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Incorporating loneliness and social connection into the Treasury Living Standards Framework

Media release:  Today Loneliness NZ provided a contribution to the NZ Treasury Living Standards Framework.

By way of background, the Government budget 2019 will be different to all previous budgets.  In addition to considering financial benefit and costs (i.e. Financial Capital), the budget 2019 will be based more broadly around the Living Standards Framework, which takes account of four types of Capital: Physical and Financial Capital, Natural Capital, Human Capital and Social Capital. 

In February 2018, the Treasuring released four ‘discussion documents’ on the Living Standards Framework (see Further information below). Our response to these discussion papers focused on the Social Capital discussion paper, but also had implications for Human Capital and the Living Standards Framework in general. 

The discussion papers were quite technical in nature, with economics terminology.  To address the issues in the discussion papers, our contribution was equally technical. Our contribution needs to be read in conjunction with the Treasury discussion papers.

General feedback on the Living Standards Framework

The key points raised in our contribution of broader relevance to the Living Standards Framework and Human Capital are as follows:

  • There are four primary social indicators driving wellbeing. We highlight the work of Stats NZ that has shown there are four primary indicators driving wellbeing in New Zealand. We do not believe any of these indicators are currently proposed in the Living Standards Framework.
  • Social connection is important to public policy. We highlight twelve important public policy issues that are associated with social connection. As a consequence, we believe social connectedness indicators need to be in the Living Standards Framework.
  • Social health is a cause of physical and mental health. We provide extensive references on this causal relationship, which is relevant to the relationship between Human Capital and Social Capital.
Why is this contribution important?
The draft Living Standards Framework, which is a wellbeing framework, does not include any social connectedness indicators, and does not propose to monetise any Social Capital indicators. The result of this draft is that Government policy will be unable to capture the benefits of social connectedness and costs of social disconnectedness (e.g. social isolation of the elderly). Further, the draft Living Standards Framework – if left unchanged – would imply that the Government has little interest in individual social wellbeing.

Feedback on the Social Capital discussion paper

An overview of what is included in our contribution is as follows:

  • Framing of Private Social Capital and Public Social Capital.
  • The consideration of an implicit assumption in the Discussion Paper.
  • The need for social connections indicators within the Living Standards Framework.
  • The reasons social connectedness indicators should be part of Social Capital.
  • A redefinition of Social Capital.
  • The consideration of what social connectedness indicators be within Social Capital, based on a detailed piece of work by Stats NZ.
  • The importance of an indicator around “not feeling lonely”.
  • Response on the three points where Treasury asked for specific feedback, including twelve important examples of the relation between public policy issues and social connection.

A brief overview of our recommendations are:

  1. There needs to be social connectedness indicators in Social Capital.
  2. The definition of Social Capital be redefined to including Public and Private Social Capital [however, Treasury has subsequently explained how individual wellbeing fits into the Framework – without needing to redefine Social Capital to include Private Social Capital].
  3. One of the social connectedness indicators should be not feeling lonely.
  4. The social connectedness indicators should be the primary measures of Social Capital.
  5. Social Capital be monetised [given the proposal at the time that the other three capitals be monetised].
It is important that our final recommendations, listed above, are read in the context of our full contribution (see Further information), which includes many national and international sourced references. 
[How has the Treasury changed its view following this contribution]
Following the submission, the Treasury released for consultation a report by Conal Smith recommending the indicators in the Livings Standards Dashboard. The report did a great job explaining the complete Living Standards Framework which includes, in addition to the Four Capitals, a (current and future) wellbeing function.  The report proposed that the individual wellbeing function contain social connectedness indicators, including a loneliness indicator. Furthermore, it recommended a general health status indicator, which we had also highlighted is a primary driver of wellbeing.

Feature photo: Loneliness NZ