Brian Mitchell (Lyons, Australian Labor Party) Share this | Hansard source

Introduced in 1988, the child support scheme is a proud legacy from the Hawke Labor government. Australia's child support system needs to be effective in assessing and collecting child support, with many custodial parents relying on regular payments for their financial stability. Today, the Albanese Labor government will continue that legacy with the Social Services Legislation Amendment (Child Support Measures) Bill 2023. This bill will help broaden the powers to recover child support debts, prevent large debts from being amassed and improve income accuracy to ensure low-income parents are not put into financial hardship.

The median income of parents who receive child support is around $33,000 a year. That is less than half the annual average weekly total earnings of all employed Australians. Custodial parents need the financial stability this bill will bring for the welfare of the kids they look after. It must be said that most non-custodial parents do the right thing when paying child support, but when payments are delayed, or ignored altogether, the knock-on effect to the custodial parent and their children is immediate and damaging.

The Albanese Labor government is deeply concerned about the $1.69 billion in child support debt that has accrued over the past 35 year, and, after nine years of Liberal neglect, we are taking action. The Social Services Legislation Amendment (Child Support Measures) Bill 2023 will make it easier for Services Australia to collect child support debts and will help prevent future debts for low-income parents from amassing. From 1 July 2023 the bill will deliver three key changes to strengthen Services Australia's powers to collect debts from parents who have not paid their child support and to improve accuracy when Services Australia makes income assessments for low-income parents. The government's bill puts money in the pockets of the people who need it most, and that's parents who look after children.

In the first change in the bill, Services Australia will be given more circumstances where it can deduct child support debts directly from a parent's wages. The bill will allow Services Australia to initiate employer withholding to collect child support debts when a case has ended. For example, the child has turned 18 and therefore the case has ended, but there's still an outstanding debt. It is expected that $164 million in unpaid child support from around 18,000 parents will be collected through this change alone. This is money for looking after the kids that parents have either had to find from elsewhere or miss out on altogether. Particularly for parents of teenagers at university or at school with the higher costs involved, it is not easy to find this money, so this change will help make their lives easier.

The second change will stop parents who owe child support and who have been issued with a departure prohibition order from being able to bypass the order by offering financial security. Currently, Services Australia can issue a departure prohibition order to prevent a parent from travelling overseas if they have a child support debt. However, an exemption is issued if the owing parent provides a bond for their return to Australia by a specified date. That bond must be returned to the owing parent if they return by the specified date, regardless of whether or not they've paid their child support debt. You can pay the bond, not pay the debt, then get the bond back and still have the debt. Some parents have exploited this loophole, and the change to this order will allow Services Australia to refuse an exemption when the parent offers financial security but has a history of not paying child support debt. This change only impacts 110 families, but on average they are owed more than $40,000 each—so a few people but big debts. We owe it to these families and these kids to close loopholes where a parent takes advantage and continues not to pay their child support when they return to the country. It's not fair, it's not right, and we owe it to these kids to fix this problem.

The bill's third change will improve income accuracy for low-income parents who are not required to lodge a tax return. Child support customers who earn less than their self-supporting amount, which is currently $27,507, are not required to lodge a tax return. Currently, if low-income parents do not provide income information, Services Australia applies a default provisional income of $55,016. That's double the self-support amount. It significantly overestimates the parent's income. An inaccurate estimate can put low-income parents into financial hardship, whether they are the payee or the payer. It can result in a parent receiving less child support than they should or it can result in a parent being liable to pay more child support than they are able to afford. We can fix this problem by deeming a parent's income to be equal to the self-support amount, and this will ensure that the child support assessment takes into account a more accurate estimate of the parent's income. This change is expected to benefit up to 150,000 low-income child support parents each year, with receiving parents making up about 70 per cent of this group.

The changes in this bill will make a difference to the lives of custodial parents and their children in my electorate. It will offer better financial security and it will make paying parents accountable for their responsibilities. However, the government also knows there is more work to do to improve the child support scheme to ensure that it's always fit for purpose. In the government's response to the report by the Joint Select Committee on Australia's Family Law System, tabled in January 2023, we have committed to implement a range of recommendations to improve the scheme over the longer term. This bill is a first step to make the scheme better for parents and children.

Australians can rest assured that the kids' best interests are the government's top priority when making changes to the child support scheme. As we say, we know that most non-custodial parents do the right thing; they pay their child support on time and they do what's best for their kids. What this is about is making sure that we get as many parents as possible—noncustodial and custodial—doing the right thing. At the heart of this bill is the welfare of children and making sure they get the support they need.

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