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The Welfare Expert Advisory Group asked Treasury to estimate the impacts of the recommended changes to income support using their tax and welfare analysis (TAWA) model. This appendix summarises the limitations and caveats associated with TAWA modelling.

Description of the Treasury tax and welfare analysis model

Results are pooled estimates using the Household Economic Survey (HES) for tax years 2014/15, 2015/16 and 2016/17 (HES15, HES16, HES17), augmented with using Inland Revenue and Ministry of Social Development (MSD) data linked in the Integrated Data Infrastructure (IDI).

Status quo results correspond to the tax and welfare system as legislated at 1 April 2018 (that is, the Families Package).

Results provided for tax year 2020/21 are based on the Half-Year Economic and Fiscal update (HYEFU) 2018 forecasts of inflation and other economic and fiscal variables.

Risk and reliability assessment

The Treasury considers the poverty projections to have low reliability and medium risk.

The Treasury considers the fiscal costs to have medium reliability and medium risk.

The TAWA model cannot extend eligibility for core benefits, so individuals who may become newly eligible, due to rate and abatement changes, are not included in these results. However, estimates of the costs of new benefit recipients have been provided by MSD and are included in the estimates of fiscal cost.

Projections of low-income poverty are subject to large sampling errors, so should be considered indicative only.

The low-income poverty projections are based on the modified OECD equivalisation scale to be consistent with the Government Statistician’s definitions in the Child Poverty Reduction Bill.

Accommodation Supplement is modelled using a sampling method.

General caveats

This analysis was carried out using Treasury’s microsimulation TAWA model. All calculations should be considered estimations.

Access to HES data was provided by Stats NZ under conditions designed to give effect to the security and confidentiality provisions of the Statistics Act 1975. The results presented here are the work of the treasury, not Stats NZ.

IDI Disclaimer

The results in this report are not official statistics. They have been created for research purposes from the IDI, managed by Stats NZ.

The results of the TAWA model presented in this report are the work of the Treasury, not Stats NZ.

Access to the anonymised data used in this study was provided by Stats NZ under the security and confidentiality provisions of the Statistics Act 1975. Only people authorised by the Statistics Act 1975 are allowed to see data about a particular person, household, business, or organisation, and the results in this report have been confidentialised to protect these groups from identification and to keep their data safe. Careful consideration has been given to the privacy, security, and confidentiality issues associated with using administrative and survey data in the IDI. Further detail can be found in the privacy impact assessment for the IDI available from link).

Inland Revenue Disclaimer

The results are based in part on tax data supplied by Inland Revenue to Stats NZ under the Tax Administration Act 1994. This tax data must be used only for statistical purposes, and no individual information may be published or disclosed in any other form, or provided to Inland Revenue for administrative or regulatory purposes.

Any person who has had access to the unit record data has certified that they have been shown, have read, and have understood section 81 of the Tax Administration Act 1994, which relates to secrecy. Any discussion of data limitations or weaknesses is in the context of using the IDI for statistical purposes, and is not related to the data’s ability to support Inland Revenue’s core operational requirements.

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