It’s not Grant’s “Living Standards Framework

Richard Harman writes:

Adams has a broader view and sees the economy as an enabler for what a National Government would really want to do.

In a way, it is a view similar to that of Grant Robertson and his “Living Standards Framework” of economic goals,  though  Adams has obviously has different priorities.

The Living Standards Framework is not Grant’s, even though he is of course supportive of them.

They were actually developed some years ago (2011), long before the change of Government. Grant is a fan of them, but this is not some new initiative. In fact as I understand it, it has been a Treasury led initiative, not a Ministerial directed one.

For those interested the LSF is based on four capitals, being:

• Natural capital – the natural environment, minerals, energy resources, land, soil, water
• Social capital – values such as trust, rule of law, communities
• Human capital – skills, knowledge, physical health, mental health
• Financial/physical capital – houses, roads, buildings, factories, hospitals,

The idea is that GDP alone is not the best measure of how a country is doing. It wants to have strong natural, social, human and physical capital also.

But the two are not contradictory. Strong GDP generally allows you to have stronger capital in the four categories.

The challenge is measurement. GDP is relatively easy to measure. Social capital for example is much harder.

So it’s great to have Treasury having developed the Living Standards Framework, and good to have a Minister of Finance enthusiastic about them (the last one was also), but this again is work that has been in play since 2011, not just since the election.

UPDATE: Today’s Politik also reports this as something new due to this Government. He says:

Writing this week in the Sydney Morning Herald, Peter Hartcher, talking about the Living Standards Framework said: “The new Prime Minister (Jacinda Ardern)  is planning a world first that could once more make New Zealand a social laboratory for the world.”

“If Ardern can sensibly pioneer a way to transform modern economies from GDP-centric systems to ones that put human wellbeing at the centre in a systematic way, she might do a lot more than improve living standards in NZ<” he wrote.

Again this is not a new initiative. It was started by Treasury in 2011 and crediting it to the Government that has not even been in office for six months is quite misleading.