Coding error in the Treasury's poverty-reduction projections

17 Jan 2018

The Treasury has advised the Government of a coding error in the Treasury’s modelling of projected changes in child poverty.

“The error in our microsimulation modelling affects our assessment of both the Families Package announced in December 2017 and comparisons with the previous Government’s Family Incomes Package announced in May 2017,“ says the Secretary to the Treasury, Gabriel Makhlouf.

“The error likely led to an overstatement of the projected impact both packages would have on the reduction of child poverty.

“It affects our projections of the number of children expected to be in low-income households, and the number to be lifted out of poverty*, by 2020/21,” Mr Makhlouf says.

“The extent of any change in the projections on child poverty is still being determined. Because the error applies equally to comparisons with the previous Government’s Family Incomes Package, the estimated relative impact of the two packages is essentially unchanged,” Mr Makhlouf says.

“The error does not affect the number of people who will be helped by the Government’s Families Package, the amount of extra income they will receive, or the fiscal impact of the Package. Our analysis continues to show that the Families Package will substantially reduce the number of children in low-income households.

“We are remodelling the projected impact of both packages, and we’re aiming to have revised projections available in the second half of February.

“This is a deeply regrettable mistake and I apologise for it on behalf of the Treasury. The Treasury holds itself to high standards and I’m disappointed to have not met those standards here.

“We are reviewing our quality-assurance procedures to minimise the risk of this kind of error in the future. I am also commissioning an independent review of the cause of the error and possible improvements to our microsimulation modelling framework and associated quality-assurance processes,” Mr Makhlouf says.

* Defined as living in a household with an income less than 50% of median equivalised household income before deducting housing costs

ENDS

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