With the latest Measuring What Matters report released on 15 September, following the National Accounts on 3 September, now is a good time to ask if we are measuring what really matters. A brief survey of the policy data landscape reveals a missing dimension: the future. Neither of these excellent reports pull together the data needed to tell a story about what the future will look like for the next generation.

The obvious reason is that the future is yet to happen, so there is no data to report. But this is a cop out. There is a lot of data that provides a clear indication of where we are headed. In the absence of a report that pulls together this data, it is too easy to ignore the warning signs and too hard to argue for policies that can avoid undesirable futures. What gets measured matters.

What the National Accounts measure…

Let’s start with the National Accounts. The modest 0.6 per cent GDP growth in the last quarter received considerable coverage, with pundits opining on whether this was just a short term boost in consumption (due to Easter and Anzac Day falling in the same quarter) or a more fundamental shift. The flat line in non-mining business investment also drew comment, given that increasing investment has been a core focus in the discussions about improving productivity growth.

Digging deeper into the National Accounts reveals a long-term decline in manufacturing and rise in services, most recently in care industries, as a share of GDP. This shift has been lamented by commentators given the labour-intensive nature of care industries means they have lower measured productivity.

This type of analysis is all very well, but what do these trends mean for the future? Productivity matters: it is how much output is produced with the resources we have available. So, working smarter to produce more of what people want with fewer inputs is good. But so does growing our national resources. Both matter for the future.

A future oriented report would look at how what we are doing today is going to set us up for higher productivity and greater resources for the future. It would report on how what we are doing now is building our knowledge, human and environmental capital for the next 50 years, as well as the physical capital investment reported in the National Accounts.

…and what they don’t

Now consider what the National Accounts do not measure. The productivity measures only reflect paid inputs. They do not include the value added by unpaid work or by “free” environmental services. Simon Kuznets, the creator of the concept of GDP, recognised that his invention measured only part of production: that which is mediated through a market or by government production.

In Australia, aside from public schools and hospitals, governments do not produce much – but they do fund a lot of services and construction produced by business. GDP matters to governments in large part as it measures what they can tax. What it does not measure is other forms of household and volunteer production that improve our standard of living or the free environmental services used in production and consumed directly. Nor does it measure the less tangible things a society and family provide, such as emotional support and relationships that improve our quality of life.

GDP has risen as women entered the paid workforce – not primarily because more work happens, but because it is paid and hence reported. The real gain, as opposed to substitution, from increasing access to the paid workforce comes from a more efficient allocation of resources: putting talent to better use and improving scale and the adoption of more efficient technology in the production of both goods and services.

A future focus would ask about the cost and benefits of this shift from unpaid to paid work – not just by mothers, but by all members of our community. These costs and benefits affect both our standard of living and our quality of life. A future focus would also ask about the projected costs of unsustainable use of natural resources. Some of this is unavoidable, but if measured and reported it could change the policy calculus.

Measuring what matters in the future…

Turning to the Measuring What Matters (MWM) framework, some of the 50 indicators in the 12 domains and across the five themes do reflect on things that matter now and provide a measure of where we are headed. Mental health indicators disaggregated by age cohort is one example. Fiscal sustainability is another. This is not the first time that government has sought to widen the framing for policy outcomes. In 2010 Ken Henry, then Secretary of Treasury, introduced a Wellbeing Framework to guide policy advice. Around the same time, the Australian Bureau of Statistics (ABS) was working on a set of indicators called “Measures of Australia’s Progress” that had four domains: society, economy, environment and governance. This ambitious effort met its fate in the 2014 Abbott Government budget. It is to be hoped that MWM does not go the same way.

If we care about the future and intergenerational equity, we need a report that builds on MWM and harnesses other data sources and analysis to project ahead. Treasury’s Intergenerational Report does this in part as it projects the outlook for the economy and the Commonwealth budget over the next 40 years. The State of the Environment report (due next in 2026), ANU’s Australia’s Environment Report, and the CSIRO’s State of the Climate report all outline the pressures on the environment that will impact environmental services in the future. The recent National Climate Risk Assessment report took the next step on climate to project out the future economic costs.

However, these reports do not consider the impacts for social stability, even if they do touch on the long-term effects on productivity. We need a more comprehensive approach to measuring how today’s decisions and actions will affect the wellbeing of future generations.

The ABS’s “Measures of Australia’s Progress” is a good place to start in driving a public conversation about the gaps between our current trajectory and the future we really want for our descendants. The framework could pick indicators that enable a debate about:

• Society. If we want a society that is socially cohesive (or at least stable) in 50 years, what trends do we need to encourage and which do we need to interrupt?
• Economy. If we want an economy that is productive (growing and scaling knowledge while using all our resources efficiently, whether through paid or unpaid production), what capital do we need to invest in for this future (human, knowledge, built, natural or institutional)?
• Environment. What parts of the environment should be protected or restored to provide the services for future generations to be healthy and productive?
• Governance. What role should government play to deliver the future Australians want? Are the institutions (political, bureaucratic, regulatory and civil) able to evolve to support this future? Are our domestic institutions building the external relationships to keep our nation secure? If not, how do they need to change?

…starts with future-oriented data and analysis

Climate change and other environmental degradation, geopolitical disruptions and an ageing population all hint that the future may not be as good as we have it now. Australia signed up to the United Nations Pact for the Future in 2024, but bringing in serious consideration of the impacts of policy choices on future generations needs a binding commitment to the Australian people.

Some governments, such as Wales, have introduced a Bill of Rights for Future Generations to enforce that commitment. A workshop held last year at ANU considered whether Australia was ready for such an approach. But for a Rights approach to work, it needs agreement on what matters for the future and government buy-in to establish the governance structures to analyse and amend policies that do not move society, the economy, the environment or the governance systems toward this better future. The workshop’s suggested approach for embedding intergenerational considerations in policy is one step toward boosting attention on the future.

But data and analysis (future impacts are projections based on the best knowledge), is an essential first step. A report addressing where we are headed, answering the questions set out above, would provide a firmer foundation than the current piecemeal approach. The discussions it engenders about the overall trends – and what they mean for social stability, productivity, environmental sustainability and national security – will help governments and society take a more active approach to the wellbeing of future generations.

Dr Jenny Gordon is an Honorary Professor at POLIS: the Centre for Social Policy Research at the Australian National University and a non-resident fellow at the Lowy Institute. She was the Chief Economist at DFAT from 2019 to 2021, was previously Chief Economist at Nous Group, and spent 10 years as Principal Adviser (Research) at the Productivity Commission. She has a PhD in Economics from Harvard University.

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