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

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

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

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

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

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

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

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

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

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Child Support Measures) Bill 2023. The modern child support scheme is a proud Labor legacy, first introduced by the Hawke government way back when Brisbane was hosting Expo 88. Thirty-five years later, the Albanese government is happy to continue to support this legacy of reform.

We know it's always tough on children when their parents separate. My father left home when my mother was pregnant with her 10th child, so they were very tough times for my family. Good, responsible governments know how important a robust child support system is. Such social support ensures adequate and fair financial support for all the children of separated parents. To do so it's essential that Australia's child support system be effective in accurately assessing and then collecting child support.

So many single parents rely on child support for economic security and stability; for dignity; and for the roof over their head. We know that the median annual income for parents who receive child support is around $33,000. This is less than half of the annual average weekly total earnings of all employees. In 2021-22 the child support scheme contributed to the economic security of 1.1 million children. This entailed $3.71 billion in child support payments transferred between 1.3 million parents—those are big numbers. And, obviously, most parents do the right thing by their children, irrespective of the circumstances of their relationship breakdown.

I have to be clear here and say that most parents are doing the right thing. Good parents provide assistance on time, they help to cover the cost of things such as food, medicine, education, clothing et cetera—like 'normal' parents under the one roof. However, sadly, when parents don't pay their child support on time there are real and immediate impacts on single parents and the children they care for. Concerningly, there is about $1.69 billion in child support debt that has been accrued over the last 35 years. That's $1.69 billion that hasn't gone to the needs of children. It's parents neglecting their own flesh and blood—parents neglecting their own children, an absence of money and support that hurts and harms. Try to imagine how much $1.69 billion could have helped with expenses: with bills, with that new pair of school shoes, that trip to the movies or all those little pleasures that are so often denied a single parent.

The intent of this bill is to make it easier for Services Australia to collect child support debts, and I'm proud to be part of the government that is helping it to do so because I believe the needs of children should be paramount: it's a great investment. Moreover, our proposed changes will help prevent future debts being accrued by low-income parents. Nobody wins from those sorts of debt traps. The Albanese government will do this from 1 July via three changes that strengthen Services Australia's powers. The first applies to expanding employer withholding. This is where Services Australia can directly debit child support debts from a parent's wage. Unfortunately, this is the default and probably most well-known method for paying child support for those who can't sort it out themselves. At present, Services Australia can only initiate an employer withholding arrangement in active child support cases. For example: right now when a child turns 18 the active child support case ends and therefore Services Australia cannot initiate employer withholdings. This bill will mean that from 1 July this year Services Australia will be able to initiate employer withholdings where there is still an outstanding debt. A parenting debt should not be wiped just because the child has turned 18. As anyone with an 18-year-old knows—and I recently acquired one of them—parenting doesn't magically stop when they become old enough to vote. Therefore, incurred expenses regarding one's offspring when they were officially a child, under 18, still have to be paid. This change will end rogue parents deliberately delaying and not paying what they owe, knowing that when the child turns 18 the debt would disappear. Trickery and delay and bad parenting should not be financially rewarded. This change alone is expected to recover up to $164 million in unpaid child support from around 18,000 parents. This laggardly cohort has an average debt of nearly $11,000 owing to the receiving parent.

A second change will stop parents who owe child support and have been issued a departure prohibition order from being able to bypass their order by offering financial security. At present, Services Australia can issue a departure prohibition order—something to stop you at the gate, basically—to prevent a parent from travelling overseas if they have a child support debt. However, there are exemptions issued if the owing parent can provide a financial security such as a bond for their return to Australia by a specific date. Upon their return this is then returned to them. This bill will give Services Australia more powers to deny an exemption when there is a history of not paying child support debt. Sadly, many parents are using this as a loophole not to pay off their debt. They can find money for an overseas trip but can't seem to find money to pay for their children's school shoes. They can flee overseas but can't feed their own children. This is not acceptable. The number of people this affects will be low, somewhere between only 100 and 200, but this group generally are those with large debts. On average, this cohort has debts of $43,000. This is money that is meant to assist with the costs associated with raising their children—money that should be paid before they swan off on an overseas trip. That's sensible government.

Another change will see improvements made to income accuracy for low-income parents. This bill will improve income accuracy for low-income parents who are not required to lodge a tax return. Child support customers who earn less than the self-support amount, which is currently $27,507, are not required to lodge a tax return annually. At the moment, if low-income parents do not provide income information, Services Australia applies a default provisional income, which is two-thirds of the annual male total average weekly earnings, which is currently $55,016. However, this is double the self-support amount, so it can significantly actually overestimate a parent's income, an inaccurate estimate that can put low-income parents into financial hardship in two ways. It can result in a parent receiving less child support than they should or it can result in a parent being liable to pay more child support than they actually are capable of doing. The bill fixes this problem by deeming a parent's income to be equal to the self-support amount, and this will ensure that the child support assessment takes into account a more accurate estimate of the parent's income. As any MP would know, often why we have our constituents in front of us complaining is because of the inaccurate assessment. This change is expected to benefit up to 150,000 low-income child support parents each year, with receiving parents making up about 70 per cent of this group.

The changes contained in this bill will make a real difference to the lives of single parents and their children. It will remove some irritants from what can already be an incredibly traumatic or fraught situation. However, the Albanese government also knows that there is more work to do to improve the child support scheme to ensure that it is fit for purpose. This bill is the first step in making the scheme better for parents and children. In the government's response to the Joint Select Committee on Australia's Family Law System, tabled in January 2023, we've committed to implementing a range of recommendations to improve the scheme over the longer term so Australians can be assured that the best interests of children will always be paramount in any changes we make to this nation's child support scheme. I commend the legislation to the House.

Justine Elliot (Richmond, Australian Labor Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I rise today also to speak in support of the Social Services Legislation Amendment (Child Support Measures) Bill 2023. As we've heard many speakers say, this bill will make the child support scheme better and fairer for Australian families and these improvements are very much needed to make this scheme much more effective and essentially fairer. The child support scheme was introduced by the Hawke government in 1988, and today the Albanese Labor government is continuing that very important legacy. The child support scheme ensures that children receive regular financial support from both parents after a separation. It also assists parents to share the responsibility of both raising their children and providing for their economic security and upbringing. Since the scheme's introduction, more than $33 billion in child support payments have been delivered.

All of us are acutely aware that most parents do absolutely the right thing in providing all of those necessary provisions for their children. We are very much aware of that and want to make that clear. The changes brought forth in this bill, however, ensure that our government can appropriately act in those cases where parents are not acting fairly in terms of making sure there are provisions for their children. That's why the changes in this bill are necessary. In fact, that's why this bill introduces three important key changes. These changes are expected to recover up to $164 million in debt which is rightfully owed to parents and their children. It's absolutely vital that those parents are able to access that in terms of the upbringing of their children. Of course, there are many pressures and lots of financial necessities in raising children, and, when you have cases where they have not been receiving that child support, it makes it much more incredibly difficult.

Firstly, the bill expands the circumstances where Services Australia can deduct child support debts directly from a parent's wages. An employer withholding is an effective and efficient way—probably the most effective way—for the government to collect child support and administer it to parents. The process also ensures that child support is paid on time, allowing parents to meet the everyday financial needs of their children. Making sure it's paid on time at regular intervals will ensure that they have that money to be able to effectively raise their children and provide for their economic security. Currently, Services Australia can only initiate an employer withholding arrangement in active child support cases. That is currently the situation. This bill, put forward today, will allow Services Australia to initiate employer withholding to collect child support debts in any case, including when a case has ended. For example, the child may have turned 18, and therefore the case has ended yet there's still an outstanding debt that is owed; it is still outstanding. This change alone is expected to recover up to $164 million in unpaid child support from around about 18,000 parents, with an average debt of a staggering $11,000 owing to the receiving parent. A change like this will vitally help those single parents around the country. Indeed, $11,000 is such a significant amount to those particular single parents, who indeed have been doing it really tough. This reform will also make the payment process easier and a lot more hassle-free for both parents by preventing debts from building up and causing more problems.

Secondly, this bill will highlight the rules around departure prohibition orders. This will allow the government to stop parents who owe child support from leaving Australia until they actually pay what they owe or agree to a payment plan. Essentially, this measure will stop people from running away overseas, not fulfilling these obligations and not paying their share for their children's financial security and wellbeing. It will also protect the rights of parents who owe child support and are indeed struggling from having those added pressures on them. This reform will stop parents from exploiting a loophole in the current system, and it will allow Services Australia to refuse an exemption when the parent has a history of not paying their child support debt. Whilst this measure is expected to only impact a very small number of parents—around 110—this group is responsible for a very significant debt pool. It is, in fact, a debt pool that sits at an average of $43,500 per parent. This is not fair at all and not okay. It is very unfair to those children and the single parents who are raising their child here. The bill will give the government the power to stop parents from leaving Australia unless they actually pay what they owe or agree to the payment plan. We must all ensure people do not get away with exploiting a system which is designed to support and help their children. Indeed, these changes are in line with what other countries, such as New Zealand, the United Kingdom and the United States, do.

Thirdly, this bill will improve the income accuracy for low-income parents who are not required to lodge a tax return. Child support customers who earn less than the self-support amount of $27,508 and receive an income support payment on each day of the financial year are not required to lodge a tax return. Currently, if low-income parents do not provide income information, Services Australia may apply a default provisional income, which sits at two-thirds of the annual total average weekly earnings for a male, which is currently just over $55,000. However, this is double the self-support amount, so it can significantly overestimate a parent's income. Indeed, an inaccurate estimate can put low-income parents into financial hardship in two ways: it can result in a parent receiving less child support than they should or it can result in a parent being liable to pay more child support than they are able to. Today's bill fixes this problem by deeming a parent's income to be equal to the self-support amount. This will ensure the child support assessment takes into account a much more accurate estimate of the parent's income—a much fairer system. It will also stop parents from hiding or reducing their income on purpose and make sure that child support payments are fair and reasonable. This change alone is expected to benefit up to 150,000 low-income child support parents each year, with receiving parents making up around 70 per cent of this particular group.

The changes in this bill will make a real difference to the lives of single parents and their children. We all know there is more work to do to improve the child support scheme in order to better support families, and this bill is the first step to making the scheme better for parents and children. Indeed, in the government response to the Joint Select Committee on Australia's Family Law System, which was in fact tabled in January 2023, we have committed to implementing a range of recommendations to improve the scheme over the longer term. These include reviewing compliance, with a particular focus on improved collection and enforcement.

We know the majority of people do the right thing, yet the fact is some people deliberately avoid paying child support to inflict financial control and abuse on their former partners. Our government will not stand for that. We also know that, in some circumstances, the child support system has been used as a means of continued financial control and abuse after people have left abusive partners, which results in sustained trauma for victims-survivors—and we know that occurs. Speaking as the Assistant Minister for the Prevention of Family Violence, I am very proud to be working alongside my colleagues sitting here today, and the entire government, with the firm commitment of ending violence in all its forms. We are absolutely committed to that.

In conclusion, in terms of this bill, the Albanese Labor government will ensure that single parents and their children receive the financial support they are entitled to. We as a government will keep working hard to better the lives of Australian families and ensure that the best interests of children are paramount in all that we do. It is for those reasons that we have this bill and these particular changes that are recommended. I commend the bill to the House.

Amanda Rishworth (Kingston, Australian Labor Party, Minister for Social Services) Share this | Link to this | Hansard source

I thank all those who have contributed in this place to this important debate on the Social Services Legislation Amendment (Child Support Measures) Bill 2023. The majority of parents who receive child support are on low incomes. Most of them are single mothers. It matters that they receive the right amount of child support, paid on time, because the consequences are real if they don't.

The Albanese government is committed to improving the child support system over the long term, and this bill is an important first step. Firstly, it will strengthen debt collection powers to make sure parents and children get the support they need. Secondly, it will improve the quality of assessments under the scheme, making arrangements fairer and more accurate. From 1 July 2023, this bill will improve debt collection by allowing child support debts to be deducted from parents' wages, even when the child support case has ended. This is a sensible and important step towards reducing the $1.69 billion of outstanding child support debt that has built up over the last 35 years. In 2021-22, $743 million in child support payments were collected from the wages of 91,000 parents. Over the next two years, we estimate that expanding employer withholding will recover up to $164 million in unpaid child support from around 18,000 parents. That is money owed to single parents and their children.

Because of this bill, parents who have been issued with a departure prohibition order will need to make suitable arrangements to repay their outstanding child support if they want to travel overseas. No longer will they be able to exploit a loophole that allows them to provide a refundable security to travel instead of paying their child support debt. While only a small number of parents are responsible for this, it does contribute to a large portion of the debt pool, owing on average $43,500 each. These parents are deliberately and repeatedly avoiding their child support obligations, and that is unacceptable.

This bill will also make the income assessment processes fairer and more accurate, protecting our lowest income parents who are not required to lodge a tax return by introducing a new provisional income equal to the self-support amount: $27,508 in 2023. Under current rules, if parents who are not required to lodge a tax return do not advise Services Australia of their income, a higher provisional income can be applied. Using an income that is too high means receiving parents miss out on child support and paying parents are assessed to pay an amount they simply can't afford. This bill means assessments will be more accurate, and we know that parents are more likely to pay when their child support assessment is fair. This will significantly increase the accuracy of child support assessments, prevent debts and reduce income reporting requirements for about 150,000 low-income parents each year. The changes in this bill will make a real difference to the lives of single parents and their children. I thank the government and non-government members for their positive engagement with me and my office on this bill.

We also know that there's more work to be done to improve the child support scheme to better support parents. In our response to the family law inquiry, tabled in January this year, we agreed to a range of accommodations to improve the scheme over the longer term. We are committed to ensuring that single parents and their children receive the financial support they are entitled to, and that government systems don't exacerbate any abuse, including financial abuse. I look forward to continuing to work with members from all sides on this issue, so that the importance of economic security and the wellbeing of many parents and their children is furthered. I commend the bill to the House.

Question agreed to.

Bill read a second time.