Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

The Child Support Scheme was set up in 1988 by the Hawke Labor government and has become an international model and the basis of a similar scheme established in the United Kingdom. However there are genuine concerns about the scheme, including the fairness of the scheme, the assessment formula and, in particular, compliance.

Let me begin my speech on the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 by saying that Labor acknowledge the need for reform. We believe that the interests and wellbeing of children must always come first and that, as far as possible, child support policies should serve to support the child in security and in economically acceptable conditions.

When it comes to child support, the reform process has been lengthy. The House of Representatives Standing Committee on Family and Community Affairs report Every picture tells a story dealt with child support and other family separation issues and made 29 bipartisan recommendations. Among its recommendations was the establishment of a ministerial task force to evaluate the Child Support Scheme, including establishing the costs of children’s upbringing after parental separation, recognising different income levels of households and reflecting the costs for both parents of maintaining meaningful contact with their children.

The May 2005 report of the Ministerial Taskforce on Child Support, the Parkinson report, was the first systematic evaluation of the child support arrangements. It recommended a new formula for child support assessment, based on evidence of the actual costs of raising children, shared parental responsibility for those costs and recognition of each parent’s level of care.

The proposed changes also included increased compliance activity, more use of courts to recover debts, a new approach to parents understating income to avoid liability, and access to administrative review through the Social Security Appeals Tribunal. The 2006-07 budget measures show an allocation of $165.1 million over five years for transitional and ongoing compliance and $146.6 million to improve service standards and carry out organisational change in the Child Support Agency. We note that income minimisation investigations over the last six months have seen an increase in child support of more than $2.3 million. Of course, that is welcome.

The report examined the scheme using sound principles and was generally well received. Labor believes that the report provides a constructive basis for moving forward. The principal concern raised about the recommendations—the heart of Labor concern—is the effect the new assessment formula will have on low-income resident parents with children under the age of 12.

The government supported the report and has picked up most of the recommendations, which it now seeks to implement. Labor wish to take a constructive approach to the reforms. This is not an issue we want to politicise. We seek to support positive improvements to the scheme. We have endeavoured to work with the government on this to achieve a better system, and there has been some constructive engagement between Labor and Minister Brough’s office.

The changes the government is seeking to implement cover various areas. The government plans to introduce them with three sets of legislation coming into effect between July this year and July 2008. We recognise that the package has been carefully crafted by the Parkinson task force in an attempt to provide a balanced approach based on the research of the task force.

In coming to a new payments formula, the task force has based its calculation on research into the actual costs of raising children. It found that the costs of care for older children are greater than those for younger children. It noted that regular contact between children and non-resident parents increases the costs of care considerably due to the duplication of infrastructure and that the costs of children change according to parent income levels. The formula attempts to divide these costs fairly between both parents in a way which recognises the level of care that each provides. This contrasts with the current formula, which is not based on research into the actual costs of raising children and therefore lacks some of the intellectual rigour of the new formula. The resulting package presents a trade-off in costs between resident and non-resident parents. The Parkinson report stated that the new arrangements do not alter the amount of resources available for raising children in total; rather, they alter the allocation between households.

The task force states that the new formula is grounded in evidence about the costs of raising children and the most defensible principles for allocating those costs. It notes the presence of anomalies in the current system and that the correction of these means that obligations ‘must go up or down’. It also says that its recommendations ‘can best be assessed by reference not to a comparison between the outcomes of the current and proposed formulae, but by reference to the principles and evidence upon which these recommendations are based’.

The task force package is the result of expert examination and analysis and seeks to balance competing factors in an intellectually sound manner. This is reflected in the package of measures. The new formula is balanced by increased compliance measures and attempts to make it harder for parties to hide their incomes and so reduce their child support liabilities.

The House of Representatives standing committee noted that the CSS—the Child Support Scheme—‘has a number of complex interrelated components’ and that changing one aspect impacts on other aspects of the scheme. I believe that this is also the case with the reform package. After some consideration, the government has picked up the package largely in its entirety. Labor feels that to unpick the package by amending certain measures would undermine the integrity of the package and could lead to further inequities.

Labor will support this bill to implement the first stage of the package, although we are concerned about the effect on some families of the reduction of the income cap, a subject I will return to later. However, Labor has made clear that its support for the entire child support reform package is conditional upon being satisfied that the government has put in place satisfactory protections against income reductions for low-income families. To that end, I would like to indicate that I will be moving a second reading amendment to this bill on behalf of the opposition.

Labor has serious concerns about the impact the new formula will have on low-income single parents of children up to the age of 12. In general, these households are headed by women. The House of Representatives report noted that 91 per cent of child support payees were female and only nine per cent were male. Many single parent families are among the poorest in the country and among the most likely to fall into poverty. Labor accepts that the new formula is based on a fair estimation and division of costs, but, in implementing it, the parliament cannot be blind to the practical consequences. The aim behind the reforms is to share the costs fairly between parents, recognising the level of care they provide. The reforms impose very little financial cost on the Commonwealth, but the Commonwealth does bear a responsibility and should bear a broader responsibility in ensuring that there is some protection against loss of income for low-income resident parents.

The reforms attempt to encourage contact with the nonresident parent by reducing their support liability in line with their level of care. Currently, the liability for the nonresident parent is the same whether they have no contact or care for 29 per cent of nights. This does not take into account the costs of care for that parent. The task force report recommends that, where the nonresident parent has care of a child for between 14 and 34 per cent of nights of the year, their liability should be reduced by 24 per cent. This attempts to recognise the cost of providing domestic infrastructure such as a second bedroom. Clearly, the rent on a two-bedroom unit as opposed to a one-bedroom unit does not change depending on how many nights the parent has care of the child.

This attempt to recognise costs for nonresident parents and therefore encourage contact is sound and should be supported. We have to note, however, the possibility that a nonresident parent might have their liability reduced by saying that they will care for their children for a higher number of nights per year and then not carrying through with that commitment. We also have to recognise that resident parents face fixed infrastructure costs, such as rent, which do not decrease at a rate commensurate with the other parent’s level of care, yet under the proposed changes she or he faces a 24 per cent cut in their child support payments. Fairness has to work both ways. It is fine to be fair to the nonresident parent and recognise the fixed costs they face, but we must apply that same fairness to resident parents. This is the area where real concern exists. This is the measure which most starkly calls into question the fairness of this package.

We should also acknowledge that many who face cuts in their child support payments will also be hit at the same time by the government’s Welfare to Work changes. I do not want to make this a debate about the Welfare to Work changes, because Labor’s opposition to those changes is well known. However, we have to acknowledge that some of the poorest families in the country face the prospect of increased work obligations, reduced welfare payments, more punitive taper rates and a reduction in child support payments all hitting at the same time.

If we put the interests of children first and respect the original intent of the Child Support Scheme—to reduce child poverty—then we cannot ignore the impact of these changes on families and, in particular, the cumulative effect that these changes will have by hitting at the same time. Thus, while Labor are signalling our broad support for the government’s package, we are also indicating that we have serious reservations about the impact on low-income families that will need to be addressed before the final legislation is agreed to.

Labor argues that there is a clear responsibility for government in ameliorating the negative effects the changes may have on children in some of the poorest families in the country. We call on the government to examine ways of ensuring that carer families are not penalised and how greater protection can be provided for them if they are disadvantaged by the application of the new formula.

This first set of reforms included in the legislation before us today, however, does not include the detail of the new formula. It refers to changing capacity to earn provisions, increasing the minimum payment and its indexation to the consumer price index, increasing the amount of the child support payment that the nonresident parent can direct to specific purposes and reducing the cap on the income of nonresident parents which is assessable for child support purposes from just under $140,000 to just under $105,000.

This final measure is also of concern. It means a reduction in payments by nonresident parents on incomes of over $104,702 of up to $180 a week and, of course, the commensurate loss of that income for the resident parent. This is a substantial income decrease and will take effect from 1 July this year. Of course concerns have been raised by the people affected, and this is certainly Labor’s main concern with the measures in the first tranche of the legislation before us today. Given that the first stage reforms are minimal, Labor encourages the government to consider phasing in this measure to ease this sudden substantial decrease in income faced by residential parents.

In summary, Labor will support the legislation before us today. We have serious concerns about the effect of the new assessment formula on low-income resident families, and we see a responsibility for government in ameliorating any disadvantage resulting from the new formula. But, as I said, the formula is not before us today. We also encourage the government to consider a phase-in of the new income cap for high-income earners. Consequently, I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House calls on the Government to provide protection against income reductions for low income households raising children”.

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Robert McClelland (Barton, Australian Labor Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

This is a long process that is coming to fruition. The original proposals were made, I suspect, by the parliamentary inquiry into child custody arrangements in the event of family separation, which was undertaken in 2003 by the House of Representatives Standing Committee on Family and Community Affairs. That committee received 1,700 submissions and heard from over 200 witnesses. I was a member of that committee, and the committee’s report, Every picture tells a story, was a comprehensive study of the pain and trauma that can often occur with family breakdown and separation. Above all things, as a group from the House of Representatives, we were conscious that the people who suffered the consequences of family breakdown more than any others, even more than the separating partners, were the children of any union, marriage or arrangement. So it was on the future of the children that the committee tended to focus.

Initial responses to our inquiry were generally favourable, although there is continuing concern in men’s groups—understandably—about the recommendations in that they did not go far enough, particularly in the area of fifty-fifty shared care. We as a committee felt that the first thing that separating parents should apply their minds to was the future of the children, so we focused not on shared care so much as on equal parental responsibility. That is not the case at the moment. At the moment, the person who has custody of the children seems to have more say than others about their future. We considered that both parents should have equal responsibility in deciding the future of the children, no matter who was the custodial parent. We also felt that grandparents should play a part in this process, as well, so grandparents receive attention in the report.

There was general community support for the committee’s report and general support from community groups for the concept of shared responsibility. We have requested the courts—and I am pleased to find that the Attorney-General is giving instructions to the Family Court—that, as a starting point, fifty-fifty shared care should not be rejected but should be considered. The way it will work—and the implementation stages are already moving ahead—is that, firstly, there will be shared parental responsibility and then, flowing from that, the prospect of shared care. The proposals also included more services to assist parents in reaching workable post-separation arrangements and more child-focused programs.

On 29 July 2004, in response to the committee’s report, the government announced a process to look at the arrangements for child support, and a ministerial task force on child support was established following the reforms to the family law system. An improvement in the outcomes for children was the goal of the task force. The task force recommended consultation processes prior to the establishment of the 65 family relationship centres around Australia, a 30 per cent increase in funding for services funded under the Family Relationships Services Program, a further expansion of the Family Relationships Services Program and establishment of a further task force. Public consultation followed and the announcement was made in August 2004 that a task force would be chaired by Professor Patrick Parkinson of the Faculty of Law at the University of Sydney. Professor Parkinson is also the Chairperson of the Family Law Council. The focus of the task force was to be on policy considerations, not on the administration of the scheme. The task force included a range of members with expertise in one or more of the following areas: research on separating families, the cost of raising children, social and economic policy and family law. The task force presented a report to the government entitled In the best interests of children: reforming the Child Support Scheme, and it is a very interesting and well prepared report.

The Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 before the House today is the first part of a three-part response to that task force report and to the committee’s effort. In the area of child support, the committee made a number of observations. The House of Representatives Standing Committee on Legal and Constitutional Affairs particularly remarked on the complexity of the formula used to decide the amount of financial support children should receive in the case of separation. The formula applies fairly rigidly unless there are some very definite indications that it cannot be complied with. We found as a committee that the weapons used by separating parents revolve around the children, and they are generally these: the weapon of the custodial parent is to deny access to the children; the weapon of the non-custodial parent is not to pay for the support of the children. So that is where the battleground is, and it is a vicious and hateful battleground. It is a tragic battleground on which the children alone are the ones who really suffer.

I remember one lady in Gunnedah who gave evidence to the committee that she had spent $260,000 on legal costs, the entire proceeds of the settlement she had received from her former husband, in order to spear him and make him comply with her wishes. She said:

I’ve spent the money and he’s still the same, but at least he’s seeing kids now and that’s all I wanted. I wanted proper acknowledgment from him. I failed to get him to pay, which is part of what I wanted, but above everything I wanted him to continue to be a good dad.

She had wasted the family’s entire savings because of viciousness between her and her former husband. That story is not unusual—the hatred and viciousness of, on the one side, women, who are generally the custodial parent; and, on the other, men, who can resort to violence and become unemployed purely to get back at their former partner. However, the kids suffer from the lack of support given for their accommodation, from changes in the provision of their shelter and from disruptions to their schooling. There is a whole range of factors that work against the interests of children, simply because men will not support women in such a situation.

The formula caught the attention of the Standing Committee on Family and Community Affairs, of which I was a member. The Child Support Consultative Group, which gave evidence, pointed out that separating the discrete costs of children from the total family costs is a problem confronting all studies where an examination is made of the cost of raising children. Regarding the development of the formula, the Child Support Consultative Group said that, as the number of children in a family increases, the per-child cost declines. I think we all know that; that is commonsense. More money is spent on children as they grow older. On average about 20 per cent of a family’s income is devoted to the first child. When the Australian data was separated from the international data, a lower figure of about 16 per cent was arrived at, so we were delving into difficult areas in trying to establish such facts. The Child Support Consultative Group said that the shares of income devoted to the second and third child were each about half of that devoted to the first child; and shares devoted to subsequent children were about half of that devoted to the second and third children—their cost reduces to about 25 per cent of the cost of the first child. It costs less to maintain an intact family at a given standard of living than it does to maintain the same family with separated parents. That is not obvious to many parents who are in the process of separating. They think they can carry on their former lifestyle without penalty. That is not possible. The share of income devoted to a child in a one-parent family is higher than in a two-parent family.

The recommendations of the House of Representatives committee were taken up by Professor Parkinson. The first recommendation in his report to the government, entitled In the best interests of children, dealt with the difficult issue of the formula. In recommendation No. 1, he said:

The existing formula for the assessment of child support should be replaced by a new formula based upon the principle of shared parental responsibility for the costs of children.

One would think that is self-evident and would have always been the case—but that is not so. The government, taking these steps in the legislation as the first part of a three-part program, has made a number of changes. One change is to increase the minimum payment. The current payment is $5, which is nothing. But if a parent—and generally it is the male—is unemployed and has little likelihood of gaining employment, $5 is the cost and many do not pay it; in fact, 40 per cent do not pay it. As there needs to be greater acceptance of responsibility for children, this legislation contains a provision for an increase in the minimum payment.

This legislation lowers the cap on income considered for child support purposes, thereby reducing the maximum rates of child support. Let me give the House an example. One of the major criticisms we came across was that, for high-income earners, the formula currently applying produces an impossibly high level of funding capable of being expended on children. The figure of $34,000 a year currently being received by a parent for two children will be lowered to $24,000. I do not know how anybody could possibly spend $17,000 a year on a child under the age of five. It is just not possible, so the formula has been changed. If, in the view of a court when considering separation and Family Court matters, there is a need to maintain a certain lifestyle, that should be considered as a separate issue and not as a maintenance of children issue. That was the goal of the committee, which was universally agreed by members of the committee, picked up by Professor Parkinson in his report and now endorsed in legislation by the government—a sensible change.

The legislation provides for fairer decisions in relation to whether a parent has extra earning capacity. This is the overtime factor. The non-custodial parent is required to pay according to a formula, and I need to give the House some understanding of what that might be. For one child, it is 18 per cent of gross income; for two children, it is 27 per cent; for three children, it is 32 per cent; for four children, it is 34 per cent; and for five or more children, it is 36 per cent. That formula, which was locked in place, is now in the process of being changed—but not by this legislation; that comes next. So the process of change is down the track.

This legislation makes provisions for circumstances where a person is locked into the current formula and it is impossible for them to maintain themselves. We had evidence from many people in dire circumstances endeavouring to live up to their responsibilities, maintain rented accommodation, provide for their children when they have custody as part of a shared arrangement and endeavouring to provide for the odd needs such as clothes or other items that the children need when they are in that casual accommodation arrangement from week to week, maybe every second weekend and half the school holidays. To have all of their overtime efforts counted as part of the child support process was something we considered to be unfair. The formula is changing in regard to a person making extra effort and providing extra capacity.

There is also an increase in the legislation on the amount a parent can have spent directly on the essential needs of their child, from 25 to 30 per cent—that is not a recommendation of the committee; the committee thought it should be higher than that. I will give an example. Somebody may be married to a person who is quite wealthy and is able to provide well for additional children. The non-custodial parent may demand that the children have essential needs—such as for school fees, clothing, school excursions, perhaps medical services—but only 25 per cent of their contribution can be directed towards payment for those things.

There is a weird proposal that a doctor has to say that a child is in need of medical services before these payments can be allocated to medical care. I would have thought a doctor’s bill is sufficient to say that a child is in need of medical care, rather than having to first of all get a letter from a doctor to decide whether these payments can be allocated to the medical care of children. It seems to be absolute bureaucratic overkill to say that doctors need to advise the CSA that this care is needed. Nobody is going to take a kid to a doctor just for the sake of it. There are some real problems with the whole way in which this was bedded down in the first place, but the changes we are making now are fairer, and they are really going to help couples focus on the children.

Australia has one of the most interventionist family courts in the world. Most courts worldwide force parents to consider for themselves what is best for the children. We do not do that. We let the court get involved in these relationships from day one. This legislation is going to change that slightly. It is going to force parents—recognising they are probably never going to like each other very much—to think of their children first. That must be a goal that this House maintains for any future changes. Another provision in this legislation ensures that the child support arrangements for exnuptial children in Western Australia are constitutionally valid, which is a change that one would expect in order to recognise the role of the Family Court in Western Australia.

So the prescribed non-agency payment is rising to 30 per cent, which allows the non-custodial parent, where necessary, to direct more funds specifically towards the care of the children. Many paying parents would like this percentage to be higher, because they consider their children may not be well looked after, but the government settled for 30 per cent. I commend the minister, Mal Brough. He has been working on this issue ever since he came into the parliament, trying to get a better deal for both parents. He saw the pain of dads and he saw the problems in families, and he is trying to rectify them.

Ann Corcoran (Isaacs, Australian Labor Party, Shadow Parliamentary Secretary for Immigration) Share this | Link to this | Hansard source

The bill we have before us today, the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006, has taken quite a few years to get here, and the issues it addresses are very difficult ones. The beginnings of the bill are found in the community’s dismay and frustrations with how decisions are made about parenting and child support when a family breaks up.

In June 2003 the Prime Minister established an inquiry into child custody and child support. This was undertaken by the House of Representatives Standing Committee on Family and Community Affairs. In December 2003 this inquiry delivered its report, Every picture tells a story. In instigating this inquiry, the Prime Minister talked about three things in particular: he talked about the idea of rebuttable shared time with each parent, that equal time would be the default situation; he talked about the need for people other than parents, mainly grandparents, to be considered; and he talked about the need for the child support formula to be revamped.

It is impossible to bring in legislation that is going to meet the demands or expectations of everyone involved in family separations. By its very nature, the issue is emotional and every aspect is often overlaid with other issues or frustrations. Every member of parliament has experience in trying to help people immersed in the family law and/or the child support systems. We see the frustrations of men and women trying to work through the process. Many of us have personal experience of the system or of our family members dealing with family breakdowns. There is no easy answer, and there never will be.

It is interesting to note the language that is often used in this area and to think for a minute about how language influences attitudes. We talk about failed marriages, failed relationships, family breakdowns. This language presupposes that a marriage or a relationship ending is a bad or undesirable thing. I would like to float the idea that some marriages or relationships, which might be good for a time, come to a point where they should end. I would like to get to a point where a relationship can end without those involved being told or being made to feel that they have failed. I would love to see us accepting in a non-judgmental way that some people decide to end their relationships for their own reasons.

I am not in any way trying to suggest that we want a world full of relationships endlessly coming and going. We do need to find ways of helping those relationships that will continue to grow and be satisfying if a bit of help or support is available at a critical time. We also need to understand that some relationships do have a finite life. We should accept that only those in the relationship itself are the ones who know whether it should end.

When the Prime Minster established the inquiry into child custody and child support some three years ago, he talked about looking for a recommendation from the inquiry supporting the presumption of shared custody or equal time with each parent. This was mischievous, misleading and even cruel. We all have a number of constituents, usually men, who do not see their children as often as they would like and who see the system as being unfair and biased towards mothers. Many of these men were, understandably, delighted with the thought that once the inquiry was over legislation would be introduced and they would have, automatically, equal time with their kids.

I cannot dismiss the thought that this was a deliberate ploy by the Prime Minister to quieten down a group in the electorate and offer them false promises in the lead-up to an election year. The inquiry did not recommend that equal time be the standard or the starting point. It did recommend shared parenting, meaning sharing the responsibility for major decisions affecting a child. Unhappily, once again misunderstanding crept in. Many parents misunderstood the term ‘shared parenting’ and thought it meant equal time. Many parents are only now starting to understand what the term means.

What all this means is that a group of already unhappy parents who feel that the world, or at least the family law system, is against them have been tricked into thinking the system would dramatically change and are now feeling abandoned again. Some of this unhappiness was inevitable as some expectations are and were unreasonably high, but some of it has evolved from, at best, loose language and the leading statement from the Prime Minister, anticipating the result of the inquiry and getting it wrong.

The committee’s report Every picture tells a story, which was tabled in December 2003, made 29 recommendations that covered the family law process, the Child Support Scheme and parenting arrangements. In August 2004 the government announced the establishment of a ministerial task force and reference group to examine the Child Support Scheme, partly in response to the report. The report of the task force was released by the chair of the task force, Professor Patrick Parkinson, on 14 June 2005 and made a number of recommendations to overhaul the Child Support Scheme. In February 2006, the government released its response to the task force report and indicated the intention to adopt most of the recommendations for change of the ministerial task force. The government proposes that these changes will take place in three stages, the first from 1 July 2006, the second coming in in January 2007 and the third from July 2008.

The main changes that are being introduced are, firstly, the introduction of a new formula for determining a parent’s child support obligations. It will move to base the obligation on the actual cost of raising children, it will more equitably share the cost between parents based on their respective incomes and it will better balance the needs of first and second families. The bulk of these changes are planned to start from July 2008. The next change is increased enforcement and compliance powers for the Child Support Agency that should enable the agency to take more effective action against parents who fail to support their children. These changes are part of the bill being debated today and are to come into effect from July 2006. Another change will introduce the ability to have Child Support Agency decisions reviewed by the Social Security Appeals Tribunal. At the moment the review processes are by the CSA itself or the courts. These changes are planned to start in January 2007.

The purpose of the bill here today is to introduce the first set of changes. It will increase and index the minimum rate of child support payments. The minimum will move from $5 per week to $6 per week and will be indexed to keep pace with the CPI. The increase from $5 to $6 is to restore the value of the minimum payment to what it was when it was introduced in 1999. The bill will reduce the maximum income cap from about $139,000 to about $105,000 per year, which will reduce the amount of child support payable by high-income nonresident parents. This change is likely to be an interim step to tide the system over until the more substantial changes are made to how the support payments are calculated. If the legislation to come follows the Parkinson recommendations and the direction the government is suggesting it will follow, the maximum cap will become irrelevant. This is because the new formula is likely to be based on the cost of raising a child rather than the income of the paying parents.

The bill will alter the way the earning capacity of parents is assessed. At the moment parents are deemed to have a greater capacity to earn even if their income has dropped for good reason—for instance, because they need to work less in order to provide care for their children or because they have lost their job. The new arrangements will move closer to the recommendation that parents should be deemed to be earning more than they actually are only if it is likely or apparent that the motivation for reduced earnings is to reduce the level of child support payments. The bill will enable nonresident parents to offset 30 per cent of their payment against any credited amount spent directly on the children. This is an increase from 25 per cent. The bill has technical changes relating to arrangements in Western Australia.

The Parkinson report—that is, the report that responded to the financial recommendations of the Every picture tells a story report—made good and broadly sensible recommendations. It is good to see these recommendations starting to be acted upon. I look forward to the remainder of the changes being introduced, although I am intrigued about the delay in bringing them forward. As I understand it, the following changes are still to come. From January 2007 the government will introduce independent review of all CSA decisions by the Social Security Appeals Tribunal, broaden the powers of the courts to ensure child support obligations are met, strengthen the relationship between the courts and the CSA to make the process easier and more responsive to parents’ needs and give separating parents more time to work out their parenting arrangements before the family tax benefit is affected.

From July 2008 the government will introduce a new child support formula; change the way income from second jobs and overtime is treated, noting that often this income is sought to help with re-establishment costs after separation; change the treatment of parents with dependent stepchildren when calculating child support payments; simplify the change of assessment rules; and deal with a number of other matters. I note that the government has said it will do all these things and I hope that it does. If the matters due to be changed from January 2007 take place sensibly and effectively, this will take some of the frustration out of the system. Changes to the child support formula are needed too, but I am concerned about how this will be done as there are many low-income families who are dependent on child support and, if these changes happen, may be vulnerable to increased financial stress.

Mr Deputy Speaker, one of the most common issues raised with me in my electorate office, and no doubt with you in yours, relates to child support or custody. There is almost universal frustration with the way the Child Support Agency works. I hasten to make the point that, by definition, I do not see those parents who are happy with how their arrangements are working out. Like everyone else in this place, the constituents who approach me are usually the ones who are having difficulties.

Their complaints usually fall into one of two or three categories. One source of frustration is about the perceived rigidity in the way payments are assessed and the slow and complex process of varying the payments. Some payers feel that their ex-partner is misusing the money and some feel that they are being taken advantage of by their ex-partner. Another category is the parents in receipt of payments. Some of these parents are unhappy because they feel that their ex-partner is deliberately hiding their income to reduce the amount they pay in child support. Some are unhappy because their ex just is not paying at all. Both payers and payees will come to see me because they are unhappy with decisions that the CSA has made. To date these decisions are reviewed by another CSA officer, with the only other recourse being to the courts. This in itself is another source of frustration and leads some people to question the transparency of the system.

Not long ago a small business operator in Isaacs contacted me about the CSA. His issue is that the paperwork required by the CSA is becoming onerous. I spent some time with Tim in his factory and I can understand just what he means. Tim’s business is typical of many small businesses. The admin function is handled by one person. This person looks after the accounts receivable, accounts payable, purchasing and payroll and is usually the receptionist. Very often a large amount of the corporate memory rests in this person. This very busy person, often a woman, does not have the time to seek out and understand every nuance of the child support system.

Tim’s attitude is that he is happy to do the things he needs to do in deducting child support payments from his employees’ wages, but he is not prepared to spend hours completing forms, particularly when the information sought is already available. He has even indicated that he is getting to the point where he will be avoiding employing people who are clients of the CSA for this reason. I wrote to the minister with Tim’s concerns and the reply I received was less than encouraging. Essentially the minister advised Tim to do the CSA work online. This advice makes assumptions about internet skills and internet availability that do not always hold. The response is an indication that the minister is out of touch with how very small businesses operate.

It is clear to me and to my constituents that the child support system needs a drastic overhaul. I want to be clear that, whilst I am firmly convinced that the child support system needs an overhaul, this reflects the legislation that has existed to date; it is not a reflection in any way on the staff of CSA. My experience with CSA staff is that they work very hard to provide the best service they can within the constraints of the legislation and the resources made available to them. The CSA people we deal with through my office are always very efficient in responding to our questions and dealing with the matters we raise on behalf of our constituents.

I put on record the efforts the CSA has gone to in my area in conducting what we call child support forums. We have held three in the last 15 months in Isaacs, the most recent being last week. These forums are a collection of agencies who offer services to separating families. At last week’s forum we had people from the Child Support Agency, Family Court, Victorian Legal Aid, Council of Single Mothers and their Children, Dads in Distress, Mensline, Centrelink, Australia family support service, Lifeworks Australia and Relationships Australia. I put on record my thanks to all these agencies and their representatives for taking part in the forum. These representatives gave up their Thursday evening to present their material and to be available to people to have one-on-one discussions about their particular problems or to seek information. The Child Support Agency arranged one-on-one interviews throughout the day for those clients who asked for one and then spent the evening discussing child support issues in general with those who attended. Over the three forums we have managed to give information to something like 200 people. Most of the work in arranging these forums was done by officers from the CSA, each of the forums was well attended and the feedback from those attending was very positive. I encourage my colleagues to sponsor similar forums for their constituents, because they are well worth doing. I want to congratulate the CSA for taking the initiative in arranging these forums.

The Parkinson report, the report that responded to the financial recommendations of Every picture tells a story, made good and broadly sensible recommendations. It is good to see these recommendations starting to be acted upon. I look forward to the remainder of the changes being introduced, although I am, as I said before, a little intrigued about the delay in bringing them forward.

Before I finish I would like to make a point that is probably obvious but needs to be made, and that is that many couples who separate do so, if not amicably, at least in a cooperative manner and manage to sort out their child custody and child support issues themselves. Sometimes these arrangements come unstuck later, but very often they do not and there is no need to get involved with the CSA. Other couples, of course, do not separate in a friendly manner and need outside help to sort out their arrangements. These are the families that are affected by the legislation and the changes that are being discussed today. In summary, I support this bill and look forward to the rest of the changes being introduced.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

I am disappointed to see the second reading amendment to the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 by the opposition. The amendment calls on the government to provide protection against income reductions for low-income households raising children. This is a populist comment. It says that the taxpayer should pick up the cost because a particular family separated. I do not think the world works like that. I would have much preferred to have seen from the Australian Labor Party an amendment which said that the opposition congratulates the government on doing the hard work that was necessary to bring forward this legislation—the first tranche of legislation that will see very significant reforms in the child support arrangements. We all know as members of parliament that this area is a minefield—that for every winner there is a loser—but the government has bitten the bullet, made hard decisions and brought forward some very sensible legislation indeed.

In fact, I think on balance most parents who are subject to this legislation agree with what the government is proposing. For once I would have thought perhaps the Labor Party could have said, as the member for Isaacs just said in this place, ‘Yes, it is good legislation.’ For once the Labor Party might have considered not tacking on a populist bit, which is not going to succeed—and I do not think any parent or taxpayer would want it to succeed. Professor Parkinson is highly regarded in the work that he has done in the ministerial task force. He has considered all of these issues and reported to the government, and the results of that report appear in the legislation before the parliament this afternoon.

There is bipartisan support for this legislation and I am pleased to see that. I recognise that and I thank the opposition for their support. Over the years many Labor members have done a lot of work on this, and so have many government members. All of us have struggled to know what we can do, but we have had this tremendous guidance, first from Kay Hull’s committee, the Standing Committee on Family and Community Affairs, which produced the Every picture tells a story report, and then from Professor Parkinson’s report. It is good to see that bipartisan support.

I was intrigued with the history of all of this and I went to have a look at what has been said previously. Back on 24 March 1987 the then Minister for Social Security and member for Batman, Brian Howe, indicated to this parliament that in that year we would see the start of a system to ensure a new deal for children of separated and divorced parents. In that year—I think it was 1988 when it became the law—there was a child support process to address the areas of community concern in relation to child support and the inadequate support provided by non-custodial parents to children living in Australia’s sole parent families.

A lot has changed since then and a lot has remained the same. There is a need for child support. The overwhelming majority of cases that we see are a result of marriage breakdown or a split in de facto relationships. Most of the children in these families come from homes where two parents once shared the responsibility for expenses and care. A situation has developed where too many parents no longer share a house with their children and they now fail to share their income with these children. That situation remains. What has changed, of course, is the government’s determination to make sure that children know both their parents. Children should be able to be cared for by both of their parents. That is a good thing, and that has been recognised and incorporated in the government’s philosophy. So the philosophy now is not only that parents should share the cost of supporting their children according to their capacity to pay but that adequate support should be available for the children from both parents and that access should be available to both parents. The government is agreed on that.

We are now making some very major changes. This bill represents the first tranche of legislation—the first phase of implementation. The legislation has some notable changes, including changes that incorporate the need to reward nonresident parents on income support who have contact with their children. There will be more dollars available there. The current provision will be broadened to parents who have care of their children for at least one night per week, and that is really going to increase the number of parents who will benefit from that particular measure. There will be a fairer assessment of the capacity of parents to earn income. We have all heard some horrendous stories where the CSA, operating under the current law, have just deemed a parent to be able to earn a certain amount of income, whether or not they can do it in practice.

This sort of thing is happening in my area, and I will give the House an example. A person may be working in the mining industry on a fly-in fly-out basis: a person who may live in Townsville will fly to Cannington, for example, to the silver-zinc mine. They are on extraordinarily high wages compared to the rest of the community because they stay away for an extended period and then fly back home again. The wages are paid in recognition of them being away for such a long time, but sometimes people get sick of this sort of lifestyle. It is kind of like being a parliamentarian, flying down to work and being away for a long time from your home and family and so on. These people may choose to say: ‘I’m not going to do this anymore. I’m going to seek a job on the coast and stay at home.’ The CSA was looking at their income from the mine and basically saying, ‘You’ve got to pay child support because you are capable of working in a mine; therefore, you’ve got to pay a high rate.’ But that is condemning a worker to not having choice over where they work. They have not in the past wilfully decided not to work at a mine because they want to reduce their child support payments; they have done it because of lifestyle issues. The point I come to is that there is this fairer assessment of the capacity of parents to earn income.

But the key thing in the legislation is the ability now to go to an appeal process if the payer thinks that he has been unfairly assessed. Previously you were not able to do that. It is a credit to the Minister for Families, Community Services and Indigenous Affairs, Mal Brough, for introducing this in the legislation so that people now will be able to ensure that they are treated fairly. That is what happens in other areas of payments, where you can go to an appeal tribunal. You will now be able to do it in this case. Legislation will be introduced later to reduce the maximum payments and do more to ensure that child support is paid in full and on time.

In the couple of minutes left to me before we hear from the member for Canberra, I want to observe a very important change in the government’s philosophy, which is encapsulated in a few words: improved service delivery by the Child Support Agency. We have all heard the horror stories. We have all heard the accusations that the Child Support Agency hates men. I have never believed that. I have always found the Child Support Agency people to be really decent people. Of course, we have to remember on the other side of the ledger that, almost on a daily basis, they have to deal with very aggressive customers who bring their marital problems into the Child Support Agency office. It is not CSA’s fault that a marriage breaks down. CSA staff quite properly just enforce or deal with the legislation that currently exists. But as a government we are now pouring a whole lot more resources into helping our Child Support Agency staff to know and understand the psychology of their customers, to know and understand how best to deal with them, so that people who do come in in a very aggressive manner can be professionally assisted and their aggression dealt with. That is a really big change in what we are doing. I thank the government for that. I know that the CSA will now go on to be a better organisation to help the mums and dads who have unfortunately separated. I support the bill and I commend it to the House.

Annette Ellis (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak on the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006. The purpose of this bill is to implement the first stage of the government’s child support reforms in response to the report of the ministerial task force on child support, the Parkinson report. The government’s reforms will be introduced in stages from July 2006 to July 2008.

The Parkinson report provides a strong and constructive basis for moving forward. Labor acknowledges the need for reform of the Child Support Scheme. We support this bill. We also recognise that the package as a whole is the result of careful consideration by an expert committee and that it has used sound principles to develop a balance of measures. To unpick the package by amending certain measures would undermine some of the integrity of the package and could lead to further inequities. Therefore we support the package, albeit with the amendment that has been moved by the member for Sydney.

As I said earlier, the bill that we are debating today introduces the first stage of reforms and includes a range of measures. This bill will increase the minimum payment and index the minimum to ensure that child support payments keep pace with inflation. The current $5 a week minimum payment is not indexed. I wholeheartedly agree with this measure. If the cost of caring for a child increases, then it is only fair that child support payments keep up with those costs.

This bill will also provide more detailed and workable arrangements for determining a liable parent’s capacity to earn. Under the Child Support Scheme, parents can be required to pay additional child support, or parents may be entitled to receive less support, if the Child Support Agency determines they have a higher capacity to earn. Under the current scheme, the provisions are too broad, and this can lead to payments which do not take into consideration changed circumstances. For example, a child support payer may need to work less because of new caring responsibilities or they may have lost their job; however, they may still be required to pay child support based on their previous income.

This bill will enable nonresident parents to offset 30 per cent, up from 25 per cent, of their payment against any credited amount spent directly on the children—for example, school fees and medical costs. Currently, nonresident parents can spend up to 25 per cent of their child support liability directly on the children. The Parkinson report recommended that the limit be increased to 30 per cent because it allows the paying parent to be confident that the children are benefiting from the child support and it gives them some sense of control over how the child support is used.

Whilst we can legislate as best we possibly can, it is impossible to legislate against human nature—something that we often would like to try to do. When we talk about additional costs being paid—and I have just referred to the direct costs incurred in caring for the child—that immediately brings to mind a constituent’s case some little while ago now where the nonresident parent was so intent on being difficult that the resident parent and the child concerned at one stage owned something like 40 school jumpers. I am not making it up. So, whilst I can fully support the changes that I have just referred to, we have to be aware that some people, regardless of our best intent across this chamber, will remain hell-bent on being difficult to their ex-partner or ex-family. That was the starkest example I ever saw, when the nonresident parent walked in carrying two large black plastic garbage bags in which resided something like 40 school jumpers, all of them in pretty good nick. We must remember that people who are no longer in a relationship but share responsibilities for children can be in a very stressed state, so I support any measures that help parents do what is best for their children.

Another measure of this bill will reduce the maximum income cap from $139,347 to $104,702, which will reduce the amount of child support payable by high-income nonresident parents. This will see a substantial reduction in the child support paid by some higher income earners as of 1 July this year. This may cause some hardship for some resident families; therefore Labor is calling on the government to consider phasing in this change so as to provide a period of adjustment for those resident families. It is important to note that this measure will become redundant if a new formula for the assessment of child support is introduced.

The Parkinson report recommended a new formula for the assessment of child support, which would be based on evidence of the actual costs of raising children, the principle of shared parental responsibility for those costs and a recognition of each parent’s level of care. The new formula is planned for introduction in the third stage of the legislation. Labor’s principal concern is the effect of the new formula on low-income families with children under 12. While we support a new formula that is based on the actual costs of raising children in separated families, and which attempts to fairly divide those costs and recognise the level of care provided, we cannot ignore the effects that the new formula will have on low-income resident families.

While Labor supports the fairness of recognising the costs of care incurred by the nonresident parent, we also recognise that the consequent decrease in child support liabilities paid to the resident parent may not correspond to any decrease in that parent’s costs. Labor believes that there is a responsibility for government in limiting the negative effects of these changes on low-income resident families. These families are already under significant financial pressure and, in implementing these reforms, we must consider their effects to ensure that children in these families are not disadvantaged. It is here that I strongly support the amendment moved by the member for Sydney.

One of the most challenging aspects of my job as a local member in this parliament is seeing the difficulties that can follow family breakdown. I would dare to say that there is not a member in this House who would not share that view. I see resident parents who are struggling to make ends meet and support their children who believe their children’s other parent is not contributing according to their capacity. On the other hand, I also see nonresident parents who miss their children and believe they are providing support beyond their means.

The other aspect that I and many others have seen is the very sad aspect where, in some cases, a nonresident parent believes that they should have access purely on the amount of money they pay in child support, regardless of the circumstances within the family that may exist. We have also seen resident parents who, for one reason or another, decide to make it difficult for the nonresident parent in accessing their children when there is a legitimate case for that access to occur. There is such a mix of human emotions and human circumstances. I think we have probably seen every mix there could be. It is an extremely traumatic situation for everyone involved, and my aim in assisting any of these constituents is to ensure that whatever influence I can bring will mean that they do what is best for their children. At the end of the day, the needs of the child simply must come first. I would like to quote part of article 3 from the United Nations Convention on the Rights of the Child:

1. In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.

2. States Parties undertake to ensure the child such protection and care as is necessary for his or her well-being, taking into account the rights and duties of his or her parents, legal guardians, or other individuals legally responsible for him or her, and, to this end, shall take all appropriate legislative and administrative measures.

In conclusion, I want to very briefly mention and commend the work done by all of the committees in this House, basically since the CSA came into being. There has been the Parkinson committee, which was a task force set up by government. Before that there was the committee chaired by Kay Hull and deputy chaired by the member for Fowler. Before that I understand there were committees under the chairmanship of the current opposition whip and many others, all of whom have put an enormous amount of effort into trying to untangle the emotions of this issue as much as possible. We have now got to the point where we have this piece of legislation, the majority of which we very strongly support. I commend all of that back work, because that is the basis upon which we stand this legislation today.

Ken Ticehurst (Dobell, Liberal Party) Share this | Link to this | Hansard source

I have been fighting for changes to our child support and family law systems since I first became a member of this parliament, particularly after learning of local men who had committed suicide because of the unfairness of the system. Tony Miller, from Dads in Distress, contacted me in about August 2002 and let me know that there were probably 2,500 men a year committing suicide because they could not access their children. My attention was then drawn to the plight of other fathers out there—and mothers and grandparents—who all suffered needlessly because of the insufficiencies of our system. I formed an informal backbench committee with some colleagues in 2002 to pressure the Prime Minister and cabinet for a formal government committee to address the need for family law reform and an overhaul of our child support system.

Five years on, we are introducing legislation in response to the recent recommendations of the child support task force regarding changes in the way child support is calculated: the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006. I cannot emphasise how pleased I am that we have got this far. These changes, once fully implemented, will bring about some equity in the system, possibly making it one of the fairest systems in the world. The proposed child support system is no longer about favouring one parent over another. It also recognises that there is no such thing as a standard family breakdown, nor is there a standard child to raise after the separation. The costs of children vary depending on what type of household you are talking about and the spending patterns of that household. These changes are significant and implementation of the new scheme requires extensive legislative and other changes. We cannot rush it and take the risk of getting it wrong. The new formula will therefore be introduced in July 2008.

This bill introduces some measures in the interim to address some of the major pressure points in the system. Firstly, the bill increases the minimum child support payment to $6.13 a week, or $320 a year, and indexes the payment according to rises in CPI. The minimum is currently not indexed, so it is losing value due to inflation. The minimum payment recognises that all parents with the capacity to do so should contribute to their child’s welfare. The minimum is mostly paid by parents on income support benefits and pensions, which are linked to CPI and other indices, so this minimum payment will remain affordable for all paying parents.

One major criticism of the current child support scheme is that the cap on assessed income is far too high. In 2006 it is $139,347. This leads to very high child support payments that significantly exceed the costs of caring for children in the majority of cases. This measure will reduce the cap by linking it to the average weekly earnings of all employees, rather than to the earnings of full-time workers only. The new cap will be $104,702, which is still quite a substantial sum. This gives a fairer and more realistic maximum amount of child support payable. It is an interim measure until the revised formula is implemented. This is particularly important where both parents are professionals and the custodial parent may even be in small business and in fact does not submit proper tax returns. Where parents will receive less child support as a result, they will still receive a substantial amount. For example, a parent currently receiving about $34,000 a year for two children will still receive more than $24,000 a year.

For the first time, the costs of children will be distributed between the parents according to their capacity to pay. Currently, parents who change their working patterns and earn less income can be assessed to pay the same amount of child support as before the change, on the basis that their former income indicates a higher capacity to earn. This is to protect against parents deliberately reducing their income to avoid child support, which is not fair to their children. However, the rules are sometimes applied to parents who have a good reason for earning less—for example, caring for a new child may mean they cannot do shift work anymore. This is unfair and a major source of concern about the scheme. I have been contacted by non-custodial parents who have been adversely affected by this ruling in the course of my push for a fairer system. Particularly on the Central Coast, where we have a high number of commuters, people who are made redundant from a job in Sydney have no opportunity to gain the same employment on the Central Coast as they previous held.

This measure strikes a fair balance for parents and children. It means that parents who can demonstrate that they have a good reason to reduce their income will not be subject to child support assessments based on their capacity to earn. It also means that parents will not be expected to work overtime, by restricting earning capacity to standard full-time hours for a person’s industry and occupation.

One complaint that paying parents have against the current scheme is that they have no say in how their child support is spent. Measures in this bill mean that nonresident parents will be able to spend a greater percentage of their payments directly on their children. If the parent receiving child support does not agree, a paying parent can still satisfy up to 25 per cent of their child support liability by paying directly for certain essential items, such as school fees and health care, when they pay the rest of the liability in cash. Many paying parents would like this limit to be much higher, but because the parent receiving child support does not have to agree to these payments it is important to find the balance between letting paying parents spend money on their children directly and ensuring that resident parents can meet their day-to-day costs. This measure adjusts this balance by raising the limit on prescribed non-agency payments to 30 per cent of liabilities.

This bill also seeks to reward nonresident parents who have contact with their children. Currently, parents who have the care of their children for at least 30 per cent of the time receive a higher ‘with child’ rate of Newstart and related payments. This is an additional $16.50 a week. To encourage contact between low-income parents and their children, this provision will be broadened to parents who have care of their children for at least one night per week.

This bill will also aim to address issues with some non-custodial parents shirking their responsibilities when it comes to payments. While some parents pay too much child support, others do not pay enough for the support of their children, and this is something we need to fix. The Child Support Agency will increase its existing activities that target serious avoiders and debtors. The Child Support Agency will increase its use of court action to recover outstanding amounts. As well, the number of parents investigated for deliberately understating their income will be increased and action will be taken to ensure that parents lodge proper tax returns.

At the heart of the government’s family law reforms are the new family relationship centres, which aim to help separating families make custody and other arrangements without going to court. These centres will better integrate the Child Support Scheme with the family law system, by helping parents to reach agreement on parenting and child support arrangements. There will also be improvements in the way in which the Child Support Agency does business. A more customer focused approach will include improved training, increased staffing and more intensive case management for difficult cases. The bill also addresses a constitutional issue with the application of the Child Support Scheme to exnuptial children in Western Australia. More specifically, the amendments confirm the validity of the longstanding practice of administering two parallel schemes during periods that fall between amendments to the Commonwealth legislation being enacted and Western Australia adopting those amendments for its exnuptial children.

Everyone knows the child support system needs fixing. This is the first stage in the implementation of the government’s Child Support Scheme, which will promote fairness that has never before existed in our child support system. The current system defies real world experience, and this bill and subsequent bills will overcome that limitation. The new scheme is more focused on the costs and the needs of children, including where care is shared. This is expected to reduce conflict between parents about parenting arrangements, encourage shared parental responsibility and help to ensure that child support is paid in full and on time. It is difficult enough going through the ugly process of divorce, especially for children, without being then subjected to the relentless child support and family law processes. I know these reforms will result in a better outcome for the most important and vulnerable people in our society—that is, our children. I look forward to the full support and implementation of the Child Support Scheme.

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

I am pleased to have the opportunity to participate in the debate on the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006. I was a member of the House of Representatives Standing Committee on Family and Community Affairs which produced the report Every picture tells a story, which led to some fundamental changes to the family law system and the creation of family relationship centres. As part of that reform process, the committee made numerous recommendations about adjustments and changes to the existing child support formula, which are being given effect by the further detailed consideration undertaken under the chairmanship of Professor Parkinson. That comes to us today in the child support legislation amendment bill which, regrettably, though, only addresses some of the many important issues that need to be considered in the revision of the child support system.

By way of introduction, I want to quote a paragraph from the Parliamentary Library Bills Digest that accompanies this bill, because I do think we need to see this issue in context:

The Child Support Scheme has been in place since 1988. The introduction of the Scheme was a major, controversial reform. It was expected that it would take many years to refine and become accepted. The CSS represented the government intervening in one of the most sensitive and traumatic points in the family life cycle. Given the acrimony and emotions associated with family breakdown, the proposal for a government administered maintenance collection process could not avoid being the focus for dissatisfaction and also grief and anger for individuals caught up in the turmoil of loss of family life and children.

It has been quite a vexed, difficult and emotional issue—an issue that all of us as representatives of our local communities deal with on a very regular basis. You have constituents who come to you with claims that their partners’ taxable incomes have been deliberately minimised to avoid their obligations and, on the other hand, you have non-custodial parents arguing that the system is all geared to maintaining the lifestyles of their former partners—you know the kinds of arguments that go on.

One of the things I have always found difficult in trying to come to a reasoned and rational position about the formula is that I could never understand the rationale for the setting of the formula in the percentage terms that have applied. Part of the difficulty was always the inability to give a reasoned argument for the way the system was structured in the first place. I am sure that, at the time it was introduced, people had all the arguments. But it has been difficult, as the committee found, to get to the basis of those arguments. We thought it would be fairer if we could reach some independent and objective analysis of the actual costs of raising children which would take some of the heat out of these vexed arguments.

The child support system was an important government intervention. It was important because it aimed to strike a fair balance between public and private forms of support for children, and to alleviate the poverty of sole parent families. We all know that sole parent families raising children are likely to be very much at the bottom end of the scale in terms of wellbeing and standard of living. We have always believed that any policy must put the interests of children first, reduce child poverty and operate in such a way that both parents contribute to their children’s well-being. It must also encourage both parents to maintain ongoing roles in their children’s lives. I welcome many of the long overdue changes that will come with the introduction of the staged changes to the formula. But, as the member for Sydney indicated, our support for the package as a whole is conditional on improved protection against income reductions for low-income households raising children. I will come back to that argument later.

The bill before us today seeks to implement only the first stages of change, and other speakers have gone into the detail of those changes. I think it is really regrettable that we are not in a position to debate the changes as a total package because, had we had that, it would have been much easier to assess the winners and the losers, and the equity considerations, of justice and fairness for all, that have to be part of the outcomes.

You cannot argue against the fact that the existing formula has been the cause of a great deal of angst in the community. The research undertaken recently by the Australian Institute of Family Studies found that more than 60 per cent of nonresident fathers and 45 per cent of resident mothers thought the system was not working well. This was confirmed in the evidence that came before us in the inquiry that led to the report Every picture tells a story. As we know, many constituents who have come to see their politicians have raised concerns about the application of the formula and what they perceive to be the many anomalies contained within it.

The formula as it now stands is, I think, based on the notion that somehow the living standards that applied in the intact family would continue to apply postseparation—what is referred to as the ‘continuity of expenditure’ principle. I find the rationale for the continuity of expenditure principle a little bit hard to fathom, because family breakdown does cause a different outcome in living standards before and after separation. But, also, I have always been concerned that I could not explain to my constituents the reason why the percentages were struck as they were, at 18 per cent for one child and 27 per cent for two, increasing depending on the number of children. I could not explain the rationale for those percentages being struck and applied in that manner.

On top of that, we had arguments about the adjustments to recognise a range of different circumstances. Coming with that were the argument about what was perceived by many to be the unfair treatment of children in second families; the issue of contact above the threshold of 110 nights, which reduces the payer’s liability; and the fact that the formula applied the same percentage of income regardless of the age of children. There was also the issue that it did not properly take into account the income of the custodial parent if that income was under average weekly earnings. In other words, the formula had not really kept pace with workplace changes, the greater participation of women at work and the issue of why their income was not part of that equation if it was under AWE.

In addition to concerns about the rationale and basis for the current child support formula, constituents continue to air grievances about what they see as inconsistencies and anomalies in the application of the formula. It is not uncommon for constituents to argue a case as to why the formula, in their view arbitrarily set, is on taxable income rather than on disposable income. There is the argument that the level of exempt income is too low for non-custodial parents. As we know, it is now struck at about 110 per cent of the single rate of the pension, around $13,500 a year. Constituents tell me—and it is the evidence produced to the inquiry—that the application of that level of exempt income leaves many non-custodial parents in a situation where they have little disposable income to sustain a decent lifestyle, let alone make arrangements for repartnering or for children in second marriages or their new relationships.

From the grievances that have come before me, there is no doubt that the self-employed are able to manipulate their taxable income and that others are able to minimise their income. As we all know from published data, the lack of enforcement provisions has seen a huge increase in debt recovery problems for the agency. As at the end of June 2003, the CSA had not collected $844 million due in liabilities.

Another vexed issue was the belief by many that in second families a child from the second relationship was treated with less consideration than a biological child from the first relationship. As we know, payers with new biological children are given a dollar figure increase in their exempt income before the relevant percentage is applied. Many nonresident parents who have repartnered and have further children in their new relationships constantly complain about the impact of overtime and second jobs on their liability for the children of their first marriage. To put it simply, let me quote from one of the submissions to the inquiry:

As it now stands, any person paying child support has little or no incentive to work any longer than they have to, knowing that any extra money earned is going to increase their child support payments ...

that is, it will increase payments to the children in their first relationship. So there has been a widespread raft of concerns about the basis for the formula, in the first place, and about the many anomalies that people on both sides of the equation—both payer and payee—see in terms of its application.

It was a vexed issue. I am delighted that the government followed the recommendations of our inquiry and set up the ministerial task force chaired by Professor Parkinson to undertake a detailed analysis and try to come up with a child support formula and system that addressed many of the issues that were causing concern in the community.

As we know, the task force has recommended fundamental changes. Those changes will see parents share in the cost of supporting their children according to their capacity. The new proposals move away from the notion of continuity of expenditure—somehow trying to artificially maintain the intact family standard of living post separation—towards what the task force refers to as an ‘income share approach’. I think that better reflects the notion of shared parental responsibility and changes in workforce participation by women.

It is proposed that in future the costs of raising children are worked out based upon the parents’ combined income, with the costs distributed between the mother and the father—or the resident and nonresident parent, with the mother usually being the resident parent—in accordance with their respective shares of that combined income and their level of contact with their children. Both parents will now have a component for their self-support deducted from their income.

Very importantly, in moving away from the arbitrary percentages applied to taxable income, we now have, for the first time, courtesy of the University of Canberra’s National Centre for Social and Economic Modelling, a much more objective and realistic assessment of what the actual costs of raising children might be. As NATSEM themselves say, the calculations cannot be perfect but they are as close as researchers believe it is possible to come. For example, they estimated that for a single child of up to four the average cost was $91 per week in a two-parent family and $115 in a single-parent family. For a five- to 12-year-old, the costs rose to $95 in a two-income family and $119 in a single-parent family. I give those as examples, because it makes it much easier to address complaints and concerns when you can say to people who come to see you that, at least for the first time, we have the best calculations possible as to the actual costs of raising children.

As I said earlier, calculating the costs of raising children is based on the parents’ combined income and is done in two age bands. I think one of the problems with the arbitrary formula applied previously was that the age of the children made no difference. As the NATSEM modelling shows, the costs of raising children increase as the children become older. The new proposal recommends that the support be calculated in two age bands—for children aged nought to 12 and for children aged 13 to 17—and that the costs are capped at a combined income of 2½ times the average weekly earnings, which means that at $104,702 the cap would apply.

Some people will argue that high-income earners are going to be advantaged by this change and will ask whether that is fair. I guess that is a judgment people will come to with regard to their individual assessments, but I would note that a nonresident parent supporting two children under the age of 12 would still be making payments of $472 per week under this lower cap, and that those payments are higher than the objective data that NATSEM has produced on the cost of raising children.

The task force recommended an increase in the self-support amount, that it should be the same for both parents and that children from first and second families ought to be treated as equally as possible. They also believe that regular face-to-face contact should be recognised in the formula. I have some concern about the withdrawal rate for child support liability. They suggest that regular contact—that is, contact of at least five nights per fortnight—should entitle the nonresident parent to a 24 per cent reduction in their child support liability. I would urge the government to review that, because I think that rate of reduction is too high and, in fact, has the unintended consequence of leaving too many sole parents—resident mums, normally—in a much more vulnerable position than they are today. I think if we could revisit that 24 per cent reduction for the nonresident parent who has the children for at least five nights a fortnight, we might get to a better and fairer outcome.

I can see some of the advisers looking perplexed. ‘Regular contact’ is defined as contact occurring between 14 and 34 per cent of the time, which averages to at least five nights per fortnight. If the nonresident parent provides that level of contact, under the Parkinson formula their liability for child support would reduce by 24 per cent. I am arguing that that 24 per cent is too high and is one of the reasons why there is concern that low-income resident families will be left in a very precarious position.

Finally, as legislators we have an obligation to ensure that all parents meet their obligations to their children. As a member of the inquiry, I was appalled to learn that, based on figures that I think went back to 2003, more than 40 per cent of all payers in our scheme today are paying $5 per week or less for child support, 56 per cent pay $40 per week or less and the average child support paid in July 2003 was $57.

They are appalling statistics and well below the actual costs of raising children. That is why the amendment moved by the member for Sydney expresses Labor’s concern that, whilst we do not decline to give the bill a second reading, we call on the government to provide protection against income reductions for low-income households raising children. We believe there is strong evidence to show that many people in the system are understating their taxable income, which does not properly reflect their capacity to pay a reasonable amount towards the support of their children. Only about half of the people paying $5 per week for their children are on minimum entitlements such as Newstart, DSP or other income support. So, in my judgment, there are a lot of people who are minimising their financial responsibilities to avoid providing for their children.

We will have ongoing debate about the impact that all these changes will have on resident parents raising children in sole parent households. I think it is incumbent upon the government to ensure that the overall package and its relationship to welfare policies will ensure in future that low-income households raising children are not left in a worse position than they are now where rising child poverty becomes an unintended consequence of the child support changes recommended by the task force. (Time expired)

David Fawcett (Wakefield, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in support of the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006. As other members have rightly highlighted, this legislation has come out of the government’s response to the House of Representatives Standing Committee on Family and Community Affairs Every picture tells a story report, which captured in no uncertain terms the high degree of hurt and cost, both financial and emotional, that is wrought upon families, particularly children, in Australia when their parents decide to separate for whatever reason. It highlighted a number of areas of concern regarding the impact on families and, in particular, the effectiveness of the systems we have in place to assist those families and their children.

The government’s response was to set up a task force which was chaired by Professor Patrick Parkinson. A wide range of people were involved to try to make sure that all stakeholders in the process, both groups representing children and those representing the primary carers—often the mums, but also the dads—had their interests represented in coming up with a solution that is reasonable and practical for government to implement but that also has just and equitable outcomes to the greatest extent possible for each of the parties involved. I make that statement ‘to the greatest extent possible’ because no piece of legislation will be able to account for every individual circumstance. I recognise there will still be some people who will feel they have been treated unjustly by these changes, but I am satisfied that, on the basis of the task force set up by the government, these changes do represent a good and solid compromise from a range of positions to get the best possible outcome for the greatest number of people.

This is part of a package of reforms announced by the government in response to the task force’s findings, and they constitute a major overhaul of the scheme. Probably one of the most important aspects is the new child support formula, which for the first time tries to put some quantifiable data around the concept of how much it actually costs to raise a child, as opposed to the fairly arbitrary application of a system that really does not take into account many of the variables that individual relationships face.

The package recognises the fact that our demographics are changing and that there are more women in the workforce. There are also more men who have realised that the importance of work and family balance means that they need to perhaps reassess how much of themselves, their time and effort they choose to put into purely career and how much they choose to invest in their families. I will digress briefly and say that my hope is that the realisation that has occurred to many post separation will start to dawn on people prior to separation and that they will choose proactively to invest in their relationships so that there is that quality of relationship built, such that separations are certainly reduced if not eliminated altogether.

This reform is being implemented in three stages, and there will be a number of extensive and complex elements coming down the path. The reason for the phased introduction is that there is such a high degree of interaction between the new formula and the various software packages and other pieces of legislation that will impact on each of the stakeholder groups that, despite the fact that people have waited an awfully long time to see this change, we are far better served to take the time to get it right the first time to the greatest extent possible before implementation, rather than to rush it and end up confusing the situation and having failures in the system that will make the situation of many families, and of children in particular, even less fortunate than they are at the moment. Whilst I recognise and appreciate the concern and angst of some people who have spoken to me about the fact that there will be yet another delay before complete implementation, I do support the fact that we are taking this measured approach and putting in the resources to make sure that, when it is rolled out completely, to the greatest extent possible each of those interrelationships with other agencies will have been thought through so that we do not have unintended consequences and we do not have families, particularly children, who are disadvantaged financially through a rushing of the process.

However, in order to try to mitigate that delay, I think the government have wisely decided to bring forward whatever steps they can in the reform package to benefit families, and this bill addresses a number of those measures. I do not intend to address all of them but they include the increase in the minimum child support payment and the cap, which is one measure that I would like to speak about. Specifically I will also address the ‘capacity to earn’ decisions as well as the increase in the proportion of a child support liability that can go towards prescribed non-agency payments. Lastly, for the sandgropers, it is good to see an element dealing with the Western Australian legislation, which I must confess was news to me when I read it because I had not realised that situation stood with Western Australia.

I will now turn to the key areas that I would to discuss—that is, the cap, the capacity to earn and the percentage for non-agency payments. The schedule amends the figure that sets the cap on a liable parent’s adjusted income. Having spoken to a number of payers, predominantly men but I have also spoken to women in this situation, this change will be very welcome because it is in line with the underlying philosophy of evaluating the true costs of raising a child and for each biological parent to play a just and equitable role in supporting that child in accordance with those costs, as opposed to a system in which somebody who works hard, who shows innovation or who runs an effective business is almost penalised—which is certainly the way it is perceived—by increasing the take from those people.

I think one of the outcomes of that process has been to see a number of people disengage from the system. I have spoken to professionals who had tremendous things to offer the community, whether in the medical field or in other fields, who have walked away from that field of endeavour purely because of aspects like this ever-encroaching take by the Child Support Agency for maintenance payments. I believe that it is not only in line with the principle of looking at the true costs; I certainly hope that it will again increase that participation. As pointed out by members opposite, even with the reduction in the cap, by looking at the all employees average weekly total earnings we will still see payments under the new system that are substantially higher for children than those that currently exist. If we can particularly get that increased participation in the scheme, I believe we will see a far broader range of children who will benefit from that support from biological parents that has not existed previously.

The next area I would like to talk about is the one that is probably the most important and which looks at a new way of assessing a parent’s capacity to earn. These changes provide for a great more detail under the legislation to look at how that decision is made as to whether the parent has that greater earning capacity. The scheme at the moment has a number of flaws, and the outcomes are quite devastating for the people involved. The scheme at the moment means that if you have been working huge amounts of overtime, perhaps as a truck driver, as a shift worker or even as a professional to earn a given level of income, that is taken as the benchmark that you are capable of earning, with no consideration given to whether those hours that you were working were in fact reasonable or safe, and very little consideration given obviously to whether it was one of the primary reasons that the relationship actually broke down in the first place.

The lack of a clear statutory definition of capacity to earn has really worked against the payers in many situations. The new method is intended to be flexible enough to allow parents whose earning capacity has been assessed to pursue a different career path or to reduce their working hours. To my mind, that is just and equitable because it provides for them the same opportunities that people who are not in a payer situation have. There is nothing that says to somebody who is in an intact family or is single that they cannot change their job. There is nothing that says they cannot reduce their hours of work if that is a reasonable thing to do from their perspective. So I think some of the outcomes that we will see through this change will go to the heart of some of the great concerns about the current system.

I will look at safety. We have heard for a number of years concerns in the road transport industry about people driving incredibly long hours and we have put in a number of measures to try to reduce the hours that drivers drive. Likewise, workplace safety requires that we manage people’s fatigue. Even in the professions, such as the medical profession, we have seen a growing concern about people working excessive hours. So whilst these really positive steps have been taken in one area, we have this arm of government requiring people to work hours which are plainly unsafe. I think this change will have a terrific outcome in terms of recognising that just because they may have worked that at some point previously in their life there is no moral justification for requiring them to continue that work. In fact, the legislation looks specifically at setting additional guidelines so that the assessment is based on the level of normal full-time work for the occupation or industry in which the payer is involved. That is a terrifically important change. Also importantly, it addresses the issue of equity. As I touched on before, payers are now free to make the same choices that any other Australian can make. If they wish to go from full-time work to part-time work and training or, in fact, to full-time study to further their qualifications and opportunities, they are not prevented from doing that or sent into poverty through choosing to do that. This provides a very welcome relief valve for the purposes of people being able to change the work imbalance in their life.

There are some good safeguards in this bill in that the courts making that decision can see what the primary motivation is and there is ample opportunity to make sure that the parent can demonstrate that the change is not purely for the reason of reducing their maintenance payments and that there is a justifiable reason, which is now spelt out in some of the guidelines, for making the change. I think the most important outcome, though, will be in terms of relationships. So many relationships come under stress and break down because of the imbalance between work and family time. As people are working to try to build what are often material assets and are perhaps working in two jobs or are working excessive overtime to pay off the family home, the stresses that are put on the relationship are often a direct cause of the relationship’s breakdown. To then require those people to continue working those hours has two quite negative effects. It dramatically affects their availability to participate in a meaningful way in the ongoing lives of their children. For many of them that was difficult enough when they were working in partnership with the mother or father of the child but when they are living in a separated situation it becomes almost impossible for many people to have that meaningful input. So the ability to reduce working hours to something that is around the industry standard will play a large role in increasing the quality of ongoing contact. A number of studies highlight the very negative impacts of fatherlessness in our society. As the vast majority of non-resident parents are fathers, I believe this measure, which will allow fathers to adjust their work so that they can have more meaningful time with their children, will have longer term positive effects that we have yet to even start to factor into measures such as this.

Importantly, in terms of quality relationships, it will also enable subsequent relationships of people who have separated to have some chance of success. If somebody is moving on to a new relationship and is establishing and maintaining that relationship but is still being required to work the excessive hours that they worked previously while trying to maintain the difficult juggling act of involvement in their children’s lives, we are almost condemning them to failure. I think that is reflected in a significantly higher percentage of separations and divorce for subsequent marriages than for first marriages. So given this reason of reducing the damage to future relationships, I think the specific outcomes of this measure will be very beneficial to our community.

Proposed subsection 117(7B) looks at what a court needs to do to be satisfied that the parent’s earning capacity is greater than is reflected in his or her income. It talks about the safeguard that they should be able to come back, almost by default, to the industry standard full-time hours or working pattern without any question about their motivation. The other factor that I think is quite important concerns the amendment to subsection 125(5) of the act that talks about the decision that is made being just and equitable. As I come to proposed subsection 117(7B)(b), I see it talks about ‘caring responsibilities’. I wish to highlight the fact that I think this is an important clause because it comes to the outcomes of future relationships and the ability to make quality future relationships. But I believe there may be a need to actually provide even some more clarity as to ‘caring responsibilities’ and the definition of those. While it talks about those including responsibilities to people other than children in relation to whom support is paid, such as parents or a new partner, alternative caring arrangements can be perceived as being things that are for someone who is in need of care, such as disability care, child care or elder care. One of the positive outcomes is going to be in the area of being able to invest in relationships to keep those together and strong, which will benefit the children that may come from that relationship, while also allowing meaningful involvement with previous children. So I believe that there needs to be clarity in that area such that if somebody wishes to reduce their working hours so that they can invest in their relationship with a new partner that needs to be very clearly a reasonable motivation for that action.

The last point I wish to specifically address is the increase to 30 per cent of the child support liability that can be credited in relation to prescribed non-agency payments. I am hoping that that this will, again, play some part in reducing some of the frustration that payers feel when they have questions about where their maintenance payments are going. In conjunction with the parenting plans that people will now be encouraged to reach with their previous partner, the other parent of the children, I am hoping that we will see more benefit for the child because there will be an agreement by both parents as to the significant milestones and directions in the child’s life and there will be agreement about where some of that money should go and the opportunity for the payer to direct where some of that money should go as part of this new provision—in fact, it will be a larger amount, up from 25 per cent to 30 per cent. I am hoping that the combination of this measure and the parenting plans that people will be encouraged to work through at the family relationships centres will, again, see a less adversarial and more beneficial outcome for the children who are so sadly affected by separation.

In summary, I would like to highlight that I support the bill. I support the fact that it is being phased in so that we get the complex parts of it right the first time around. I support the cap and I particularly support the changes to how capacity to earn is decided. I note that the outcomes of that have the potential to have very long-term benefits for relationships and communities which, at the core, define our society and how functional our society is, so I greatly welcome that. Not only are things like the parenting plans going to help facilitate this but some of the other outcomes of things like the family relationships centres will be focused on relationship education which I hope will manifestly change the culture of relationships in our country, so that people invest in them so that many of the measures that we are talking about today will become less and less required as relationships are stronger and last longer.

Julia Irwin (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

Of all the issues that stir the emotions of people living in the electorate of Fowler—whom I have the pleasure and honour of representing in this House, and I am sure the same could be said by every member of this House—the issue of child support payments or, you could add, their nonpayment ranks No. 1. It is not hard to understand why. On the one hand, nonresident parents, mostly men, pay, in many cases, a large proportion of their income to their former partner as a child support payment. This leads to disputes over the amount paid in child support and very often over the use to which the payment is put. On the other hand, resident parents face the full cost of caring for children in circumstances where, generally, the costs remain the same but the level of household income is lower. The issue of child support in the context of child custody arrangements was examined by the House of Representatives Standing Committee on Family and Community Affairs, of which I was deputy chair. It was reported under the title, Every picture tells a story, in December 2003.

The issue of child support was an area of the inquiry which deserved close attention and the committee should have spent more time on the issue of child support. I think all members of the committee would agree that, while its findings in general terms have in many ways been incorporated in this Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006, the fine detail work as seen in the Parkinson report provides a sounder base for the detail of this legislation. Professor Parkinson did give evidence to the committee and later briefed committee members on his report. In fairness to Professor Parkinson, I should point out that this legislation owes more to his detailed study than to the report of the committee.

The terms of reference for the family and community affairs committee required an inquiry into whether the existing child support formula worked fairly for both parents in relation to their care of and contact with the children after separation. The committee’s conclusion was:

... it is imperative that independent modelling of the cost of children in separated families should be undertaken and published to establish what the impact would be if child support payments were based upon those results. In any event, the results of the study should be used to determine the basis of future child support payments.

In effect, the Parkinson review provided that independent modelling and other principles on which this legislation is based. It has to be said, however, that this legislation is just one small step. There is still a great deal of work to be done before we even get close to a fair system of child support arrangements. The minister acknowledged this in his second reading speech when he stated that the reform package would be introduced in three stages, with the more extensive complex elements included in the formula being the third stage. I can accept that there may be some wisdom in leaving the hard bits of the package until later but we need to keep in mind that the reforms will bring greater fairness to 1.4 million parents and they should not be delayed indefinitely.

In looking at the measures contained in this bill, it is clear that it really only scratches the surface of this problem. The increase in the minimum child support payment from $5 per week set in 1999 to the indexed figure of $6.15 week is hardly an earth-shattering reform. The issue of the $5 minimum payment was of great interest to the family and community affairs committee. When the original child support formula was introduced, the Child Support Consultative Group believed that such a payment would force some nonresident parents into poverty, that the amount would be so low as to be of little help to the child, that it may lead to further demands on the social security system to avoid poverty by the nonresident parent and that it would not be cost-effective to collect. Welfare groups and nonresident parents opposed the minimum at the time of the introduction of child support payments.

The 1994 Joint Select Committee on Certain Family Law Issues recommended a $5 per week minimum, and this was introduced in the 1999 legislation. The principle that there is an obligation on a parent to share income with their child, however low that income may be, can be seen as the overriding justification for imposing a minimum payment. When you look at the number of nonresident parents paying the minimum $5 a week, you can see why some members of the Standing Committee on Family and Community Affairs were alarmed. According to the June 2003 figures from the Department of Family and Community Services, 39.7 per cent of child support payers paid only the minimum $5 per week. To put it another way, that represents 268,000 out of a total of 684,000 child support payers who are paying just $5 a week. I know that many people in this country are doing it very tough, but I just cannot accept that all of those 268,000 nonresident parents are doing it so tough that they can barely afford to pay $5 a week to support their children.

By comparison, in overseas countries minimum payment figures were $NZ677 in New Zealand and £260 in the UK. I will not convert those figures because you also need to take into account cost-of-living figures for those countries, but it should be obvious that at least a doubling of the Australian minimum payment from $5 to $10 would be appropriate. That was the recommendation of the Standing Committee on Family and Community Affairs. It is indeed a very small amount but, as the committee saw it, that extra $5 a week would make a difference to the 217,000 children who would benefit from such an increase. The increase in this legislation from $5 to $6.15 is laughable. It would not even buy a loaf of bread. Although the indexation is commendable, because it is starting from such a low base it will never really be worth while.

You might think I am mean-spirited asking nonresident parents to pay a reasonable minimum. I do not think that even $10 is reasonable in some cases. When you look at the proportion of Child Support Agency payers, you see that 43 per cent pay more than $40 a week and 21.5 per cent pay more than $100 a week. Of course, there are thousands of cases where the amount is several hundred dollars a week. If you consider the fairness of the child support payment system, it is reasonable to ask how those nonresident parents who pay their full share of child support feel about those who pay just $5 a week or, from July this year, will pay the grand sum of $6.15 a week.

Finally, on the issue of minimum payment, I would repeat the stand of the Standing Committee on Family and Community Affairs, which expressed its strong support for section 3 of the Child Support (Assessment) Act, which states that a parent’s responsibility to support his or her child or children takes priority over all other financial obligations other than that necessary to support themselves and any other legally dependent children and that this obligation is not affected by any other person’s responsibility for the child.

This legislation also deals with the level of maximum payment. Changing the basis for assessing the cap from 2.5 times the yearly value of full-time average weekly earnings to 2.5 times all employees’ average weekly earnings has the effect of reducing the maximum income cap from $139,347 to $104,702. This represents a 25 per cent reduction in the cap and has the potential to save high-income non-residential parents up to $180 per week. This of course will be at the expense of resident parents. The Standing Committee on Family and Community Affairs looked at the income cap and reducing the cap by changing it to either two times full-time average weekly earnings or, as is proposed in the legislation, 2.5 times average weekly total earnings for all employees. The change proposed does give a slightly lower cap than the alternative 2.5 times full-time average weekly earnings, which will benefit some nonresident parents. However, time will tell which of the two figures is more volatile over the years. Given we are dealing with a maximum payment and not a minimum payment, I would have thought that the full-time average would be more appropriate. Given that the figure is $104,000 a year, I do not think many people working part time get anything like that amount. It seems to me that, since we are talking about incomes of over $100,000, we are really talking about full-time employees and it would be fairer in the long run to use full-time earnings as the base rather than total earnings for all employees.

The bill also makes changes which will limit the circumstances under which a parent’s income for child support assessment purposes can be increased, and additional guidance will also be provided for decision makers to improve consistency and clarity of decisions. These determinations have generated a large number of grievances when nonresident parents have been assessed on their capacity to earn rather than on their actual earnings. These changes will give some immediate relief in this area but will be seen to greater effect when changes are made to the child support formula.

The bill also increases the percentage that a nonresident parent can offset against payments, from 25 per cent to 30 per cent. These offsets can be used to pay for items such as school fees and medical expenses. As I said at the beginning of this speech, for many nonresident parents, how the child support payment is spent is often as contentious as the amount of the payment. But I do have some reservations about the discretion that this gives nonresident parents over what will become 30 per cent of child support payments.

Going back to the Standing Committee on Family and Community Affairs report Every picture tells a story, its main recommendation, which has since been included in the legislation, involved the concept of shared parental responsibility. The concept requires that both resident and nonresident parents share in the major decisions which affect the care of their children. I am concerned, however, that having discretion over 30 per cent of child support payments may impact on some low-income resident parents. I know just how much private school fees and treatments such as orthodontistry can cost and I am concerned that, by increasing this discretionary amount to 30 per cent, it may begin to eat into the everyday costs of caring for the child.

There is also the matter of second families. While we look at child support in terms of the responsibilities of the child’s parents, we should acknowledge that many resident and nonresident parents are part of second families, with dependent children of the second relationship. With the changes to the nonresident parent offset, I will be closely following the experience of families and problems which may arise from the change.

Another matter which needs consideration, and which the family and community affairs committee found to be a barrier to shared parental responsibility and to the desirable outcome of shared parenting was the issue of the 109 nights—the number of nights that a child may stay with a nonresident parent before the amount of child support is reduced. There are two sides to this issue: the nonresident parent receives no concession if their child stays with them for fewer than 109 nights and the resident parent can have their child support payment reduced if the child stays with the nonresident parent for more than 109 nights per year. The Family Court, in full knowledge of this, shows a clear preference for contact arrangements of below 110 nights. This was identified by the committee as a major barrier to shared parenting; however, changing this figure would have consequences for resident parents. This will need to be closely considered in the next phase, when the payments system is reviewed. I raise this matter at this time because it is a barrier to expanding shared parenting and should be looked at with greater urgency.

Another matter which we will need to follow closely is the issue of the use of taxable income or after-tax income as the basis for calculating child support payments. This is a longstanding complaint, with reviews dating back to the Child Support Evaluation Group in 1991, the Joint Select Committee on Certain Family Law Issues in 1994 and, more recently, the Every picture tells a story report, which concluded that after-tax income gives a more accurate indication of the income available to non-resident parents to pay child support.

It is recognised that such a change would also require a change to the formula for calculating child support. It would also require a further change to the income cap, which has been changed in this legislation. As with all these issues, because they affect people day by day, any further delay in carrying out reform extends the unfairness and disadvantage that result from the faults in the present system. I know that the task in coming up with a formula that will be fair to the greatest number of parents of separated families is definitely not an easy one. The data from the Parkinson report can provide the starting point for reform. What we need now is the political will—we definitely need the political will—to frame and fund the complete reform of Australia’s child support system.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

This important Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 follows the tradition since the introduction of the initial legislation where both sides of parliament support the legislation. I do acknowledge the presence of the Parliamentary Secretary to the Minister for Industry, Tourism and Resources in the chamber.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

I was waving to the children!

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I beg your pardon. It is a privilege to follow the honourable member for Fowler, who is the Deputy Chair of the Standing Committee on Family and Human Services. I have recorded in the Hansard on a number of occasions my praise for the tremendous job and for the bipartisan way that its predecessor, the Standing Committee on Family and Community Affairs, developed Every picture tells a story, because that is where the genesis of these changes lie. I would like to say two things about the honourable member for Fowler: firstly, she was so conscientious that she insisted on reading every one of those 6,000 submissions. How she did it, I will never know. On every issue that she takes up, she is always a champion of that cause and I thank her for it, as I do other colleagues who served on that bipartisan committee.

I have had a bit of a history in this area, and I particularly welcome this first tranche of changes. It has been difficult to get effective reviews in the areas of family law and child support—and counselling, for that matter. I need to repeat at the outset one of the most important principles that we all subscribe to: that parents must have the children as their first priority, and they would be ours. We need to develop systems, and family relationship centres are one of the outcomes, that will encourage parents to have a productive and constructive dialogue about their children if they cannot have a constructive and productive dialogue in any other area after the dissolution of their relationship or marriage.

It is important for people to see these things moving forward step by step. We cannot solve the problems just by changes to family law and we cannot solve the problems just by changes to child support. There was tremendous time pressure put on that committee, and the area that I thought we did least well in was child support—not because of any lack of motivation or intent. I therefore acknowledge the good work of Professor Parkinson in his report and also the ministerial task force. I want to repeat that the Australian Labor Party supports the changes in this bill and wants a constructive dialogue with the government about further changes that to be implemented.

The honourable member for Fowler referred to non-agency payments. It has been possible for a non-resident parent to pay up to 25 per cent of their child support by way of worthwhile expenditure in favour of their children. This is an extension of five per cent. If you believe that the changes being put in place by this bill and other measures will increase the likelihood of constructive dialogue between separating parents about the needs of their children, this is a very good measure. It first came from a report I was associated with in the mid-1990s. We always had the view that, by agreement, additional amounts of money could be spent directly by the non-residential parent. It is not a means of attacking the authority or undermining the expenditure of the residential parent; it is about reflecting good dialogue and the mutual responsibility that two parents have to their children.

One of the most common requests any committee or member of parliament receives is for some super accounting mechanism that fully accounts for and audits every dollar of expenditure received in child support. Such a system is completely impossible. But I hope that those who are not directly involved in divorce can understand that it is frustrating for a parent to be paying significant amounts of money towards the wellbeing of their children and having absolutely no say in how that money may be spent. I fully support the increase in the non-agency payments to 30 per cent.

I also support the lower cap on child support. In the explanatory memorandum, there is a justification for the change from average weekly earnings to all employees’ average weekly total earnings. This actually results in a lower figure. My disappointment is that, when the cap was originally set at 2.5 per cent of average weekly earnings, there was no capacity for anyone to appeal a decision on the amount of child support, so you then had to take the appeal directly to the Family Court—a superior court more costly for litigants. That is why that original figure was derived. Here I again place on the record my admiration for the former member for Bowman, Con Sciacca, who got that internal review mechanism going in the child support scheme. As flawed as it is, I welcomed it. It was a big change and made a big difference to a lot of people but, once that happened, there was no adjustment to that cap. There is a fair amount of argument and some evidence to suggest that, with very high income earners, not all the child support money goes to the best interests of children. I repeat again something that I am on record as saying: one of the flaws underpinning the initial scheme, and even the scheme today, is the belief that somehow when parents separate they can maintain the same standard of living that the children had. That is just a mathematical nonsense. It can never happen. I support lowering the cap.

There is another measure in this bill that I have long sought regarding the review process that currently exists in the Child Support Agency. As I said, I welcomed it and it was a welcome change. The only thing I disagreed very strongly with was the review not being a proper external review. It has never been a proper external review; it has always been an internal review process. We have lacked a proper external review. If we think that giving citizens the right without the means to challenge these things in the Family Court is a privilege, we are mistaken. That is no right or privilege whatsoever. This legislation sets up the opportunity for matters to be referred to the Social Security Appeals Tribunal. I strongly endorse that. I strongly endorse mechanisms that do not involve parents in outlaying hundreds and thousands of dollars in exercising their appeal rights, and I believe that agencies benefit from proper external review. By the way, I think citizens should have a right to have decisions by those who work diligently in the bureaucracy subject to proper external review. For me, this is a long sought, very welcome change. I hope in the future we will see that it works very efficiently.

Another matter I wish to raise concerns the indexation of the $5 a week in child support that is required of all parents. This originally arose from what I think is a very sound principle—that no parent, no matter what their circumstances, should be free of the obligation to pay child support. Clearly, that presents some problems for those receiving welfare payments, but it is a very important principle which, again, was first articulated back in 1994. There is a lot of criticism of it on the not unreasonable ground that it probably costs more to be collected than the amount of child support received. I am not sure about that—certainly the cost-benefit ratio in such a small amount of child support would not be great, but the principle is worth hanging on to.

To those non-resident parents who have opted to leave work and go onto social welfare as a means of evading their child support obligations, you may feel that you have good grounds for doing that. There may be difficult relations between you and your former spouse or partner, but I, for one, cannot accept, nor do I support, such action. That the amount is being indexed is all to the good, and again I say it should be supported.

I suppose I could say more, but let me just say that the most difficult task that we face in developing formulas for child support is applying it uniformly to everyone. A formula will not suit every case, so we do need some greater flexibility. If we do not have greater flexibility, then as legislators—as members of parliament and as an executive government—we should be prepared from time to time to go out there to voter land, where resident and non-resident parents are, and test how the formula is working. What are its impacts? Are we achieving what we actually set out to achieve or are we creating unintended consequences or hardship? We can all agree about principles, but at the end of the day we have an obligation to ensure that what we have intended is actually happening or, alternatively, we must be prepared from time to time to amend and change. If there is one thing that has been absent—particularly in the area of child support but also, I suspect, in family law—it is a willingness of legislators, members of parliament, to not so much accept that change is needed but to demonstrate the willpower and determination to undertake that change.

Labor will support much of the government’s package in all of this particular legislation, and we will approach the proposed changes in a constructive manner—and I think we have seen that in the debate today. We certainly support encouraging shared parenting and a fair balance in meeting the costs of children’s care and upbringing. As I understand it, there are two more packages that have yet to be presented to the parliament. I look forward to those, but in the end I do hope that lots of people who for a long time have given up hope of any changes will be heartened by this initial package of change. As I say, it is a twin approach. We have to get the family relationship centres up and running—as yet they are not—and there is a whole host of issues around their development, not in a negative sense but in the sense of dealing with problems, gaining accreditation et cetera.

Last but not least, I said that we are taking a bipartisan approach. It came out of a bipartisan committee. But I must say in question time yesterday, when asked a legitimate question about a relationship centre, the Acting Prime Minister could not help but escape from bipartisanship on this issue and give a very partisan response. I hope that members opposite will observe the tradition of a bipartisan approach to this difficult issue that affects so many parents but, even more importantly, so many children.

Peter Andren (Calare, Independent) Share this | Link to this | Hansard source

Before beginning, I must acknowledge the statements of the member for Chifley and his longstanding contribution to and constructive role in the area of child support over many years in this place. The Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 represents the first of a raft of changes to the child support system that will be implemented from July this year, January next year and July 2008. Those contained in this bill could fairly be described as the least contentious. The bill increases and indexes the minimum child support payment from $260 to $320 a year or $6.15 per week. Such a payment is more of an indication of the obligation of all parents to contribute to the needs of children than of any substantial assistance with the care of children. The bill recognises and rewards non-resident parents on income support who have contact with their children.

Surely the aim of any child-support process should be not only financial support but also that essential physical and emotional support that an otherwise absent father or mother should be offering, and should have the opportunity to offer, to their children. Under these provisions, parents who have care of their children for at least one night a week will receive higher income support. As well, the legislation introduces a fairer assessment of parents’ capacity to earn income. This has been an area of concern for many constituents whose child-support payment is based on an earlier set of circumstances than applies at present—for example, they might have lost their job. The change will limit the circumstances under which a parent’s child support assessable income can be increased. I hope the provisions for a clearer determination in this vexed area will indeed provide the clarity and consistency that the government’s fact sheet claims.

The new legislation is aimed at ensuring that parents share the cost of raising children by assessing the combined income of both parents, which is further assessed to cover actual contact costs. The total income of a sole mother—including government payments to sole parents, which have increased significantly in recent times—is now assessed in the figure. While new support payment formulas that reflect the costs of raising children and create new teenage categories will come into effect from July 2008, from July 2006 there will be a reduction in the income threshold from $139,347 to $104,702. This is designed to eliminate the so-called subsidisation of the lifestyle of the former—now custodial—partner. This still requires a payment of around $24,600—at that capped income scale—by a parent who has little or no contact with his or her children.

No doubt, this will cause some consternation. But I am more concerned, quite frankly, to see that middle- and low-income families—which, after all, are the vast majority of child-support families—receive a fair payment to ensure the costs of raising the child are properly met. The increase from 25 per cent to 30 per cent in the amount a non-resident parent can direct to be paid for essential items for their children is very welcome. It will enable non-resident parents to have more say in how child-support payments are spent. But with many child-support clients engaged in ongoing personal issues—and many of us see that on a weekly, if not daily, basis—this needs to be carefully monitored. In almost all cases, it is the primary carer who is the most able to determine the child’s daily needs. But I accept that there is frustration among many non-resident parents who feel their child-support payments have not been used to best effect. Hopefully, this five per cent increase in prescribed non-agency payments will achieve part of the desired effect.

The bill also amends the provisions that deal with a parent’s capacity to earn. The current method can require a parent to continue to work extensive overtime if that had been their working pattern before the relationship broke down. Under this bill, a parent’s maximum capacity to earn is based on the level of normal full-time work for the occupation or industry in which he or she is involved. This will allow paying parents to reduce their working hours due to other responsibilities, due to no longer having to meet mortgage requirements or perhaps for health reasons. It allows payer parents to make decisions about their work and life, such as pursuing a different career.

This all seems fair enough when one considers the greater enforcement and investigative powers that will be introduced to identify those who abuse the system. Studies show that about 40 per cent of parents misrepresent their capacity to earn. However, this also recognises the situation in which an overworked payer parent has to support a very disinterested former partner who has not contributed to the household’s income despite a clear ability and opportunity to do so. Above all, there are checks and balances in this process and an ability to appeal any decisions, notwithstanding the protracted and often frustrating appeals process.

So, overall, these reforms are very welcome and should ameliorate some of the concerns that bring so many parents to the offices of MPs. Child-support cases still represent about 10 per cent to 15 per cent of inquiries at my office, but that is a halving of the number I had when I first met the rush of disgruntled, disillusioned and mostly non-custodial fathers who came to see me from 1996 onwards. In fact, I was absolutely gobsmacked by the amount of work that had to be done in this area. There is no doubt that things have gradually improved over those 10 years, and these provisions will certainly assist in that process. The move from the tax office chasing the unpaid child support to a more humane Centrelink and Child Support Agency process, and the outreaching of staff to conduct seminars in members’ electorates, has gradually helped to create an environment of far more trust and confidence in child-support clients and, I would suggest, has been welcomed by all members of this House.

The provision of family advisory services such as the family relationship centres must be welcomed if they achieve their aims. Many have doubts. The adversarial nature of much of the child-support process suggests that many partners will not accept counselling and will demand their day in court. Still, the lengthy delays in accessing the courts suggest that something must be done to provide some level of conciliation and counselling at the earliest possible stage.

This bill is the first in a three-stage series of legislative responses to the report from Professor Patrick Parkinson. The future bills, especially those to be introduced from July 2008, are likely to create far more debate than this one. While there are concerns about a proposal that non-custodial parents who see their child one night a week be relieved of 24 per cent of their child-support obligations, there is recognition of the need for differential payments for younger children aged up to 12 and teenagers aged 13 to 17. Many will welcome the recognition of first and second families in determining the child support payable. Also, in future legislation, some cuts in child support for residential parents will be balanced by the elimination of the requirement to split family tax benefits with former partners unless care is shared almost equally. I will reserve further comments until a future debate.

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! It being 2.00 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.