Wellbeing Budget 2023

Support for today
Building for tomorrow

Te Ara me te Angana Toiora The Wellbeing Outlook and Approach

Te Anganga Toiora | The Wellbeing Outlook

Budget 2023 is our fifth Wellbeing Budget, in which New Zealanders’ overall wellbeing drives the decisions we make, and we measure progress on a broader range of metrics than the more traditional fiscal and economic considerations. This wellbeing outlook provides an overview of Aotearoa New Zealand’s current state of wellbeing. It provides a short update on the relevant sections of the Budget Policy Statement (BPS) published in December 2022.[2]

New Zealand’s wellbeing at a glance

The Treasury’s first wellbeing report, Te Tai Waiora[3], provided a broad perspective on the range of things that matter for wellbeing. It highlighted that New Zealand is a good place to live in many ways and that many aspects of life have improved over the past 20 years. We enjoy cleaner air, longer life expectancy, and higher incomes. However, New Zealand faces wellbeing challenges, particularly around mental wellbeing, education, and housing quality and affordability – and these challenges tend to be experienced more by our younger people. These issues are long-standing but have not lost their urgency.

New Zealand has relatively high levels of many aspects of wealth to support our future wellbeing. Future New Zealanders will benefit from New Zealand’s increasing stock of physical capital and human capability. High social cohesion bodes well for future wellbeing, although there are challenges to maintaining this.

New Zealand’s strength and resilience to global forces continues to be tested by the combination of an international economic downturn, globally high inflation, and a geopolitical situation dominated by war, trade disputes, and residual supply chain issues. While the economy has fared better than expected, significant challenges remain. Many of the macroeconomic trends identified in December’s BPS have persisted, with a global economic downturn, a tight labour market, and rising interest rates continuing to put pressure on New Zealand’s economy. These have contributed to increasing pressure on households as the cost of living increases.

Aspects of the natural environment are deteriorating as a result of intensive resource use and a changing environment. Recent extreme weather events in the North Island highlight that more frequent and severe climate-related hazards are having an effect on individuals, firms, and communities. They also illustrate the importance of building our resilience to climate change and its impacts.

New Zealand has weathered many shocks in recent memory and our wellbeing has generally held up well. Absorbing these shocks has affected our wealth and we need to rebuild our resilience to the future shocks we know will come.

Impact of recent extreme weather events on wellbeing

The Auckland Anniversary Weekend floods and Cyclone Gabrielle caused widespread catastrophic flooding across large parts of the North Island, causing devastation to some communities. Specific impacts (structured under the Treasury’s Living Standards Framework four domains of national wealth) include:

  • Human capability: Eleven fatalities were tragically confirmed from Cyclone Gabrielle, and four from the Auckland Anniversary Weekend floods. Hundreds of people across the North Island had to leave their homes, and many remain unable to return. We know that the personal recovery for those affected by these events is going to be tough. That is why the Government has surged support, including mental wellbeing services, in the affected regions.
  • Natural environment: Significant damage was caused by woody debris (including forestry slash) and sediment. The recently announced Ministerial Inquiry is urgently considering the impact of related land-use practices on the environment and communities. Getting affected rural communities back on their feet as quickly as possible remains a Government priority, given the criticality of our farmers, growers, and other rural businesses to local economies.
  • Social cohesion: The aftermath of the events saw communities come together and support one another, with extraordinary stories of selflessness emerging all over the country. As we recover, we are committed to a locally-led, central Government-supported approach where local voices are heard. This is why we have established lead regional Ministers and bespoke regional recovery structures, which will coordinate regional recovery activities between local and central government, iwi, and community groups in each of the affected areas. The Cyclone Gabrielle Recovery Taskforce (with representatives from business, local government, iwi, and unions) will help to align these locally-led recovery plans with the work of government agencies and the private sector.
  • Financial and physical capital: These events have caused significant damage to homes, businesses, and infrastructure. The Treasury estimates that the damage will total between $9 and $14.5 billion. This comprises $5 – $7.5 billion of damage to central and local government infrastructure (eg, transport and water), as well as losses suffered by households and businesses. The events have also caused an estimated $400 – $600 million in output losses in the first half of 2023, primarily from lost agricultural and horticultural production. Persistent annual losses of approximately $100 million are also anticipated beyond 2023.
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