Robertson's rocket for Treasury over child poverty modelling error

Monday 22nd January 2018

Finance Minister Grant Robertson had some choice - but unrepeatable - words for the Treasury Secretary, Gabriel Makhlouf, when it emerged the government's lead economic agency had over-estimated the impact of Labour's flagship families package replacing the previous government's tax cuts and targeting low-income families.

Legislated before Christmas, the package was billed as lifting 88,000 children out of poverty, striking an early blow for one of the new administration's primary targets - reducing child poverty.

However, the Treasury announced on Jan. 17 it had advised Robertson of a coding error that meant the benefits of the package were overstated, thanks to an error in a single line of code in a mathematical model, but that it had not yet worked out what the real number should be. Its estimate that the previous government's mix of tax cuts and low income household measures would have improved the lot of more than 50,000 children was also wrong because of the same mistake.

Asked what he said to Makhlouf when told of the error, Roberston told a press conference following a Labour caucus retreat in the Wairarapa he did "not want to say that in the company we are in now".

"I was very, very disappointed. I expressed that disappointment to the Treasury Secretary, and he undertook to redo the analysis as quickly as he could. I made clear that, for us, this was an important projection and important for him to get it right."

The error exposed the government to questions about possible fiscal pressure in the 2018 Budget because of the higher hurdle required to reduce child poverty, but Ardern said the figure of 88,000 children moving out of poverty was "never a target" and only ever a projection provided by the Treasury.

"This package will still reach more than 380,000 families. What we don't have a clear picture of is how many of those have children in poverty," she said. "But the package is still a solid package. It will not change.

"All we will know is how much further we have to go to hit some of the ambitious targets we have for child poverty. That was always the case."

Ardern is expected to release concrete targets for reducing child poverty in coming days, along with legislation intended to make the government accountable for measurable reductions and to allow public input on the government's level of ambition.

While the government would maintain the previous administration's innovation to have a set of high level Better Public Service targets, it would more explicitly target such issues as cold, damp homes and levels of absolute child poverty than the National-led government, which used proxy measures such as reductions in the incidence of rheumatic fever to signal improvements in both areas.

(BusinessDesk)

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