation opportunity to, as economist Kate Raworth puts it in her book, Doughnut economics, ‘change the goal’ (Raworth 2011). We can decide to judge the success of recovery from the global pandemic not just by how swiftly the economy rebounds, but also by whether our country is meeting measures of what Australians value as contributing to a ‘good society’.

Measuring wellbeing is neither a new nor a radical suggestion. In fact, the Australian Bureau of Statistics (ABS) was the first national statistical organisation to do it (Drabsch 2012). As the ABS noted in a submission to the 1996 Senate Legal and Constitutional References Committee Inquiry into National Wellbeing:

Towards the end of the 1980s and into the 1990s … interest intensified in social well-being issues and the need for appropriate indicators. Declining real wage levels and an awareness that sections of the community were experiencing hardship, also sharpened the need for indicators. At the same time, the community became more aware of the wider issues of quality of life and the concept of economically sustainable development. (SLCRC 1996)

Although significant economic reforms were introduced during the 1980s and early 1990s, the intensified interest and awareness described by the ABS didn’t translate into changes to the way in which the Australian Government constructed the national accounts. The New Economics Foundation suggested in January 2009 that, while the operation of:

a set of National Accounts of Well-being would be a significant departure from conventional practice … the idea in fact represents a return to the original intent for modern national accounting systems as they were first conceived almost 75 years ago. (Michaelson et al. 2009)

Since that observation was made, various international jurisdictions have considered what a ‘national account of wellbeing’, however named, might look like, such as the report of France’s Commission on the Measurement of Economic Performance and Social Progress (commonly referred to as the Sen–Stiglitz–Fitoussi Commission) (Stiglitz et al. 2009). The OECD subsequently set up the High-Level Expert Group on the Measurement of Economic Performance and Social Progress (HLEG 2018a), which in 2018 released a report analysing responses to the 2008 global financial crisis and recommending that:

governments use a dashboard of indicators to assess a country’s health and people’s conditions, encompass[ing] the most important dimensions of people’s lives, such as skills, health, jobs and income, as well as economic security, environmental degradation and trust. It should pay attention not just to average outcomes but also to how policies affect each of the segments of society, and give a balanced consideration to well-being today and in the future. (HLEG 2018b)

In 2015, the UN member states (with bipartisan support in Australia) adopted the Sustainable Development Goals—a ‘blueprint to achieve a better and more sustainable future for all’ (UN 2015). The 17 interconnected goals relate to poverty, inequality, climate change, environmental degradation, peace and justice.

Closer to home is the New Zealand ‘Wellbeing Budget’ (NZ Treasury 2019). The first Wellbeing Budget, handed down in 2019, used evidence to identify five priority areas with ‘the greatest opportunities to make real differences to the lives of New Zealanders’: supporting mental wellbeing; improving child wellbeing, supporting Māori and Pacific aspirations ; transforming the economy; and investing in New Zealand. (As an aside, I can’t help but wonder if it’s merely a coincidence that the three national leaders championing the wellbeing approach—in New Zealand, Scotland and Iceland—are women.) It’s important to note that a wellbeing approach embraces economic growth, seeking to maximise the benefits that flow from it by ensuring that growth is broad, inclusive and sustainable.

While Australia might draw from those international examples, we need an Australian approach. The ‘quadruple bottom line’ (Drabsch 2012) approach to measuring national wellbeing (economy, society, environment and democracy) could provide the foundations for an Australian approach to a national wellbeing budget and for national wellbeing accounts. The specific line items under each of those meta-measures could reflect a modern Australian description of what’s required for, or what constitutes, a good society. We’ve plenty to build on, given the pioneering work of the ABS, of the Australian Treasury’s 2004 Wellbeing Framework and the National Sustainability Council’s 2013 measures of ‘sustainable wellbeing’.

I’ve reflected on the way my constituents in Dunkley have responded to the challenges of 2020 and on the issues that they’ve asked me to champion as their federal member. They nominate social connectedness and opportunities to participate in ‘community’; equitable access to physical and mental health support, employment and education; and the preservation of our local environment. They care about economic growth, but they care about much more than that. In July 2020, more than 70 locals responded to an open invitation to attend a virtual ‘charities and community groups’ forum. There was some discussion about the dearth of government funding and support for individual groups and projects, but the participants themselves drove the conversation towards how they could work together to deliver programs and resources for those in our community who find themselves isolated or disadvantaged. Rather than pushing their own barrels, our charities, community groups, sporting clubs and arts societies wanted to explore what they could do together that none of them could ever hope to do alone.

This is the message I bring from my community to the national debate. We really are all in this together. It isn’t the time in our nation’s journey for piecemeal, short-sighted or divisive leadership. On the contrary, if we can again step back and reflect, we can grow not only wealthy but wise and well by working together towards the future we want.

 

[i] Kuznets devised his measure of national income to understand the depth of the Great Depression.

[ii] ‘The next Golden State’, The Economist, 26 May 2011, online.

 

This piece was first published in ASPI’s After Covid-19: Voices from the Federal Parliament on Tuesday, 1 December 2020.

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Authorised by Paul Erickson, ALP, Canberra.