Microsimulation in Australia: lessons from
NATSEM
Presentation to ESRC/BSPS
UK Microsimulation: Bridging the Gaps Seminar
Sussex University, September 11 2009
Justine McNamara
Acknowledgements
● Thanks to Ann Harding and other senior management
and staff at NATSEM for their contributions to this
presentation
● Thanks to ESRC/BSPS
2
Background
● Australia
● NATSEM
● Defining ‘success’
3
Outline of presentation
Establishment of NATSEM
Self-funding
Development of modelling capabilities
Cross-model synergies
Extending models
Public policy applications
Staffing
KEY SUCCESS FACTORS
4
History of NATSEM
● National Centre for Social and Economic Modelling
(NATSEM) established 1993 at University of Canberra
● First academic research centre to specialise in
microsimulation modelling in Australia
● Key role of Ann Harding
5
History of NATSEM
● Had 5 years of core funding from then Department of
Health, Housing and Community Services (1993-1997)
●
Participation of govt on NATSEM Advisory Board
●
Early establishment of STINMOD model (static tax transfer
model)
●
STINMOD now maintained by NATSEM for govt
●
STINMOD actively used by Treasury & other depts (e.g. in
Budget papers)
6
Establishment of NATSEM success factors
● Visionary leader
● Close connections with government/policy
process
● Got in first
7
History of NATSEM
Transferred from government funding to self-funding over
3 years
● Reflected changing funding environment (short-term,
competitive)
● STINMOD pivotal in making this transfer successful
● Very close internal monitoring of budgets/timelines (eg
TRS)
8
Self-funding success factors
● Very strong emphasis on deliverables
● Some ongoing STINMOD funding
● Close collaboration with government officials
● Marketing/awareness/reputation
● Expanding vision
● Staff with ability to bring in funds
● Government departments that use microsimulation
models
Also many challenges
9
Development of modelling capabilities
● STINMOD
● DYNAMOD
● Health modelling (MediSIM, CareMOD, Diabetes)
● ChildMOD
● HouseMOD
● SpatialMSM
● APPSIM
10
11
12
MediSim: The Australian Pharmaceutical
Benefits Scheme
● PBS aims to provide affordable access to prescription
medicines
● MediSim constructed on top of National Health Survey
microdata and simulates changes in
●
the drugs listed under the PBS
●
drug prices
●
the rules (settings) of the PBS – copayments and safety net
thresholds
●
costs to government and consumers
●
the distributional impacts
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% of PBS outlays received by each income
quintile of Australians
Top one-fifth
8%
Next one-fifth
7%
Middle onefifth
15%
Bottom onefifth (lowest
quintile)
41%
Next one-fifth
29%
Ranked by equivalent disposable income of their family using new OECD scalae
*Source: Harding et al, 2004
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Building modelling capabilities success
factors
● Joining up with powerful partners who can provide
funding, including private sector organisations
● Starting small and building out
● Developing cross-disciplinary linkages where microsim
is part of a larger project focused on particular subject
area
Challenges include:
● Pros and cons of advisory boards/steering committees
● Over-committing
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Cross-model synergies/extending models
● STINMOD often key
● Spatial microsimulation methodology used for health,
housing, broader socioeconomic modelling
● Dynamic modelling, spatial modelling can be linked to
STINMOD
● APPSIM may inform dynamic dementia model
● Some micro/macro collaborations
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Links between models (examples)
CHILDMOD
STINMOD
DYNAMOD
SPATIALMSM
APPSIM
HOUSEMOD
CAREMOD
DYNOPTA
17
CHILDMOD – An alternative child support
scheme
● A recent STINMOD extension
● Child Support Scheme requires separated parents to
each contribute to the costs of raising their children
● Many concerns about Scheme -> Ministerial Task Force
established to review scheme in 2004
● Govt accepted Ministerial Task Force
recommendations: new scheme started July 08
● NATSEM built the Taskforce a ‘hypothetical’ (illustrative
families) model (see Harding and Percival, 2007)
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Proposed Scheme:Payments of NonResident Parent
Child Support Paid by Non-Resident Parent for One 13-17 Year Old CS Child
Child Support Paid ($ pw)
$450
$400
$350
$300
$250
$200
$150
$100
$50
$135,000
$126,000
$117,000
$108,000
$99,000
$90,000
$81,000
$72,000
$63,000
$54,000
$45,000
$36,000
$27,000
$18,000
$9,000
$0
$0
Private Income of Non-Resident Parent ($ per year)
Current Child Support Paid
Proposed Child Support Paid
Resident parent has zero private income and 100% of care; non-resident parent's income increased. Source: Ministerial Task Force, 2005, p. 227
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Extending models success factors
● Agenda management and agenda setting
● Taking advantage of opportunities (needs sufficient
flexibility)
● Look ahead and identify possible issues, then approach
potential partners
Challenges include:
● Model maintenance
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Cross-model synergies success factors
● Acceptance by key policy players of STINMOD
● Being able to see possibilities and identify possible
connections
● Sometimes co-operation with other agencies’ models
falls short of actually joining models up
Challenges include:
● IP issues
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Public policy applications examples
STINMOD – tax reform, welfare to work
SpatialMSM – pension reform
HouseMOD – housing assistance
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The Great Australian tax reform debate,
1998-2000
● Introduction of 10% goods & services tax (like VAT)
● Removal of existing inefficient indirect taxes
(wholesale sales tax)
● Major cuts in income tax
● Large increases in social security to compensate
poor
● Question for Senate: how to ensure tax reform
package is fair?
● Answer: assess its distributional impact using
microsimulation models -> use NATSEM
● Compensation to poor increased after NATSEM
analysis
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Welfare to Work reforms, 2005 budget
announcement
● Move to make sole parents on welfare get jobs
● Those on Parenting Payment Single before 1 July 2006
remain ‘pensioners’ (relatively generous payment)
● Those commencing after 1 July 2006:
●
Go on PPS if youngest child aged < 6 years
●
Moved onto Newstart when youngest child turns 6
●
Start on Newstart immediately if youngest child aged 6 yrs +
● NATSEM commissioned by welfare groups to analyse
impact of change (see Harding et al, 2005)
●
Age of child later changed to 8 years after public debate
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Public policy applications success factors
● Close links with policy makers and an understanding of
how policy is made
● Need to undertake research for organisations across
the political spectrum
● ARC Linkage grants
● AMP-NATSEM reports
● Reputation for impartiality and quality
● Reputation for delivering
● Microdata analysis as well as microsimulation
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Staffing success factors (and challenges)
● Collegiate environment
● Strong support for researchers from non-academic
senior staff member
● Multidisciplinary
Ongoing challenges
● recruitment
● loss of trained staff
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Key success factors
● Visionary leader
● Willingness to evolve/innovate
● Involvement with agenda setting
● True collegiate/team environment and senior support
● Public/media interested in distributional analyses
● Staff with skills/focus on bringing in money
Continuing challenges:
-
Balance between academic/soft money priorities
-
Funding
-
Staffing
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Selected references
STINMOD and STINMOD applications (static tax-benefit model)
Toohey, M and Beer, G, 2004, Financial incentives to work for married mothers under A New Tax System’, Australian Journal of Labour
Economics, vol. 7, no. 1, p. 53–69, January
Harding, A., Warren, N., Robinson, M. and Lambert, S., 2000, ‘The Distributional Impact of the Year 2000 Tax Reforms in Australia’,
Agenda, Volume 7, No 1, pp 17-31.
McNamara, J, Lloyd, R, Toohey, M and Harding, A, 2004, Prosperity for all? How low income families have fared in the boom times,
Report commissioned by the Australian Council of Social Service, the Brotherhood of St Laurence, Anglicare NSW, Family
Services Australia, Canberra, October.*
A. Harding, R. Lloyd & N. Warren, 2006, "The Distribution of Taxes and Government Benefits in Australia", in Dimitri Papadimitriou.
(ed), The Distributional Effects of Government Spending and Taxation, Chapter 7, Palgrave Macmillan, New York., pp. 176-201.
Harding, A, Vu, Q.N, Percival, R & Beer, G, “ Welfare-to-Work Reforms: Impact on Sole Parents” Agenda, Volume 12, Number 3, 2005,
pages 195-210 (www.agenda.anu.edu)
Harding, A., Payne, A, Vu Q N and Percival, P., 2006, ‘Trends in Effective Marginal Tax Rates, 1996-97 to 2006-07’, ,AMP NATSEM
Income and Wealth Report Issue 14, September (available from www.amp.com.au/ampnatsemreports)
Lloyd, R, 2007, ‘STINMOD: Use of a static microsimulation model in the policy process in Australia’, in Harding, A and Gupta, A.,
Modelling Our Future: Population Ageing, Social Security and Taxation (eds), North Holland, Amsterdam.
Harding, A., Payne, A., Vu, Q.N., and Percival, R. ‘Interactions between Wages and the Tax / Transfer System’. Report to the Australian
Fair Pay Commission, September 2006 (available from
http://www.fairpay.gov.au/fairpay/Research/Research2006/Research2006.htm )
CHILDMOD (static child support model)
Ministerial Taskforce on Child Support, 2004, In the Best Interests of Children – Reforming the Child Support Scheme, Report of the
Ministerial Taskforce on Child Support, May (see Chap 16 for output from CHILDMOD)
(http://www.facsia.gov.au/internet/facsinternet.nsf/family/childsupportreport.htm)
Harding, A. and Percival, R. 2007, ‘The Australian Child Support Reforms: A Case Study of the Use of Microsimulation Modelling in the
Policy Development Process’. Australian Journal of Public Administration, Vol. 66, No. 4, December, pp 422-437
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Selected references
MediSim (static model of the Pharmaceutical Benefits Scheme)
Brown. L., Abello, A., Phillips, B. and Harding A., 2004, "Moving towards an improved microsimulation model of the Australian PBS'
Australian Economic Review., 1st quarter
Abello, A., Brown, L., Walker, A. and Thurecht, T., 2003, An Economic Forecasting Microsimulation Model of the Australian
Pharmaceutical Benefits Scheme, Technical Paper No. 30, National Centre for Social and Economic Modelling, University of
Canberra.*
Harding, A., Abello, A., Brown, L., and Phillips, B. 2004 The Distributional Impact of Government Outlays on the Australian
Pharmaceutical Benefits Scheme in 2001-02, Economic Record, Vol 80, Special Issue, September
Brown, L., Abello, A. and Harding, A.2006. Pharmaceuticals Benefit Scheme: Effects of the Safety Net. Agenda, vol. 13, no. 3, pp211224
Diabetes Model
Thurecht, L, Brown, L. and Yap, M. (2007) Economic Modelling of the Prevention of Type 2 Diabetes in Australia. Paper presented at
the International Microsimulation Association Conference, Vienna, August 2007.
Brown, L., Harris, A., Picton, M., Thurecht, L., Yap, M., Harding, A. Dixon, P. and Richardson, J. (2007) Linking Microsimulation and
Macro-Economic Models to Estimate the Economic Impact of Chronic Disease Prevention. Paper presented at the International
Microsimulation Association Conference, Vienna, August 2007.
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Selected references
APPSIM (dynamic Australian Population and Policy Simulation Model )
Keegan, M. (2009) Mandatory superannuation and self-sufficiency in retirement: An application of the APPSIM dynamic microsimulation
model. Paper presented at the 2nd General Conference of the International Microsimulation Association, Ottawa, Canada, June
2009
Keegan, M. and Kelly, S. (2009) Dynamic microsimulation modelling of social security and taxation. Online Working Paper 14.
Lymer, S. (2009) Population ageing and health outlays: assessing the impact in Australia during the next 40 years. Paper presented at
the 2nd General Conference of the International Microsimulation Association, Ottowa, Canada, June 2009.
Pennec, S. (2009) APPSIM - Cohort component population projections to validate and align the dynamic microsimulation model
APPSIM. Online Working Paper - WP12
Percival, R. (2007) APPSIM - Software Selection and Data Structures. Online Working Paper - WP3
SpatialMSM (static spatial microsimulation model)
Chin, S-F, Harding, A., Lloyd, R., McNamara, J., Phillips, B. & Vu, Q.N. (2005). Spatial microsimulation using synthetic small-area
estimates of income, tax and social security benefits. Australasian Journal of Regional Studies, Vol 11, No. 3., 303-344
McNamara, J., Gong, C., Miranti, R., Vidyattama, Y., Tanton, R, Harding, A. and Kendig, H. (2009). ‘Two Worlds of Ageing: Spatial
Microsimulation Estimates of Small Area Advantage and Disadvantage Among Older Australians’. Paper presented at the 2nd
General Conference of the International Microsimulation Association, Ottawa, Canada, June 8 – 10, 2009.
Miranti, R., McNamara, J., Tanton, R. and Harding, A. (2008) “Poverty at the Local Level: National and Small Area Poverty Estimates
by Family Type for Australian in 2006’. Paper presented at Small Area Estimation Workshop, University of Canberra,
September 2008
Tanton, R., Vidyattama, Y, McNamara, J., Vu, Q.N. and Harding, A. (2008) ‘Old, Single and Poor: Using Microsimulation and Microdata
to Analyse Poverty and the Impact of Policy Change Among Older Australians’. Paper presented at UNU-WIDER Conference
on Frontiers of Poverty Analysis, Helsinki, 26-27 September 2008.
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