BUDGET 2022: REDEFINING SUCCESS TO GROW NEW ZEALAND SUSTAINABLY
How do we, as a nation, define success?
For many years the answer has always been the same: the economy. GDP, GNP, ToT and a whole host of other acronyms are used to assess the health of our economy, and therefore our country, over time.
As a relatively stable Western country, our economy has steadily grown, bar a few events-based blips, the 2008 recession and COVID-19 among them.
And yet even through Covid, the Government can legitimately say our economy has performed pretty well. Despite supply chain and labour constraints, and continued worries around inflation, our GDP has remained stronger than expected, unemployment is at a historic low, and even debt is not as high as was originally forecast, and is still significantly lower than that of most other advanced economies.
If we are taking the economy as our defining factor, then we can say that New Zealand as a country is relatively successful.
So why does it feel like things are getting worse?
Mental health, the environment and our small businesses are suffering
There has been a decline in the mental health of New Zealanders over the past 20 years. The proportion of people reporting high psychological stress sometime in the last four weeks has increased to 9.6%,1 while the proportion with mood and/or anxiety disorders has risen from 12% in 2006 to 21.5% in 2021.2 This is disproportionately skewed towards young New Zealanders and also Māori, whose rates of psychological distress are almost twice as high as other New Zealanders (while Māori suicide rates are 80% higher). The gap between the physical health of Māori and Pasifika compared with the rest of New Zealand has also widened in the past two decades.3
Poor mental health is also impacting business owners – anecdotally we are seeing increasing amounts of stress among the businesses that we work with, as COVID-19, supply chain and uncertain economic and political conditions all take their toll.
Meanwhile nearly every week we are hit with new stories of a decaying climate. Droughts, storms, bushfires and cyclones aren’t just affecting far-off countries anymore. We are seeing them in increasing severity both in our Pacific neighbours and right here in New Zealand, with devastating consequences for businesses in every industry, particularly agriculture. The latest IPCC report has indicated that we are nearly out of time. If we do not halve our emissions by 2030 at the latest, we will face severe consequences. And yet, per person, New Zealand’s emissions are currently the sixth highest in the world.4 Our leaders are yet to take meaningful action to curtail this.
Worsening mental health, continued inequities and a poor climate record all continue to have a significant impact on New Zealanders and our business community. So can we really call New Zealand a success?
When we focus on profit and finances, we never get the full picture. We see this in business all the time – the success of an organisation is dependent on its people and its impact on the community and the world around it, just as much as its profit margins and revenue.
Growing Aotearoa sustainably: It’s time to act
The same notion can be applied to the country as a whole. Put simply, now is the time to act. Yes we still want to see economic growth – but how can we do this sustainably, ensuring that everyone benefits from it, and that our environment does not suffer as a result?
On the surface, the 2022 Budget appears to try to solve this question. A bumper Budget of $6 billion will include funds to create far-reaching health reforms that focus on both mental and physical health, as well as the establishment of a new Climate Emergency Response Fund, allocated towards initiatives that will help us meet our climate change objectives.
A new wellbeing framework is being created – one that incorporates te ao Māori and Pacific perspectives, and that recognises that the natural world is at the centre, that we are sustained by it and that we have a responsibility to look after it.
The Government has also indicated continued investment in infrastructure and housing, to ensure warm and healthy homes for all New Zealanders.
Detail and long-term thinking the key
While in theory this spending should go a long way in creating a truly successful New Zealand, unfortunately, we are yet to see any meaningful detail.
Nick Innes-Jones and James MacQueen, BDO Construction Sector Specialists, want to see Government working with the construction industry to absorb inflation costs.
“The health of all New Zealanders will be positively impacted by an increase in healthy homes, but with inflation a key risk for construction businesses, we’d like to see the Government, and particularly Kāinga Ora, work with the industry to absorb some of those costs,” explains James MacQueen and Nick Innes-Jones, BDO Construction Sector Specialists.
Gina Cook and Rachel Shoebridge, BDO Health Sector Advisory Partners, would like to see more detail in the new national health reforms.
Meanwhile the biggest shake up to health ever seen in a Budget is about to occur, but there is little detail to help health businesses understand what this will mean in practice. “A national health authority is intended to create efficiencies and eliminate the postcode lottery, but health businesses are crying out for more information, with many having no idea how this will affect them in practice,” says Gina Cook, BDO Health Sector Lead Partner, and Rachel Shoebridge, BDO Health Advisory Partner.
The same can be said for plans to improve Māori health: “A new Māori Health Authority that will try and lift stats for Māori and Pasifika health is welcome, and this will be a significant revenue stream for Māori organisations working in this area,” explains Angela Edwards, BDO Māori Business Sector Lead Partner. “I hope the Government includes training so that Māori businesses can fill this demand – the same goes to the new climate-related projects that will come out of the Climate Emergency Fund.”
Angela Edwards, BDO Māori Business Sector Lead Partner, says the new Māori Health Authority will create a significant revenue stream for Māori organisations working in this area.
Mandatory climate-related reporting requirements for large financial institutions will help affected entities understand both their opportunities and risks when it comes to transitioning to a low carbon economy, but these are only for a tiny proportion of our business community. Many of our clients want to contribute to better climate outcomes - understanding that this is what their customers and their communities care about. However, without any meaningful help from Government, they are struggling.
Richard Croucher, BDO Sustainability Lead Partner, would like to see more Government support to help SMEs meet their climate goals.
“Our climate change response cannot just be based on regulations and compliance – the Budget must offer meaningful packages and advice for businesses to transition to a low-carbon economy,” explains Richard Croucher, BDO Sustainability Lead Partner. “The number of packages that have been offered to businesses for COVID-19 shows that when there is appetite our Government is willing to provide high levels of support to SMEs. I’d like to see the Climate Emergency Fund include packages specifically aimed at businesses to enable them in their transition to the low-carbon economy.”