The Well-being Economy: A Primer for Economic Renewal

To:

The Hon Dr Jim Chalmers MP, Treasurer 

Summary

This policy briefing from the Centre for Policy Development (CPD) gives an overview of the 'wellbeing economy' theory. The report was written by Dr Katherine Trebeck and Warwick Smith and it explains the increasing trend of discarding the use of gross domestic product (GDP) as the main indicator of economic success and moving to a system that focuses on people's wellbeing and environmental sustainability (Trebeck & Smith, 2024). The report is based on the findings of the UN, OECD, and World Economic Forum, which indicate that the world is facing social and environmental crises. It explains the definition of the key terms around wellbeing and shows how countries and jurisdictions are investigating wellbeing frameworks and dashboards. The authors state that Australia needs new economic policy approaches to tackle these interconnected challenges and build a resilient economy that will improve the quality of life for everyone.

Political Context

The concept of shifting to a wellbeing economy through the inclusion of social and environmental aspects, not just economic growth, coincides well with the priorities and policy platforms of the progressive think tanks and advocacy groups in Australia. Groups such as the Australian Conservation Foundation and The Australia Institute have been arguing for a long time that GDP is not a good indicator of the national progress and the citizens' wellbeing (Australia Institute, 2024). Policy should be more concentrated on sustainability, equity and community welfare outcomes rather than the continuous economic growth. With the election of the Labor government in May 2022, the political conditions are good for the further development of the idea of a wellbeing economy at the national level (Frontiers, 2024). Anthony Albanese and his ministers have stated their plan to create a National Anti-Poverty and Social Justice Strategy to enhance the living standards and tackle the problem of inequality. This shows that the country is open to the idea of other indicators of national success that are not GDP (Frontiers, 2024). Besides, Prime Minister Albanese has brought up the issue of the review of the Reserve Bank of Australia's mandate which is now focused on inflation and employment but not environmental or wellbeing targets (Reuters, 2024). Through the possible expansion of the central bank's mandate, the government could have a long-term effect on the country's economic priorities.

However, not all influential voices in the business community and political right necessarily agree that Australia should move towards the explicit prioritization of people's wellbeing over GDP growth. The Liberal-National opposition is campaigning on the issue of "jobs and the economy" and they say that a higher economic expansion is needed to increase the incomes of the households. They argue that wellbeing will inevitably go up with the increase in gross domestic product (Parliament of Australia, 2019). Besides, some industries still believe that any deviation from the growth-centered policies could weaken the profits and investment. As the major party of business, the Coalition is the brake on more radical departures from the orthodox economics. On the other hand, the social and environmental pressures are also pushing Australia in the direction of a wellbeing economy (Friel et al., 2023). Problems such as unaffordable housing, flat or falling real wages, inflation, and record-breaking droughts, floods and bushfires have raised the public demand for new economic solutions (Pillay et al., 2023). At the same time, climate change has emerged as the most serious public concern according to polls. These types of community anxieties and changing social values show the support for moving beyond GDP as the main policy goal.

In this political context of competing viewpoints, progressive think tanks and civil society groups will keep on campaigning to institutionalize the concept of a wellbeing economy on Australia's policy agenda. However, the business lobbies, which are keen on keeping the status-quo, are well-resourced opponents of the transformational change. For the wellbeing economy to become a national reality, the new Labor government will have to skillfully combine economic, social and environmental requirements while dealing with the opposition criticism. These debates could be the deciding factor of what kind of development path Australia will follow in the coming decades. 

Recommendations

1. Establish an independent, expert body such as a 'National Wellbeing Commission' to advice on economic progress key metrics and policy settings.
2. Undertake comprehensive reviews of the tax system and industrial relations framework to support job quality and social inclusion.
3. Implement the Wellbeing Budget framework proposed by treasury to incorporate wellbeing, sustainability and equality considerations into budget deliberations.

Reference List

• Australia Institute (2024). [Online] Australiainstitute.org.au/. Available at: https://australiainstitute.org.au/wp-content/uploads/2020/12/DP35_8.pdf [Accessed 16 May 2024].
• Friel, S., Collin, J., Daube, M., Depoux, A., Freudenberg, N., Gilmore, A. B., ... and Mialon, M. (2023). Commercial determinants of health: future directions. The Lancet, 401(10383), 1229-1240.
• Frontiers, (2024). The wellbeing economy: Possibilities and limits in bringing sufficiency from the margins into the mainstream. [Online] Frontiers. Available at: https://www.frontiersin.org/articles/10.3389/frsus.2022.966876/full [Accessed 16 May 2024].
• Parliament of Australia, (2019). ParlInfo. [Online] Aph.gov.au. Available at: https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p.
• Pillay, S., Riaz, S. and Dorasamy, N., (2023). Examining the work–life balance of immigrants in Australia: An anomie theory perspective. International Journal of Intercultural Relations, 93, p.101753.
• Reuters, (2024). Australia PM considers extra inflation relief as families struggle. [Online] Reuters. Available at: https://www.reuters.com/world/asia-pacific/australia-pm-considers-extra-inflation-relief-families-struggle-2024-01-03/ [Accessed 16 May 2024].
• The Australia Institute. (2022). Creating a Wellbeing Economy for All. https://australiainstitute.org.au/report/creating-a-wellbeing-economy-for-all/
• Trebeck, K. & Smith, W. (2024). The Wellbeing Economy in Brief. Centre for Policy Development. https://cpd.org.au/work/wellbeing-economy-in-brief/
  Australian Conservation Foundation. (2022). Prioritising Wellbeing. https://acf.org.au/prioritising-wellbeing/
• Trebeck, K., & Smith, W. (2024). The wellbeing economy in brief: understanding the growing agenda and its implications.
• World Economic Forum. (2022). The Global Risks Report 2022. http://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2022.pdf