Shaw JamesPUBLIC FINANCE (SUSTAINABLE DEVELOPMENT INDICATORS) AMENDMENT BILLFirst ReadingJAMES SHAW (Co-Leader—Green): I move That the Public Finance (Sustainable Development Indicators) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. The saying goes that what gets measured gets managed. The purpose of this bill is to complement a traditional measure—gross domestic product—that has become highly synonymous with success with a series of other complementary measures to give ourselves a better picture of the health and wealth of our country. Gross domestic product is shall we say a highly problematic measure of success. It captures very little of what we value in life. It is a poor measure of well-being and as The Economist magazine says it is not even a reliable gauge of production.This bill will bring some pretty uncontroversial environmental measures like air and water quality into the Public Finance Act and ensure that they are reported on regularly and are counted alongside more traditional fiscal and economic measures. The bill also requires the Minister of Finance to present the ecological footprint of New Zealand and the Human Development Index to the House of Representatives in relation to each financial year.Before I expand on my comments in relation to the bill I would like to acknowledge my colleague Dr Kennedy Graham. This bill was originally drafted by Dr Graham 6 years ago. He consulted widely with a vast network of contacts overseas as well as here in New Zealand and he rewrote it a number of times based on submissions that he was receiving in the drafting phase. We hope that this can be voted on on a non-partisan basis and improved in a similar light through the select committee process. Dr Graham did choose a set of indicators—as you have to if you are drafting something like this—that was based on an ecological footprint approach run by the World Resources Institute but I want to acknowledge that there are a number of different systems that we could be using in relation to this. This is why we are asking for the House to send it to select committee so that we can receive submissions and hear from businesses and academics and non-governmental organisations that are experienced at using sustainable development indicators in their work as to what the final shape of this bill should look like. So we are asking for the House to send it to the Finance and Expenditure Committee because it directly affects the Public Finance Act and obviously the Finance and Expenditure Committee is responsible for that and it affects the nature of the work of the Minister of Finance. The Minister of Finance will have responsibility for these new indicators and I would like to lead an open and non-partisan process to take what we are starting here and make it suitable for a cross-party coalition. Yesterday for example the OECD presented us with another set of indicators. It has been doing some fantastic work on the effects of pollution and the running down of finite resources on gross domestic product for example in a way that we do not yet understand here. Treasury has been working for several years on a Living Standards Framework. That work is well advanced but has stalled and so on. So we think that there is a decent body of work that we can draw on.My career started in earnest at PricewaterhouseCoopers (PwC) in London and my primary role there was to help to start the sustainable business services line. At the core of that was the proposition that we were offering to other businesses other clients on how to report on not just the financial health and well-being but a more balanced scorecard of the businesses' state of affairs. That work was reasonably well advanced in the late 1990s which is when I came to it. At that time in the late 1990s there were only a few large corporates like Shell that were actually using sustainable development indicators in part of their corporate reporting process. Each of the large consulting firms had their own proprietary systems for measuring this which we felt was an absurd state of affairs because it is not like each of the large firms had different accounting standards to measure the financial state of the firms. There was obviously a generally accepted set of accounting principles in the UK and around the world. So what we did was we got PwC and the other firms together with a series of non-governmental organisations and leading academic institutions into something called the Global Reporting Initiative.The Global Reporting Initiative is now in about its 20th year. Its set of indicators that it has developed for how large companies are able to report on the impact that they have on the environment and on communities and on their workforce alongside their financial stocks and flows—that work is now well progressed and in fact very very mainstream in the corporate reporting world. So in that sense what we are doing here with this bill is taking something that is well advanced in global corporate reporting and simply importing it in principle into how the Government would think about its own finances.Many of the indicators and the data points that we are suggesting in this bill are already being gathered by the Ministry for the Environment (MFE) by Statistics New Zealand and by other organisations. So people have asked me—given that MFE for example does gather some of this information already—why it should be imported into the Public Finance Act and why the Minister of Finance should be given specific responsibility for reporting on New Zealand's ecological stocks and flows alongside our financial stocks and flows. That is actually precisely the point. The Minister of Finance currently presents a fairly narrow sort of set of information that we tend to assume forms a view of the health and well-being of the country as a whole but actually it is only a partial picture. Importing some of that information into the Public Finance Act and giving specific responsibilities to the Minister does mean that they build up a much more varied and nuanced view of how the country is going.There are other countries that have shown quite a lot of leadership in questioning the overriding focus on gross domestic product alone as a measure of success. In 2004 China began adjusting gross domestic product for pollution subtracting the damage that economic growth was doing to its air its water and its land and in that year alone environmental damage had it been accounted for would have knocked 3 percent off China's gross domestic product. The OECD found in 2006 that gross domestic product per capita remains critical for any assessment of well-being but needs to be complemented with other measures to get a comprehensive picture of well-being. In 2008 the United States Government began funding the State of the USA project designed to create a key national indicator system following a period of rising GDP but at the same time falling personal incomes in the early 2000s.In 2010 the United Kingdom under David Cameron's leadership began to survey happiness alongside gross domestic product. The President of France Nicolas Sarkozy established a commission led by former chief economist of the World Bank Joseph Stiglitz to reconsider the way that prosperity is measured in France. They found that new political narratives are necessary to identify where our societies should go" and recommended a dashboard of measures to capture human welfare. Finally The Economist magazine—that bastion of economic orthodoxy—came out last year saying that gross domestic product is increasingly a poor measure of prosperity and it is not even a reliable gauge of production given the major technological changes that have happened to our economy since gross domestic product was invented.Our singular focus on GDP is distracting us from focusing on what really matters in life and so I would like to end by quoting Robert F Kennedy former senator of the United States of America in 1968. He was referring to gross national product the predecessor of GDP. He said: "Our gross national product now is over $800 billion a year but that gross national product—if we judge the United States of America by that—that gross national product counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in the chaotic sprawl. It includes napalm and counts nuclear warheads and armoured cars for the police to fight the riots in our cities. … It measures neither our wit nor our courage neither our wisdom nor our learning neither our compassion nor our devotion to our country it measures everything in short except that which makes life worthwhile." And so with that I commend this bill to the House."