Carol Brown (Tasmania, Australian Labor Party) Share this | Hansard source

I rise to speak on the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006. The Labor government established the Child Support Scheme in 1988. The existing scheme has been in place since 1989. The interim has seen a fundamental philosophical shift in family/carer models, articulated nicely by the Australian Institute of Family Studies—from a ‘one home, one carer’ model to a ‘two home, two family/carer’ model. They said:

This shift reflects mounting social science evidence that the interests of children post-divorce are generally best served when children can maintain ongoing and frequent contact with both parents who can cooperate. The Scheme was originally built in a world where fathers were typically the sole breadwinners in families while mothers were the primary carers of children. But with rapid social and economic change over the past decade or so in Australia—whereby both parents are increasingly in the labour force, relation breakdown is pervasive ...

The institute further stated:

… the shift from the old ‘sole (maternal) custody’ model towards greater sharing of the care of children makes sense—so long, of course, as children’s needs, interests and wishes are heard and protected.

I might also add: wellbeing.

The process of child support reform has been lengthy and complex. In December 2003, the House of Representatives Standing Committee on Family and Community Affairs delivered its report on family separation issues: Every picture tells a story. That report recommended the establishment of a ministerial task force to inquire into the Child Support Scheme. The terms of reference for the task force, supported by the reference group, were:

1. Provide advice around the short-term recommendations of the Committee along the lines of those set out in the Report (Recommendation 25) that relate to:

• increasing the minimum child support liability;
• lowering the maximum ‘cap’ on the assessed income of parents;
• changing the link between the child support payments and the time children spend with each parent; and
• the treatment of any overtime income and income from a second job.

2. Evaluate the existing formula percentages and associated exempt and disregarded incomes, having regard to the findings of the Report and the available or commissioned research including:

• data on the costs of children in separated households at different income levels, including the costs for both parents to maintain significant and meaningful contact with their children;
• the costs for both parents of re-establishing homes for their children and themselves after separation;
• advise on what research program is necessary to provide an ongoing basis for monitoring the child support formula.

3. Consider how the Child Support Scheme can play a role in encouraging couples to reach agreement about parenting arrangements.

4. Consider how Family Relationship Centres may contribute to the understanding of and compliance with the Child Support Scheme.

The task force was chaired by Professor Parkinson. Its report—which undertook a comprehensive assessment and made 30 recommendations to overhaul the system—was submitted to the government in May 2005 and was released in June 2005 as a two-volume report entitled In the best interests of children—reforming the Child Support Scheme, which has become known as the Parkinson report. At the time of the release of the Parkinson report, Labor indicated:

... that child support policy must put the interests of children first, reduce child poverty, ensure both parents contribute to their children’s well being and encourage them to maintain ongoing roles in their children’s lives.

The measures contained in this bill come on top of the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006, which was passed in June this year. That bill provided the legislative basis for stage 1 of the reforms of the Child Support Scheme. The bill changed the capacity-to-earn provisions for parents, increased and indexed the minimum payment, increased the amount of the child support payment that the non-resident parent can direct to specific purposes, dealt with a constitutional issue regarding application of the Child Support Scheme to ex-nuptial children in Western Australia, and reduced the cap on the income of non-resident parents which is assessable for child support purposes.

The Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, which we are now debating, seeks to implement the second and third stage of the child support reform package. The second stage reforms will introduce the independent review of all Child Support Agency decisions by the Social Security Appeals Tribunal, broaden the powers of the courts to ensure that child support obligations are met and strengthen the relationship between the courts and the Child Support Scheme. The reforms will also allow separating parents more time to work out parenting arrangements before their family tax benefit is affected. These changes are due to commence on 1 January 2007.

Under the third stage of reform measures, the bill will introduce a new child support formula that will change the way child support payments are calculated, change the treatment of income from second jobs and overtime, change the treatment of parents with dependent stepchildren when calculating their child support liability, simplify the change of assessment rules for altering the amount of child support that is payable, and change the arrangements for parents who wish to make agreements for ongoing child support or lump sum payments. These changes are due to commence on 1 July 2008.

I know that all members of parliament and senators have received many emails, phone calls and letters about the Child Support Scheme. Many people have documented their concerns about the current system and the proposed provisions. I am also aware of many of the stories that have been related by the people involved. This is a very sensitive area of policy and it is one we need to get right. The decisions we make here today will affect how literally hundreds of thousands of families function.

On 14 September the bills were referred to the Senate Standing Committee on Community Affairs, which reported on 10 October 2006. All witnesses regretted the very short time frame the Senate committee had for its inquiry into the bill—except one, as Senator Moore indicated; the department did not list that as a concern. The Men’s Rights Agency commented, and I quote from the Senate report:

I have to say that the lack of time is really quite appalling. I will not say anymore; I think everyone else has covered it. But three days to produce a submission after 300 pages and 200 pages of explanatory memorandum is quite impossible.

This view was shared by the Senate community affairs committee in its report, which stated:

... the legislation is complex, detailed and the timeframe for consideration of the legislation was very short.

The Senate committee went on to recommend:

The Committee ... has considered the Child Support Legislation Amendment (Reform of the Child Support Scheme —New Formula and Other Measures) Bill 2006 to the extent possible in the available time ...

Labor and Greens senators on the committee, in their additional comments to the report, stated:

Labor and the Greens believe that it is unreasonable for the government to expect witnesses to respond and express their views on such a complex and lengthy piece of legislation in such a short period of time.

They continued:

While Labor and Greens Senators are mindful that there are major implementation issues with aspects of the Bill, these issues are not serious enough to have warranted the restricted timeframe imposed on the Committee by the Government.

Labor’s approach to this policy area has always been guided by a set of core principles. Absolutely critical to these core principles is that the interests and wellbeing of children must always come first. Labor has previously expressed its support for child support reform but noted concerns about the potential negative financial impact on low-income, single parent households.

Labor recognises and has stated previously that the package as a whole is carefully crafted by an expert committee, which has endeavoured to provide a balance based on the results of its research. In designing a new payments formula, the task force has based its calculations on research into the actual costs of raising children. The most significant change in the bill is the introduction of a new formula for calculating the child support payment obligations of non-resident parents, which is to apply from 1 July 2008.

The bill also includes compliance, enforcement and recovery provisions. These provisions must ensure that obligations are being met appropriately. I welcome the fact that the agency will be able to pursue non-resident parents who fail to provide for their children, given that only half of non-resident parents meet their child support obligations in full and on time—a long overdue and much needed improvement. The difference between the current formula and the proposed formula for child support liability is that the current formula is calculated using fixed percentages of income and the proposed formula is based on evidence received on the actual costs of raising children, shared parental responsibility and the level of parental care. Analysis undertaken for the ministerial task force showed that, under the new formula, low-income families could experience reduced child support payments.

Labor and Greens senators of the Senate committee highlighted their concern in their comments:

... [we] are very concerned, however, that there is no publicly available modelling to estimate the impact of the new system on existing child support recipients and payers. The lack of analysis is doubly concerning given that the Government has made no provision to protect low income families who may lose income as a result of the Bill.

It is our understanding that the CSA will reassess all clients’ payments under the new formula once the Bill is passed and before it comes into effect on 1 July 2008.

The Department of Families, Community Services and Indigenous Affairs, as the agency with policy responsibility for the Bill, should produce modelling to quantify the impact on existing child support customers, and make provision to protect low income households who may lose income. Such protections are critical given the risk of poverty already confronted by these families.

Labor’s view is that there has been failure to make adequate transitional arrangements for people who may lose under the new arrangements. In evidence to the Senate committee, Professor Parkinson and the Australian Institute of Family Studies both agreed that this was the case. Professor Parkinson also noted that the costs of child-rearing in families with very low incomes are now largely met by family payments. However, no evidence was produced to support this argument. The department indicated that it would undertake regular monitoring and evaluation of the impact of the new arrangements on affected families. The Australian Institute of Family Studies also indicated to the Senate inquiry that it would have an ongoing role in tracking the implementation of the new scheme, including finetuning the formula over the long term if required.

It is critical that the government implement adequate transitional arrangements and make sure that ongoing monitoring and evaluation is effective to ensure that these changes do not lead to income reductions for low-income families, who are already some of the most vulnerable in the community. We must be vigilant to ensure that these provisions do not cause these families to be worse off. As a result, the Labor Party will move to establish a Senate inquiry next year to properly examine the impact of the bill, particularly to examine whether any of these families are worse off. I hope the terms of reference for the inquiry, to be moved next year, will be supported by all senators.