Annual budget to focus on ‘wellbeing’ of people as well as economic measures

A new method of calculating the annual budget to focus on the “wellbeing” of people as well as economic measurements is being discussed in government formation talks.

The Green Party has raised a new “wellbeing budget” with Fine Gael and Fianna Fáil. The party has cited the New Zealand “wellbeing budget” model first introduced by prime minister Jacinda Ardern’s government last year.

The New Zealand approach is based on the idea that the long-term impact of polices on people’s lives is better than measuring progress from economic data.

The first wellbeing budget in New Zealand saw significant investment in mental health, measures to combat domestic violence and major funding for improving children’s wellbeing, such as tackling child poverty.

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It also focused on climate measures, a digital economy and supporting minority groups such as the Maori community.

The idea was discussed in a session on the economy on Wednesday, with sources saying budgeting must focus on “quality of life rather than economic growth”.

The approach of Ms Ardern’s administration is understood to have influenced key people in Fine Gael and Fianna Fáil as they drew up the framework document – which included an “overriding focus...to improve the wellbeing of the Irish people and society” – between their two parties.

It was pointed out by a well placed source that Gabriel Makhlouf, the governor of the Central Bank, was a key figure in the New Zealand treasury when this new approach was implemented, and that an Irish model should be driven by the Department of Finance.

The meeting on the economy between the three parties was given a presentation by Minister for Finance Paschal Donohoe. He is said to have “laid it on the line”, with sources in both Fianna Fáil and Fine Gael saying that all parties in the next government must be aware of the challenges and choices that lie ahead as the country emerges from the Covid-19 crisis.

Transition

Tánaiste Simon Coveney is said to have spoken about the risk of Britain exiting the post-Brexit transition with the EU without a deal at the end of the year.

Taoiseach Leo Varadkar confirmed on Wednesday that the State would “probably” borrow €30 billion this year, which was at the outer limits of the Government’s worst-case scenario calculations less than a month ago.

The Stability Programme Update in mid-April said the deficit would be €23 billion, but Mr Donohoe said this could rise to €30 billion if economic recovery was delayed.

Numerous government figures, as well as those involved in coalition talks, said a deficit of €30 billion is now the likeliest scenario.