Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

In my remarks yesterday afternoon on the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 I was making the point that there had been an amazing amount of very positive work done to review this legislation and acknowledge that it needed to be changed. But my fear is that the undue process—the lack of consideration of the actual legislation—could make it more difficult for us to engage with all those people who need to be involved in the ongoing process will feel pushed away and dismissed, and therefore not able to fully have their views understood and respected. This is an absolute shame because this legislation that touches upon families and children and their survival in our community has not been given the respect it deserves.

In the time that I have left, I want to make a couple of points about Labor’s concerns. One of the things that we raised in the committee inquiry was the impact of the changed model on those people who currently rely on their payments for their continuing survival in our community. I speak about this aspect having had the opportunity of being involved in the Senate’s poverty inquiry several years ago. That inquiry heard significant evidence from all states across Australia of the financial difficulties experienced by single parents. Their difficulties are not denied by most people—certainly not by the people who represent single parents or the welfare agencies in this country that work most closely with people who need support on a regular basis. Support is not only provided on the basis of a one-off crisis, which used to be the way that welfare agencies operated in Australia, agencies like St Vincent de Paul, Lifeline, Anglicare—the whole range of community support organisations—and, particularly, the Smith Family, who focus exclusively on issues to do with children. Those agencies provided evidence with one voice to the Senate inquiry on poverty—and many of them also provided submissions to this legislation inquiry—and pointed out the tenuous balance that single parents have in regard to their financial security. And we know that there is not just one stream of financial support.

In terms of the way that single families balance their income, we know that they have child support payments, which is the basis of the legislation the Senate is discussing at the moment, and we know that they have the family tax payment benefits brought in by this government as well as other elements of employment response that all come together in the bucket of money that families need to survive. One thing that is very clear about the bucket of money we are talking about for single parent families in lower income brackets is that it is precariously small. The debate that we are going to have on rejigging the model, which is the basis of the whole revamp of this legislation, will determine exactly how payments will be distributed—those payments being a major stream of finance for any single parent family. We know that the modelling is being conducted with strong research provided by the Australian Institute of Family Studies, and we welcome that. In fact, the role of the AIFS must be enhanced in any future consideration of the impact of this on Australian families. That is a particular concern for many of us on this side of the chamber.

Under questioning to the AIFS about the kind of work they did leading to the development of the child support legislation, we asked specifically whether the Welfare to Work legislation had been considered in their research and extensive modelling. They said no. We then asked whether that inquiry had been put to them, whether their significant expertise had been requested in the various considerations by the government about what the implementation of Welfare to Work would do to single parent families. They said no.

That was extremely confronting for us on the committee, because there has been a focus on single parent families by this government over a period of time, most particularly over the last 12 months or so as the Welfare to Work legislation has been brought through this place and implemented in the community. The Welfare to Work legislation focused on economic security for single parents. None of us have any argument with the concept of access to employment and the development of enhancements for single families. The issue about which we are arguing is how the government can pursue legislation in the child support area, using a range of consultation mechanisms and talking about where this is going to take single parent income into the future, whilst at the same time introduce another raft of legislation focused on those same families. It does not look at them together. In a period when we consistently talk about cross-departmental liaison and whole-of-government response, how could this be seen as credible?

In terms of where we go next, as I have said consistently, we need to have a process whereby people feel confident in the system and feel as though their issues are being taken into account by the system. They need to know that there will be genuine involvement in whatever happens in their interactions between them and the government. How can we move forward when such a basic issue is seemingly ignored? No-one seemed to have an argument with whether this was appropriate or not; it just had not been done. The message we have for the people dedicating their time to developing the child support legislation and the reform of the Child Support Scheme is: moving forward, please ensure that the consultative mechanisms involve the best possible resources that this country can offer—and we have them. That is one of the more frustrating elements. We have the Australian Institute of Family Studies, we have various community groups and we have people working to put forward the views of single parents.

One of the things we did find—and I know that this is no surprise to people—is that, when we had representatives looking at the issues of single mothers and the issues of non-custodial men, sometimes it was difficult to have them cooperate effectively at the table and to respect each other’s views. But we did have an understanding that, if we are going to proceed, that kind of discussion must occur. It may be difficult. It may sometimes be difficult when developing the legislation to balance effectively and to find a path upon which most people can agree, but the discussions must be had. People must be assured that their views are not being taken in a token way—that the issues will be genuinely reviewed and considered and the whole impact of what is happening in our society and economically will be taken into account so that one series of decisions will not be taken in isolation. That has been one of the serious faults until now.

There is no way that the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 will have the opportunity to succeed if those issues are not effectively considered. No piece of legislation can ever be considered in isolation, and no piece of legislation is beyond review. We need to have a process of review before the legislation is put in place. We have an opportunity to do that with this legislation because it is a part of a series of implementation processes, which I understand will not be concluded until 2008.

We have the chance to engage with people effectively throughout this whole process. But the engagement is dependent upon a sense that the voices will be respected and heard. If you lose trust now, if you in any way dismiss people from credibly partaking in this process, it will fail. We cannot afford it to fail because no-one believes that the child support system at the moment is working perfectly. In fact, I do not think anyone truly believes that the child support system will ever work perfectly. It is reliant on so many streams of information and knowledge and it is also dealing with people during a period of crisis. So we need to ensure that what is put in place is as effective as possible so that people feel confident in being part of the system. They need to be able to acknowledge that—even if their personal pet projects or issues are not taken up—they have been considered and the review process will continue.

The legislation is dynamic. If things are implemented and found to not be as effective as they ought, we must have the chance to come back and rejig things. I think that is something that our system allows, but we need to make sure that there is an ongoing review process and that it is not just at set times. This is not the kind of process that can rely on a two-year or 10-year review. At the beginning of the implementation of the new model, the process that I believe has been effectively put in place till now with the various streams of advisory groups, using the expertise that we have in this country, should be continued formally—not on an informal basis but formally. That commitment seemed to be given by the department and the government during the committee process that we had.

We have the opportunity now to move forward. I continue to be concerned about some of the implementation processes, and I believe that will come up in the committee process. How we ensure that the Social Security Appeals Tribunal process is effectively resourced and how we can make sure that the legal elements around that are implemented is something we can discuss.

I am pleased that the Child Support Agency received a considerable increase in resources in the last budget. I have said on previous occasions that I was deeply concerned that the Child Support Agency had not received appropriate resourcing over the last 10 years and that if we are going to have confidence in this system being able to be implemented fully we need to have a strongly resourced public sector that is doing the work that has to be done. They need to be well trained, well resourced and responsive to the range of people who are relying on child support for their financial security. In terms of where we go next, there needs to be an ongoing process of cross-departmental cooperation, because child support is not a single agency. It relies on so many other forms of legislation and bases. The department has been introducing things over a period of time. The Attorney-General’s Department, Centrelink and the Taxation Office all have to be brought together such that they focus on the issues of child support.

As we work through the Welfare to Work process, working with agencies who now work with the community is essential. The government have said that that is part of their plan. We want to be part of that plan. Wonderful people continue to come forward, consistently saying that they want to work with the government despite the fact that they know that their own issues may not be able to be dealt with completely. Those people from various community groups came to see us when the House of Representatives Standing Committee on Family and Community Affairs was meeting. We must continue to value them. We respect their honesty. We also know that it is our community responsibility to respond to children particularly through the child support legislation. The hope that was brought to so many families when the original legislation was passed must be maintained. It can never be allowed to just go without question. Children are the central point of any legislation looking at child support, and the financial and social interests of children must be maintained into the future.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to 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.

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to 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.