State of the state

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Fit for the future
Boosting resilience in the face of uncertainty

State of the State 2017

State of the State New Zealand 2017 considers how we can preserve our quality of life in the face of uncertainty and change, and investigates policies that can be developed now to make sure we stay fit for the future.

In State of the State 2016, we looked at how a social investment approach can improve the outcome of the long term wellbeing of New Zealanders. In the 2017 report, we widen the lens to look at the theme of household resilience and wellbeing. Not only is this relevant to all Kiwis, it is topical for our current Government given recent pre-Budget announcements. If wellbeing is our quality of life, then resilience is how secure our quality of life is.

Overview

While we can anticipate some future challenges, conditions change and we can’t always predict them or their effects on New Zealand.

Resilience considers how well and how quickly we can bounce back from adversity – anticipated or unexpected.

Shocks we can anticipate include things like the rising cost of our Kiwi lifestyle; healthcare, housing and education costs are all going up faster than inflation.

Other big challenges ahead, like the changing nature of work, global financial and political turmoil, trends in industry and natural disasters, bring with them a cloud of uncertainty around our future.

And smaller-scale shocks brought on by economic loss, health problems and income volatility can have as great an impact on household wellbeing as these larger-scale disruptions.

We are only as resilient as our people, businesses and social infrastructure. How well we respond to future uncertainty relies on ensuring resilience at all of these levels, individually and together.  

What is State of the State?

These reports are a series of digestible research designed to start discussions on topics Deloitte believes to be of importance to the future of New Zealand. This year we have partnered with Victoria University of Wellington School of Government.

What is this year’s report about? Watch this short video

Executive summary

Resilience underpins the security of our wellbeing. Boosting household resilience in the face of uncertainty will help ensure we are fit for the future.

Life in New Zealand is pretty good. We have one of the best performing economies in the developed world and enjoy comparatively high levels of social cohesion and connectedness. We are buoyed by strong institutions built on solid governance. And we boast a vibrant business environment.

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Understanding resilient households

Resilience is the ability of an eco-system to either absorb or bounce back from a disruption.

This report considers resilience within households, as a part of the broader conversation about the role of public policy, in improving the wellbeing of New Zealanders.

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A framework for assessing household resilience

Personal resilience of individuals in the household is the starting point for household resilience. Beyond personal characteristics that mean people will deal with the same situation differently (for example whether someone is risk averse and how they plan),12 we look at two specific aspects of personal resilience: health (mental and physical), and human capital.

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Resilience in New Zealand

We looked at the evidence for the factors that affect resilience across a number of dimensions to determine how New Zealand is performing. We have focused on two aspects of personal resilience which are also natural areas for government focus: health and human capital.

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Recommendations

There is plenty that New Zealand gets right. We have learned a lot about resilience from our recent experiences, particularly in infrastructure, community and disaster preparedness. But international and domestic experience has also taught us how precarious our wellbeing can be and, as we have shown, New Zealand households are facing numerous challenges.

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Methodology

Income volatility is a growing area of international research, with many US studies finding that the share of households experiencing a fall in income year-to-year has increased markedly since the 1970s. One study noted that for all the recent attention on income inequality, the instability of incomes had actually risen faster.

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