A three-legged stool

Written By: - Date published: 10:34 am, April 10th, 2012 - 4 comments
Categories: debt / deficit, economy, sustainability, treasury - Tags:

Ruth Richardson pushed Fiscal Responsibility and as part of her legacy we have the Fiscal Responsibility Act, meaning that all policies are measured for their financial implications.

This hasn’t always worked brilliantly.  It’s pushed Treasury to the fore, and their required predictions aren’t always very close to the mark.  So the 2010 ‘revenue neutral’ tax cuts – shored up by a bit of Treasury ‘growth’ magic – have in reality cost us over $1 billion in their first year, and created a hole in the accounts worth about 2% of GDP.  Even when Treasury does say something doesn’t make economic sense – like National’s proposed sale of our energy companies – it doesn’t actually stop the government proceeding.

But the Fiscal Responsibility Act does mean there’s a constant watch on the price of things – if not necessarily the value of them.  We see the effect on the tax take, the government accounts and on GDP (I’d prefer GDP per capita for a start, so population growth doesn’t distort the figures, or ideally some measure that valued voluntary work, but that’s an argument for another day…).

But money isn’t everything.  As the Dalai Lama says: “The purpose of our lives is to be happy”, and as the Beatles say: “Money can’t buy you love” (although, as one wag puts it, it does allow you to be miserable in comfort).

As a society, it’s all very nice if the government aims to make us all rich, but what would that really achieve?

So I’d like a second Act: the Social Responsibility Act, beefing up the Ministry for Social Development as it evaluates whether each piece of legislation actually works for society.  Makes us happier, improves societal cohesion, improves the actual lives of all our country’s citizens.

Bhutan was the first and has gone the furthest on happiness – they’ve replaced GDP with Gross National Happiness as their primary measure of society.  But even Britain is measuring happiness now, so that they can track progress on this as well.  Some might dislike measuring such an amorphous social science; but, if something’s important, it doesn’t matter if it’s difficult to measure (and it’s not exactly like economics isn’t ‘the dismal science’…)

But there’s a third problem too.  It’s great if the government’s books are balanced and the current generation is happy – but what if there’s nothing to hand over to the next?

So we need a third act: the Environmental Responsibility Act, beefing up the Ministry for the Environment to evaluate each policy’s environmental sustainability.

Fiscal responsibility has resulted in decreased public debt, leaving our books in a good state internationally.  If we engaged in Social responsibility we’d likely end up with increased equality and a happier, healthier nation.  Environmental responsibility might make us truly green, as an example to the world of what needs to be done for our own survival.

If each government policy had to be sized up against these three measures before proceeding I think we’d end up with much better laws, much better policies and a much better country.  What do you think?

4 comments on “A three-legged stool ”

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  1. deemac 1
    10 April 2012 at 2:40 pm

    and how about an equality audit while we’re at it?

  2. bbfloyd 2
    10 April 2012 at 5:14 pm

    it’s hard to put into words just how blindingly obvious it is that if we were to truly be who we claim to be, then these ideas would not just be ideas, but reality….

    one thing…”and their required prediction aren’t always very close to the mark”… i applaud your sense of fair play, but one can give too much credit… i can’t remember treasury getting within a bulls roar for years……. probably not since the last time there was a competent finance minister…. and even then…………?

  3. Alethios 3
    11 April 2012 at 1:47 pm

    How about Cultural Wellbeing?