"The documents I am releasing today developed out of the Government's commitment to increase the well-being of New Zealanders by building a more inclusive and innovative economy," Finance Minister Michael Cullen said.

"They also build on Towards Higher Living Standards for New Zealanders, Treasury's briefing paper to the incoming government, which identified social cohesion as a primary policy concern.

"When I took over the finance portfolio, I instructed the Treasury that this work should have high priority. Since then, a team of 10 officials has been working on it. They have delivered a suite of reports, drawing upon previous work within the Treasury and upon a burgeoning body of overseas literature," Dr Cullen said.

The Government was impressed with the calibre of the work Treasury had produced and had agreed that it would be used as a context for departmental and Cabinet decision-making.

"This is high level analysis. The intention was never to come down with hard recommendations but to provide a guide to policy-makers for measuring competing proposals and for assigning spending and resource priorities.

"The focus on inclusiveness derives from the recognition that social and economic policies interact with each other so should be considered together.

"The effort over the last two decades in New Zealand has been focused on achieving greater economic efficiency, primarily through a programme of restructuring and deregulation.

"A lot of this was necessary and good but significant problems remain. Average material living standards have fallen relative to most OECD countries, income inequalities have increased, the incidence of household poverty is too high, wide gaps exist in ethnic averages across a range of social indicators and there are poor outcomes in health and education among the lower socio-economic groups.

"Dealing with these issues requires a different approach - one which focuses as much upon the social impact of policies as the economic impact," Dr Cullen said.

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