My Daily Advertiser Op Ed column for 10 May 2020

by ray goodlass

We need to move beyond the Gross Domestic Product (GDP)

For decades now we are subjected to a regular measurement of Australia’s well-being known the Gross Domestic Product (GDP).

As the total financial output of our economy would not benefit those on low or no income, I have often thought that it is a very misleading way of measuring the well-being of the nation. A high GDP would not improve the lot of those on Newstart or the old age pension, and would be of no value to those enduring stagnant wage growth.

And of course, there are many contributors to the well-being of a nation apart from its economy. Social health, for example, though it will be difficult to persuade Scotty from Marketing & Co to agree to such inclusion.

As almost every coronavirus news story tells us of its impact on the stock market and the GDP my mind turned to alternatives to measuring national well-being.

Initially my wondering often took me to the tiny Himalayan country of Bhutan, which instead of the GDP measures its well-being by its Gross National Happiness (GNH). Its four pillars are sustainable and equitable socio-economic development, environmental conservation and good governance.

This led me to researching if the rest of the world was considering identifying alternative pathways to measure the health and wellbeing of the population and, following on from that, establishing ways to ensure the information is used in policymaking.

Jacinda Ardern, New Zealand’s prime minister, has put forward the idea that government policies should be directed towards the future wellbeing of our societies and even be influenced by values such as kindness, fairness and compassion.

Over the past two decades the Organisation for Economic Co-operation and Development (OECD) and the UN have been committed to measures other than GDP to evaluate the success of governments in enabling effective, equitable and sustainable societies through its millennium and now sustainable development goals.

At the last OECD global forum on ‘Beyond GDP’, more than 100 nations reported progress on developing indices to measure wellbeing, equity and sustainability as well as economic success.

From the 1950s, some economists and policymakers began to question its limitations as the singular measure of a society’s success. GDP gives the same value to sales of goods that are harmful to our health and well-being, such as alcohol, tobacco and guns,  as to sales that are of benefit. It tells us nothing about standard of living, quality of our environment, our houses, our education system, our health or how our children and disabled are cared for.

And while GDP rises it does not show the costs to the environment or to income inequalities that may result from such activities.

Recently Professor Fiona Stanley, an Australian epidemiologist noted for her public health work said “ How good it would be to identify for all subgroups in the population the best pathways to improve health and wellbeing and to ensure that this information is used in high level federal and local policymaking?”

If we took into account the problems facing society today, including environmental degradation, climate change, water scarcity, suicide, poor mental health and many others, and used data to guide us, our situation would be significantly better than today.

Moving to a system of measuring wellbeing is being tested in many countries with OECD guidance and support. Most models are firmly anchored in a process of citizen engagement. Asking our citizens what they value most and what priorities they want governments to focus on to deliver the kind of Australia they want in the future enhances their participation in the democratic process. Countries as diverse as Italy, Canada, New Zealand, Wales, Bhutan, Ecuador, Costa Rica and many others have shown this approach is feasible.

The most successful models are those which are initiated by and embedded in governments though it is unlikely that this will be attractive to the current federal government. In 2003 the Australian treasury’s mission was to “improve the wellbeing of the Australian people” but by 2017 it had changed to “be the preeminent economic adviser to government”. It also stopped funding the ABS Measuring Australia’s Progress which was admired internationally.

It is high time Australia caught up with the rest of the world.