Should citizen wellbeing be the main focus of Government spending ahead of economic growth?

Jo Caruana - 2nd July 2019

“Projects with a major impact should be future-proofed in terms of their happiness impact” – Dr Gordon Cordina

There is a fast-growing school of thought that believes citizen wellbeing – rather than economic growth – should be the primary focus of government spending.

 In New Zealand, for instance, Prime Minister Jacinda Ardern said she wanted to prove that she could govern the country on an approach based on kindness and empathy, not one that focuses solely on GDP growth. With that in mind, she has just published the world’s first-ever ‘well-being budget’. In it, her government focuses its spending explicitly on certain social outcomes and inter-generational issues.

It sets five clear goals: to support mental health (particularly among young people); to reduce child poverty; to increase support for its Maori and Pacific Islander peoples; to transform the economy for a low-carbon future; and to boost productivity and digital innovation. As a result, bids to the Treasury will not only need a cost-benefit analysis, but an assessment of their well-being impact.

 Over in the UK, the move to a wellbeing focused spending budget has also been on the agenda. In Wales, the government’s innovative Well-Being of Future Generations Act places a legal requirement on public bodies to think about the long-term social, cultural, environmental and economic well-being impact of their decisions.

 This activity led one of Britain’s past cabinet ministers, Gus O’Donnell, to launch a report that urges a “sea change in thinking”, and through which he believes the UK could lead the world by making well-being the goal of government policy. His paper calls on the government to use the spending review to boost its funding for mental health services, teaching in schools and social care by an extra £10 billion (€11.1 billion) within five years to raise the well-being of its citizens.

Gordon Cordina

Gordon Cordina

In an interview in last week’s edition of The Malta Business Observer, local economist Gordon Cordina, Executive Director of E-Cubed Consultants, said that the idea is fast gaining traction in international policy debates. “Some academics claim that income explains only one per cent of happiness,” he stated. “This, of course, does not mean that we can live happily without income, but that income seems to not really affect the differences between happiness in different countries.”

For instance, he explained, people in Scandinavia are often quoted as being among the happiest, due to protective social networks and enabling environments for individuals. “Malta also typically fares well, placing in 22nd place, having advanced over 25 places in the past five years. Our climate plays a role in this no doubt, but improved social inclusion, economic prospects and performance also play a part.”

Sustainability is an important factor, according to the economist. “But the fundamental question is whether this is sustainable into the future, within the context of a rising and more diverse population, a more congested environment and, potentially, an erosion of traditional networks and arrangements that we typically associate with a Maltese identity,” he noted.

Marie Briguglio

Marie Briguglio

Agreeing with the fact that well-being should be a major focus of the Maltese economy, Marie Briguglio, a lecturer in behavioural economics, economic research methods, environmental economics and social marketing at the University of Malta said there is, arguably, no human quest more important than that of improving wellbeing. “A large (and growing) body of scholarly research – research conducted in Malta, with works by international and national governmental and non-governmental bodies around the world – has made it possible to identify some of the key issues which can help improve wellbeing in Malta.

These include health and exercise, lifelong education, togetherness, active participation, the environment and working for better governance,” she asserted. “There is also a role for spirituality, religiosity, mindfulness and gratitude.” In fact, at the first National Conference on Well-being in Malta, held in October 2015 and conducted under the auspices of Marie Louise Coleiro Preca by the then-President’s Foundation for the Well-being of Society, Dr Briguglio presented measurements of wellbeing across the world, as well as key socioeconomic factors of well-being and their implications on policy. “The conference concluded that regular and robust national wellbeing statistics and research are required in Malta to be able to compare the wellbeing of different segments of Maltese society, over time, and with other countries, so as to evaluate policy performance in well-being terms and to identify policy priorities,” she said.

With much of this in mind, Mr Cordina went on to explain that the international academic debate typically focuses on a conflict between growth in production and the happiness of its population. “So, the government can either direct its budget towards expanding the productive base, or to sustaining social and welfare services,” he said.

“When analysing the bare essentials of Malta’s competitive advantage, it often boils down to offering investors and business partners a number of factors, such as a cost-efficient operating environment, coupled with our distinctive selling proposition as a Mediterranean archipelago with an attractive lifestyle where people can work, relax, heal, learn and be creative. This combination of factors has attracted tourism activity, foreign direct investment and the new economy based on jobs in financial services and iGaming. Should Malta lose its ‘happiness’ proposition, I believe that this would be of significant detriment to the economic performance of the country.”

“Looking to the future, I do believe that Malta should invest in ‘happiness’ projects and activities, and ensure that projects with a major impact are future-proofed in terms of their happiness impact – whether that’s in terms of the natural and physical environment, social relationships, or physical and mental health. This will likely be the major challenge facing us in our next phase of economic development and growth, and it will mark our welfare as a nation for generations to come,” Mr Cordina added.

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