Activity 8(j)

Activity 8j [Extension]: What is a well-being budget?

  1. A well-being Budget is one that focuses on measures over and above the traditional ones used to determine the value of a budget. It includes measures that are less financial in nature (e.g. real GDP) and ones that provide a more comprehensive picture of how well the budget is advancing living standards of Australians, such as the quality of education and healthcare and the degree to which Australia achieves intergenerational equity or gender equality. 


  1. Real GDP per capita is a very limited measure of well being because it only measures the ability of Australians – on average – to access goods and services. Aside from the inherent problems associated with measurement of real GDP itself, a focus on real GDP per capita as a measure of wellbeing ignores a host of other factors that influence wellbeing that are non-material in nature, such as gender equality, the incidence of crime and pollution levels.


  1. By focusing on these broader wellbeing measures, the government may be able to shift the community focus away from the expected impact of the budget on economic growth and towards broader measures of wellbeing that might not translate into an immediate boost to economic growth.


  1. Australia is considered to be a poor performer by international standards in areas such as species extinction, our global or material footprint, household debt levels and gender inequality in relation to a feeling of security. In light of this information, the government may decide to devote more government expenditure to the protection of the natural environment (reducing the rate of species extinction), develop policies that seek to internalise the negative externalities associated with excessive carbon pollution (e.g. carbon pricing) and/or allocate more money to state governments in an effort to provide for greater policing. These types of measures will typically cost the government money (with the exception of carbon pricing), leading to an increase in the budget deficit and a more expansionary budgetary policy stance than otherwise.