Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Hansard source

In response to the comprehensive recommendations made by the Ministerial Taskforce on Child Support, chaired by Professor Patrick Parkinson, the government has commenced the reform of the Child Support Scheme. This will ensure that the scheme works in the best interests of children while balancing the interests of parents and reflecting community expectations.

The first stage of the reforms commenced in July this year, and the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 delivers the legislation for the remaining two stages of the reforms. The bill also complements our recent reforms of the family law system. In particular, both the family law changes and the present bill aim to encourage shared parenting and to reduce conflict. The government is backing these reforms with a commitment of nearly $400 million to establish a network of family relationship centres and relationship support services in the community. One of the task force’s major findings was that the Child Support Scheme needed updating because of substantial changes in Australian society and in the situations of many Australian families since the scheme’s establishment in 1988.

The community has expressed concern about how children and their parents have coped following marriage and relationship breakdown. This was evident in the House of Representatives Standing Committee on Family and Community Affairs report on child custody arrangements in the event of family separation. The report, Every picture tells a story, recommended that a task force be established to examine the child support formula. In addition, people are more aware of the importance of both parents remaining actively involved in their children’s lives after separation.

The new scheme is based on fairness to both parents and is focused on the needs and costs of children. It will also be better integrated with the family law and income support systems. These improvements should reduce conflict between parents about parenting arrangements and encourage shared parental responsibility. The new child support formula is at the heart of these reforms. The new formula is based on new expert Australian research on the costs of caring for children and reflects community beliefs about separated parenting.

There are a number of important differences between the current formula and the new formula. One difference is that the current formula fixes percentages of income, assuming people spend the same proportion of their income on children regardless of their level of income. However, the new research conducted by the task force shows that, while people with higher incomes spend more on their children than people with lower incomes, those on higher incomes spend less as a percentage of their total income. The current formula does not distinguish between the ages of children. This means that the much higher expenses associated with teenagers go unrecognised. Under the current formula, the income of resident parents is treated more generously than that of non-resident parents, and contact by the non-resident parent is not taken into account until it is at high levels. Finally, the treatment of second families is unfairly and inconsistently taken into account under the current formula.

In contrast, the new formula draws on Australian research into the real costs of children based on the level of parents’ incomes and the children’s ages. An income share approach, which means that both parents will have the same amount deducted as self-support, will be used and both parents’ incomes will be considered in establishing the costs of the children. The resulting costs will be apportioned between the parents according to their share of combined income.

In order to share non-resident parents’ involvement with their children, parents who care for their children for at least 14 per cent of the time will be recognised as contributing to the costs of the children through their care. In addition, first and second families will be treated equally. This will be done by using the actual costs of the children from the second family rather than a flat amount in working out child support payable for the first family. Another measure means that a resident parent will keep all of their family tax benefit if a non-resident parent has care of their child for less than 35 per cent of nights in a year.

The new formula will be introduced from 1 July 2008, and the Child Support Agency and Centrelink will ensure that parents are notified of the changes that affect them well in advance. The Child Support Agency and Centrelink will establish comprehensive systems to assist parents in adjusting for their new child support arrangements.

A number of reforms are due to commence on 1 January 2007. One major reform is the expansion of the role of the Social Security Appeals Tribunal to provide an independent review of child support decisions. Presently, external administrative review of child support decisions is limited to review by the courts, which can be an expensive, time-consuming and frustrating process. The new arrangements will improve the consistency and transparency of child support decisions and will provide a review mechanism that is inexpensive, fair, informal and quick.

Other changes commencing on 1 January 2007 are amendments to simplify the relationship between the courts and the new Child Support Scheme. These changes include providing parents with better access to court enforcement of child support debts. The changes also align the court’s powers to seek information and evidence in relation to child support matters with those of the Child Support Registrar, thus increasing the court’s ability to understand and investigate matters. The courts will also have increased powers to make interim arrangements in relation to child support cases.

As well as the new formula, other changes are commencing on 1 July 2008. These changes are to improve the overall effectiveness and fairness of the scheme. If parents wish to make agreements between themselves about the payment of child support, including payment by way of a lump sum, the bill introduces changes to provide better legal protection and increased flexibility for these arrangements. Other changes relate to the family tax benefit. The family tax benefit intersects in many ways with the Child Support Scheme. In recognition of this, and to support parents in determining their child support arrangements, child support and family tax benefit will be more closely aligned as a result of the bill. Specifically, the maintenance arrangements for family tax benefit part A will be changed, with the result that reduction under the maintenance income test that applies to payment above the base level will be limited to those children in the family for whom child support is paid.

The bill will also align the income definitions used to calculate child support and family tax benefit. Currently, the respective income definitions lead to varying treatment for certain tax-free amounts, foreign income and fringe benefits. Certain definitions will be broadened. The definition of child support income will now include certain tax-free pensions and benefits that already apply for family tax benefit. The definition of foreign income for child support and family tax benefit will also be widened and they will be aligned with each other. The gross value of reportable fringe benefits, rather than the net value, will apply for the family tax benefit, as it already does for child support. The changes to income for family tax benefit will also apply for child-care benefit.

Another change is to improve the fairness of the minimum payment rules. The minimum payment for non-resident parents who pay child support in more than one case will be about $6.15 per week per case, up to a maximum of three cases. If parents deliberately minimise their income to avoid paying child support they will be required to pay $20 per child per week, up to a maximum of three children, unless they can prove their income is in fact very low.

The bill also recognises that, following separation, parents will have re-establishment costs. Accordingly, parents who use income from second jobs and overtime to re-establish themselves will be able to apply to have their child support calculated taking into account their re-establishment costs. This applies for the first three years after separation. Presently, the Child Support Scheme can create difficulties for parents who separate, attempt to reconcile and then separate again. Under the changes introduced by this bill, parents will be able to suspend child support payments for a period of six months when they get back together again. If the reconciliation is not successful, the resident parent will be able to reinstate the child support assessment without applying again. This measure aims to reduce any further conflict between the parents by removing the pressure of worrying about child support assessment.

Many parents also have financial responsibilities for stepchildren. These parents will now be able to apply to have the stepchild treated as a dependent child under the child support formula for the parent’s first family. There are circumstances in which parents may wish to change their child support assessment. The bill clarifies and simplifies these processes, which are currently very confusing for many parents.

This is a significant package of reforms and will introduce extensive changes to the Child Support Scheme. These changes will ensure that the Child Support Scheme is fairer to parents; therefore reducing conflict, which, as we all know, is in the best interests of children. I commend the bill to the Senate. I believe it should have a speedy passage. It has been very extensively debated and discussed for a considerable period of time. I note the thoughtful contributions made by senators in this debate. Hopefully, this bill can be passed into law as quickly as possible.

Question put:

That the amendment (Senator Chris Evans’s) be agreed to.