Praise for spending on mental health and child wellbeing is tempered with concerns that the economic plan fails to address root causes of inequality

Pensioner Garry Harvey lived in Australia for decades before returning home to a tidy council flat in South Dunedin earlier this year. The socio-economically deprived suburb at the bottom of New Zealand’s South Island is in the crosshairs of the nation’s first-ever “wellbeing budget”, a radical economic plan for the country devised by Jacinda Ardern to improve the lives of the poorest citizens.

For the first time the annual budget puts social wellbeing indicators ahead of GDP when it comes to spending decisions. From now on, the health of New Zealand will not be measured by growth alone, but instead by the overall wellbeing and prosperity of its nearly 5 million people.

It is a tall order. New Zealand has the highest youth suicide rate in the OECD, the fourth highest rate of family violence and diseases of poverty seen no-where else in the developed world.

Harvey, 67, a gruff but loquacious former seaman, hopes the wellbeing budget will transform his suburb, where many locals battle mental health issues and crime is prevalent. He returned to New Zealand from Australia because of rising racism, and says his native country is now more “equitable” than its neighbour across the Tasman Sea.

Facebook Twitter Pinterest Dunedin, New Zealand and the Otago Peninsula and Bay. Photograph: Alamy Stock Photo

“It was a good start, because you can’t get all your Christmas crackers in one day,” he says.

“I felt hopeful. There is so much more money for mental health, which is good as gold. And there is a big new hospital. We’re all in the one canoe, the big New Zealand waka [canoe], and we’ve all got to work together.”

When finance minister Grant Robertson announced the budget last week he said it would make New Zealand “both a great place to make a living, and a great place to make a life.”

Vicky Freeman, 40, who appeared on the front of the budget document with her daughter Ruby-Jean, says the priorities of the budget are “solid”; a record NZ$1.9bn for mental health, NZ$1bn for child wellness, and a record NZ$320m to combat domestic and family violence.

Despite gracing the cover of the budget, Freeman and her daughter no longer live in New Zealand, having relocated to Australia in December after the high-cost of living in the country’s largest city of Auckland proved too much.

“We do need help for people that are mentally ill and committing suicide. We need to help the children, we need to bring up Kiwi children better. I really hope this makes a difference in people’s lives. I hope they’re not just saying stuff and won’t follow through,” Freeman says.

‘We need to stop the harm from happening’

But the praise has not been universal. At Child Poverty Action Group, which campaigns on behalf of more than a quarter of New Zealand children who live in income poverty, there was disappointment.

Spokeswoman Jeni Cartwright described the budget’s mental health focus as “an ambulance at the bottom of the cliff”; that instead of tackling entrenched poverty issues in New Zealand, it was throwing money at the end result of long-term, inter-generational deprivation.

“We were looking for significant improvement to people’s incomes, and we didn’t see that,” says Cartwright.

Facebook Twitter Pinterest Garry Harvey, South Dunedin pensioner flat resident. South Island, New Zealand. Photograph: Alex Lovell-Smith/The Guardian

“Rather that thinking about how to allay the harm [of poverty], we need to stop the harm from happening.”

While Harvey remains “hopeful” about the government’s commitment to helping the country’s most vulnerable people, he remains concerned that structural change – such as the introduction of a capital gains tax – have been ruled out by Ardern.

“I agree with putting money into a wellbeing budget but they are periphery things,” says Harvey. “This country is run by the rich to exploit the poor and lets face it, and say it, and plan for it.”

Robertson admits inter-generational transformation will take decades, but the building blocks of changing New Zealanders lives from the bottom up have now been put in place.

“Our North Star is now reflective of a broader set of values,” he says.

“It’s a work in progress, but the constant refrain we have heard [from New Zealanders] is if we have this so-called rockstar economy how is it that the OECD says we have the worst homelessness? How is it that we can’t swim in most of the rivers and lakes of New Zealand in the summertime? And how is it child poverty has grown to the extent it has?

“The answer, in my view, is that the government wasn’t sufficiently valuing those things … if it wasn’t being valued it wasn’t being measured. And if it wasn’t being measured it wasn’t being done.”