When the government changes the income tax system or cash payments such as the age pension, there is always great interest in whether there are winners or losers from the policy change. Equally important is the relative balance between winners and losers and the types of families that they live in (sole parent families, single age pensioners) and how large or small the losses or gains are.  After summing the results for a representative sample of the Australian population, the total cost of new outlays or gains to revenue can be calculated.

During the past few months, Professor Ann Harding, one of Australia’s experts in this field, has been a Visiting Fellow at ADSRI. Ann began her academic career at the National Centre For Social and Economic Modelling (NATSEM)  at the University of Canberra in January 1993 and served as its  Director  from then until July 2009, when she decided to focus more on research and less on administration.  She remains Professor of Applied Economics and Social Policy at the University, as well as a Professorial Fellow at NATSEM.

Even today, many countries only have static microsimulation models, which show the immediate ‘morning after’ gain or loss from a policy change. Australia, however, has been one of the world leaders  in developing the technology to expand the subject matter covered by microsimulation. Today, NATSEM has models spanning such areas as aged care,  public housing, child care, higher education loans, diabetes, the Pharmaceutical Benefits Scheme, housing stress, poverty, income tax, and  the social security and family payments systems.

One of the most significant developments in recent years, says Ann, has been the development of spatial microsimulation models. Instead of just looking at the national effects of policies, these models drill down to the Statistical Local Area level.  For example, NATSEM recently simulated  the small area  impact of the increase in the single age pension rate, and is providing neighbourhood estimates of disability and child poverty.

Among her career highlights Ann pinpoints three areas of public policy importance. These include the distributional impact of the GST tax reform package of 1998-2000 for the Senate Committee on a New Tax System, the examination of the ‘welfare to work’ policy changes, and the Ministerial Review of the Child Support System, for which NATSEM built an extremely complicated model.

One of the NATSEM models, the Australian Policy and Population SIMulation model  (APPSIM) involves moving the population captured in the Census one per cent sample file forward through time for up to 50 years, and Ann hopes there will be scope for collaborative work on this model with ADSRI staff. A second area out of many where the interests of ADSRI and NATSEM coincide is an evaluation of the new Child Support scheme.