Child support legislation amendment Bill (no. 2) 2000
October 2000
© Parliament of the Commonwealth of Australia 2000
ISSN 1440-2572
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Senate Standing Committees on Community Affairs
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MEMBERSHIP OF THE COMMITTEE
Members
|
Senator Sue
Knowles, Chairman
|
LP, Western Australia
|
|
Senator Lyn
Allison, Deputy Chair
|
AD, Victoria
|
|
Senator George
Brandis
|
LP, Queensland
|
|
Senator Kay
Denman
|
ALP, Tasmania
|
|
Senator Chris
Evans
|
ALP, Western Australia
|
|
Senator Tsebin
Tchen
|
LP, Victoria
|
Report - Child support legislation amendment Bill (no. 2) 2000
THE INQUIRY
1.1
The Child Support Legislation
Amendment Bill (No. 2) 2000 (the Bill) was introduced into the House of Representatives on 30 August 2000. On 6 September 2000, the
Senate, on the recommendation of the Selection of Bills Committee (Report
No. 14 of 2000), referred the provisions of the Bill to the Committee for
report by 10 October
2000.
1.2
The Selection of Bills
Committee, in recommending the reference of the Bill to the Committee,
provided the following reasons for referral:
To examine the provisions of the Bill which change
the child support payment formula, particularly the lowering of the cap on
non-custodial parents' taxable income; the impact of the departure prohibition
orders; and changes to the review process.
1.3
The Committee considered the Bill at a public hearing on
4 October
2000. Details of the public hearing are
referred to in Appendix 2. The Committee received 21 submissions relating to
the Bill and these are listed at Appendix 1.
THE
BILL
2.1
In the second reading speech on the Bill, the Minister
for Community Services stated that the Bill would further improve the Child
Support Scheme ‘in a balanced way, resulting in a fairer scheme’ that
‘addresses the needs of parents and children alike, and that encourages parents
to continue to be involved in the lives of their children’.[1] The Bill
proposes amendments to various Acts as follows:
-
Schedule 1 provides for amendment of the Child Support (Assessment) Act 1989 to
reduce the child support formula percentages where a non-resident parent has
contact with his or her child for between 10 per cent and 30 per cent of the
time. The Minister stated that ‘this provides a modest acknowledgment of the costs
to non-resident parents of ongoing contact...the measure will improve the ability
of non-resident parents to maintain
contact with their children’.[2] The
proposed amendments are consistent with the treatment of shared care for family
tax benefit under the A new Tax System
(Family Assistance) Act 1999;
-
Schedule 2 provides for the use of the same
measure to set the upper limit (or ‘cap’) on payer taxable income that can be
subject to child support formula assessment as that used in relation to the
payee’s income. The result will be a lower ‘cap’ (approximately $79,000);
-
Schedule 3 proposes to create a new ground for
exclusion of additional income from the child support formula assessment for a
parent where that additional income can be shown to have been earned for the
sole purpose of providing support to children in the parent’s new family. The
additional income cannot be earned as part of the normal earning pattern and is
limited to a maximum of 30 per cent of the parent’s total income;
-
Schedule 4 proposes to amend the A New Tax System (Family Assistance) Act
1999 to allow for a full deduction of all child support paid under the
means testing arrangements for the family tax benefit and child care benefit.
This means that child support payers with children in new families will have
their family tax benefit and child care benefit assessed on the actual income
available to their new families;
-
Schedule 5 proposes to amend a number of Acts to
reflect the relocation of the Child Support Agency from the Australian Taxation
Office to the Department of Family and Community Services. The General Manager
of the Child Support Agency will become the Child Support Registrar, replacing
the Commissioner of Taxation;
-
Schedule 6 provides for amendment of the Child Support (Registration and Collection)
Act 1988 to establish a system of departure prohibition orders, similar to
that existing under the Taxation
Administration Act 1953, to prevent persistent child support defaulters
from attempting to leave Australia;
-
Schedule 7 proposes to amend the Child Support (Assessment) Act 1989 to
establish a regulation making power to allow certain amounts to be excluded
from income so that the current $260 minimum child support liability will not
apply;
-
Schedule 8 proposes to amend the current
requirement whereby supporting documents supplied by an applicant to depart
from the child support formula assessment are to be supplied to the other party
to the child support arrangements;
-
Schedule 9 provides for a new definition of
‘eligible carer’. This change will ensure that carers who are not parents or
legal guardians of a child who has left home cannot be ‘eligible carers’ in
relation to that child, and therefore cannot apply for child support from the
parents unless a parent or guardian has consented to the arrangement, or it is
unreasonable for the child to live at home; and
-
Schedule 10 proposes a number of technical
amendments will be made to correct and clarify minor matters in the child
support legislation.
ISSUES
3.1
In evidence to the Committee, the Department of Family
and Community Services (FaCS) noted that the package of measures put forward
‘seeks to provide a fairer basis for determining assistance to children of
second families and particularly to encourage parents to maintain contact with
their children. The measures are designed to improve the scheme in a balanced
and targeted way while not changing the scheme’s basic parameters.’[3]
Reduction of the ‘cap’
3.2
The Bill proposes to
lower the ‘cap’ on payer income subject to child support formula assessment. At
present the cap is set according to the Average Weekly Earnings of Full-time
Employees, currently $40,461 per annum. The Bill
proposes that the cap be set according to Average Weekly Earnings of All
Employees, currently $31,699 per annum. As a result assessable child support
income will be capped at $78,378 instead of the present $101,153.
3.3
It was argued in evidence by some witnesses such as the
Sole Parents Union and the National Council of Single Mothers’ and their
Children (NCSMC) that there was no data to support the change in the cap.[4] The Department did however detail
extensive research that has been undertaken over a length of time.
3.4
The Partners of Paying Parents (PoPPs) supported the
lowering of the cap but argued that the reduction did not assist the majority
of paying families as the average taxable income of a paying parent is around
$28,000.[5] The Lone Fathers’ Association
Australia (LFAA) stated that the measure was ‘heading in the right direction’
but a reduction at lower income levels was still required.[6]
3.5
FaCS, in its submission, provided background to the
‘cap’. It was stated that the Child Support Consultative Group, which reported
in 1988, had recommended an upper limit or ‘cap’ on child support liabilities
for a number of reasons including that child-rearing expenses plateau at
relatively high income levels. The Consultative Group, after consultation with
researchers, reported that at that time the plateau effect took place at income
levels of approximately twice average weekly full-time earning. The ensuing
legislation increased this cap to 2.5 times average weekly earnings.
3.6
In 1994 the Joint Select Committee on Certain Family
Law Issues recommended that the cap be lowered to two times Average Weekly
Full-time Earnings to reduce the work disincentives experienced by non-resident
parents as a result of high combined marginal tax rates and child support which
occurred at these levels of income.
3.7
FaCS stated that the proposed change will align the AWE
figure used to set the cap with the payee’s disregarded income figure and this
will effectively achieve the outcome recommended by the Joint Committee. FaCS
also stated that the current level of the cap is not supported by recent
research on the costs of children, for example, research by the National Centre
for Social and Economic Modelling (NATSEM) shows that most payers with income
above $65,000 are paying more than the total gross costs of their children.[7]
3.8
The Department also noted that the proposed changes do
not preclude parents from paying more than the formula assessed amounts:
parents may reach agreement on an amount that more appropriately reflects their
circumstances; or they may apply to the Child Support Agency (CSA) for a change
to the formula assessment where they believe special circumstances exist.[8]
Lower formula percentages for payers exercising
contact with their children
3.9
Currently, the child support formula is reduced by four
percentage points where a non-resident parent has contact between 30 and 40 per
cent of nights of the year. Under the proposed legislation this reduction will
be extended to those parents who care for a child for between 10 and 30 per
cent of the nights of the year with the formula generally reduced by three per
cent for contact between 20 and 30 per cent and by two per cent for contact
between 10 and 20 per cent.
3.10
Some witnesses and submissions put the case that such a
system may create more conflict between parents than that which already exists.
Some also argued that non-resident parents should pay the full amount
regardless of the amount of contact they have.[9]
3.11
FaCS noted that this initiative is aimed at encouraging
parents to maintain contact with their children by making some allowance for
the costs which non-resident parents incur and ‘draw the distinction that we
believe should be drawn between the liabilities of those who have no or minimal
contact, and those who exercise regular and ongoing contact with their
children’. The Department went on to state that it did not see it as ‘parents
buying contact’ rather that ‘we are aligned here with general support for the
family law principles which emphasise the right of parents to know and to be
with their children’. Further, that the measure ‘will improve the ability of
non-resident parents to maintain contact with their children and we believe
will result in better outcomes for children and increased payment of child
support’.[10]
3.12
FaCS stated that this brings the child support
arrangement into line with the provisions of the new family tax benefit, where
parents who have care of their children for at least 10 per cent of the time
have that level of contact recognised. The Department also indicated that most
of the affected payees will have any reduction partially offset by an increase
in the family tax benefit they receive and stated that ‘in most cases where the
liability of the custodial or the resident parent has been reduced in dollar
terms 50 per cent of the shortfall will be made up by an increase in the family
tax benefit’.[11]
3.13
In relation to the inclusion of an allowance for
contact in the establishment of the original formula, FaCS stated that the
Consultative Group, in arriving at the original formula percentages ‘considered
that parents would have small amounts of contact and that that should be included
in the formula’. However, this was not specified and FaCS reported that the
Joint Select Committee did not understand how the Consultative Group ‘had taken
into account the smaller costs of contact and how they were connotated in the
formula’.[12]
3.14
FaCS provided the Committee with an outline of relevant
research which indicated that contact with the non-resident parent is of
benefit to the development of children and that contact also leads to a higher
likelihood of payment of child support. Recent research has also indicated that
the costs faced by parents in order to have regular contact are often
significant.[13]
Income earned for the benefit of resident children
3.15
NSCMA stated that this proposal ‘further undermines the
principle that children have the right to benefit from their parents’ income
according to the parents’ capacity to pay’.[14]
It was also believed by some that the proposal will encourage the manipulation
of income to minimise support for children in first families.[15] Some submitters called for the
rejection of the proposal, however, the Sole Parent’s Union
stated that it would be more willing to consider the proposal if guidelines
were in place to ensure that work patterns could not be changed to lower child
support liabilities.[16] The Committee
notes that many witnesses and submissions did not seem to be aware of the
eligibility criteria set out in the Bill.
3.16
FaCS stated that this measure will help parents better
the position of their new families without unduly affecting their first family.
It will also reduce workforce disincentives faced by payers who have new
families. While there will be a reduction of child support paid for some
families, this will be partially offset by additional family tax benefit
payments. FaCS noted that additional income will be excluded from the
assessment of child support only if the grounds for change are met. The Child
Support Registrar will then determine the extent of any reduction in child
support ‘taking into account the circumstances of both parents and children’.[17] In addition, CSA has undertaken considerable work to establish guidelines, although these are not ready for public consultation.[18]
Post-separation counselling and
support for non-resident parents
3.17
The child support package provides for improved
post-separation counselling and support for non-resident parents. FaCS stated
that a pilot program will provide intensive practical assistance and ongoing
support by assisting non-resident parents to access existing community and
Government programs. FaCS noted that ‘through this program post-separation
relations between parents will be improved, which will lead to better outcomes
for children, and the continuing involvement of both parents in the lives of
their children’. FaCS stated that it is also likely to result in improved child
support payment rates and a decreased need for parents to have their child
support collected by the CSA.[19]
3.18
Submitters supported this proposal, however, some
argued that post separation counselling and support for resident parents should
also be made available.[20]
Departure Prohibition Orders
3.19
This proposed system of departure prohibition orders
(DPOs) was supported by some submitters including ACOSS.[21] However, the Law Council of Australia
raised a number of issues: there are many circumstances in which a child
support debt might not be enforceable, for example, arrears do not really
exist; the manner in which the Registrar may make an order including the lack
of notice to the payer; the propensity to cause severe embarrassment, cost and
inconvenience to a payer; and, that the proposed measure does not afford
natural justice to the payer.[22] PoPPs
also expressed concern about the potential adverse impact on payers who are
required to travel overseas regularly.[23]
3.20
FaCS noted that the Child Support Registrar may make a
DPO where all of the four specified conditions are satisfied. Application may
be made to the Registrar to revoke or vary the DPO or to issue a departure
authorisation certificate (DAC). A person aggrieved by the making of a DPO may
appeal to the Federal Court of Australia against the making of the order while
certain other decisions by the Registrar are subject to review by the
Administrative Appeals Tribunal. FaCS noted that the system will closely mirror the existing
departure prohibition order system in place under the Taxation Administration
Act.
3.21
In response to concerns voiced by PoPPs, the Department
stated that in such circumstances the CSA has an administrative measure
available ‘whereby we can ask the employer to deduct the child support from a
person’s wages. So, in fact, it is not a measure that is likely to be used in
those circumstances at all’.[24]
Changes to the change of assessment (review)
process
3.22
Several submitters argued that the proposed change to
the current requirement whereby supporting documents must be supplied to the
other party when a departure from the child support formula assessment is
sought is a denial of natural justice.[25]
The Law Society of Australia also argued that a parent may be able to influence
a decision by secretly providing information. It noted, ‘in many cases, the
concealed information will relate to the details of the financial circumstances
of a party even though assessment of these details goes to the heart of many
child support departure applications, particularly those concerned with finding
a just and equitable sharing of the support of a child’.[26]
3.23
FaCS noted that all relevant information regarding the
request to change the assessment and any opposition to the request is provided
in the application and response forms from the parents. FaCS argued that the
change will assist the CSA’s verification process as it is considered that
parents are more likely to provide supporting documents when they know that
such documents will not be forwarded to the other parent. Further, under the
present arrangements, if a parent is unwilling to have the supporting documents
provided to the other parent, they cannot be taken into consideration in the
decision. This may impact on the quality and fairness of the decision.[27]
3.24
In relation to general criticisms of the assessment
process, FaCS stated that two reviews of the process have been completed, with
many of the improvements recommended by the reviews already implemented.
Further, that ‘the evaluation also determined that, in general, the outcomes of
that change of assessment process are sound’.[28]
Definition of eligible carer
3.25
Some submitters argued that the CSA does not have the
resources or expertise to make the types of decisions, for example whether it
is appropriate for a child to return home to live with one of their parents,
required under this proposed provision.[29]
3.26
The Department commented that the legislation is
modelled on that used by Centrelink to determine whether a young person is
eligible to receive youth allowance at the independent rate. A Centrelink
social worker makes an assessment in relation to the youth allowance and the
CSA will request Centrelink social workers to undertake such as assessment for
the purposes of this provision, ‘so the agency will only be making a decision
in those run away from home cases where a Centrelink or other social worker has
made that assessment’.[30]
Increase in the Family Tax Benefit Income Test
deduction for payers with a second family
3.27
This proposed amendment was generally welcomed as it
was agreed that payers’ households do not benefit financially from money paid
in child support and their household should not assessed as if they did.[31]
RECOMMENDATION
4.1 The
Committee reports to the Senate that it has considered the Child Support
Legislation Amendment Bill (No. 2) 2000 and recommends that the Bill proceed.
Senator Sue Knowles
Chairman
October 2000
MINORITY REPORT - AUSTRALIAN LABOR PARTY
CHILD SUPPORT LEGISLATION AMENDMENT BILL
(No. 2) 2000
While Labor senators are broadly supportive of a majority of
the measures contained in this Bill we are
unable to support a number of the conclusions and recommendations contained in
the Committee majority report. In particular, the Inquiry has raised a number
of concerns about the lack of research, evaluation and consultation which has
underpinned the development of the proposed measures. We do not feel that the
majority report presents an adequate response to these concerns.
The Child Support Scheme (CSS) was established in 1988 to
ensure that children in separated families received financial support from
their parents. The Scheme has been successful both in promoting this
responsibility and in protecting children against poverty. Recent research
published by NATSEM found that in the absence of the CSS, an additional 58,000
children would have been in poverty in 1997-98.
This is not to say that the CSS scheme is without its
problems. It is the subject of valid criticisms from both resident and
non-resident parents. This leaves policy makers with the difficult task of
balancing interests in a way which is fair to both parties and which - above
all else - protects the interests of children.
While the Scheme has responded to legitimate concerns about
its operation, and has improved considerably in recent years, there is an
ongoing need for review and reform. Labor senators note that submissions from
organisations representing lone fathers, sole parents and second families are
united in their support for a thorough reappraisal of the CSS. Such a reappraisal
needs to be founded on rigorous economic modelling, and the monitoring and
evaluation of what have been incremental, and frequently ad hoc, changes.
In broad terms, the proposed legislation has the aim of
alleviating the financial pressures faced by non-resident parents, particularly
those who have second families. While this objective has merit, Labor senators
are concerned that the package will provide only limited benefits to those most
in need. In addition benefits flowing to non-resident parents come at the
direct expense of resident parents and serve to promote rather than diminish
conflict. We are of the view that a more constructive and beneficial approach
would have been to target benefits to those on low-to-middle incomes. The
package instead distributes the greatest benefits to non-resident parents
earning in excess of $78,000 per annum. Central to any capacity to address
concerns about families in poverty is an active role for government. This role
is not to retreat from the field leaving families under pressure in
impoverished circumstances.
There has been a raft of changes to the child support scheme
in the last two years. Labor senators would have been more comfortable
participating in the debate if these changes had been monitored and evaluated
for their impact on resident parents, non-resident parents and children before
further changes were considered.
Shared care
(Schedule 1)
The proposal to lower child support percentages for children
with whom the non-resident parent has contact between 10 and 30 per cent of
time, represents an extension of the ‘shared care’ arrangements which have
applied to the Family Tax Benefit (FTB) since July 1.
Labor set out a number of concerns about ‘shared care’ in
the course of debate on the new tax package. On April 11, 2000 Labor moved an amendment, which would
have increased the sharing threshold from 10 to 30 per cent, and allowed
sharing of FTB at lower levels of application, only with the agreement of both
parents. Our primary concerns relate to
three issues. First, the philosophical shift to linking child support and care.
Second, the absence of research on costs of contact informing the proposal.
Third, the impact on the living standards of resident parents and children of
reduced child support payments.
Labor senators feel that in creating a strong link between
child support payments and contact the measure contravenes a guiding principle
of both the Child Support and Family Law acts. This principle is that decisions
should be made in the best interests of children. The Law Council of Australia
states in its submission “In direct conflict with the Family Law Act, parents
will be encouraged to focus on the financial consequences of the sharing of
care of the children rather than upon what is in the best interests of the
child” (p.2).
We were concerned by the Council’s view that a by-product of
this change will be increased contact disputation based on financial
considerations rather than the needs of the children. This will place an
additional burden on an already strained Family Court system.
The undesirability of linking child support payments to
contact and the likelihood of increased disputation was raised in a number of
written submissions including those from the Law Society of NSW, Legal Services
Commission of South Australia, National Network of Women’s Legal Services,
Hobart Community Legal Service, Women’s Legal Centre ACT, Family Law
Practitioners Association of Tasmania, and ACOSS.
Even where groups supported the outcome of this measure -
that is a reduction in the child support liability of payers - they did not
support the linking of money and contact. Partners of Paying Parents stated in
the hearing “We do not support the linking of the two together. However, the
fact that the percentage would be reduced we support as being beneficial to
second families. So it is a catch 22 isn’t it” (CA9)
The majority report sets out the Department’s rationale for
this measure. The initiative “is intended to encourage parents to maintain
contact with their children...We want this to encourage parents to maintain
contact with their children following separation by making some allowance for
the cost that non-resident parents can incur in order to do so. This will
improve the ability of non-resident parents to maintain contact with their
children and we believe will result in better outcomes for children and
increased payment of child support” (CA31)
Labor senators were keen to learn from the Department about
research establishing a positive causal relationship between contact and
payment of child support. It was agreed that the research cited established
correlation rather than causation. Later in the hearing, the representative
from the CSA argued that the measure acknowledged contact rather than providing
an incentive per se:
“We did some research in the Child Support Agency a couple of years back
which showed that something like 90 per cent of all non-resident parents had
contact with their children. So we are already talking about a very high
proportion of parents who have contact. The scheme at that time gave a person a
reduction in child support if they had contact at the level of 30 per cent or
higher. Less than five per cent of parents have contact at that level-at
between 30 per cent and 50 per cent. It is hard to say that acknowledging that
parents have costs when they have contact or when they share the care of their
children is a major incentive for parents to push to have additional contact”
(CA35).
There seemed to be some confusion about the assumptions
concerning costs and contact built in to the original child support formula. A
number of submissions stated that the formula assumed contact between the
non-resident parent and his/her children of 22 per cent (a standard contact
order of every second weekend and half the school holidays). Senator Evans
asked the Department to stipulate the actual amount of contact or value of the
adjustment allowed in the formula. While stating that it did include some
assumption about contact the Department was not able to quantify it or to say
whether a cost adjustment was made. This issue has not been clarified in the
majority report.
Labor senators expressed concern about the absence of
research to establish both the relative costs faced by resident and non-resident
parents, and the nature of the relationship between costs and level of contact.
Senator Evans asked the Department what evidence it had to support how costs
vary with contact. The response provided was: “The truth is very little.”
(CA36).
We argue that it is difficult to make responsible and
informed judgements if the proposals before us are not grounded in rigorous
analysis. The majority report makes reference to work on costs of contact
undertaken for the Department by Murray Woods and Associates. Labor senators
are familiar with this reference and note that the purpose of the study was to
establish the general expenditure behaviour involved in providing contact
rather than to establish exact costs. The authors acknowledge that the research
is exploratory and cannot be taken as representative. It did not seek to
establish whether there was a proportionate relationship between costs and
share of care.
Modelling provided by the Department suggests that the
measure is poorly targeted and will provide little relief to non-resident
parents in greatest need. The child support payments of a payer earning $25,000
per annum (one child and contact ranging from 10 to 20 per cent ) will fall by
$5 per week while a payer earning $75,000 will see their weekly liability fall
by five times that amount ($24.82). Non-resident parents paying the minimum
level of child support ($260 per annum) will not receive any additional
assistance while the disposable income of 205,000 resident parents will fall as
a result of this measure.
The impact of this change causing greatest concern to Labor
senators is the effect on the poverty of sole parent families. Modelling tabled
by the Department during the hearing showed that the impact of this measure is
to redistribute income away from resident toward non-resident parents. The
tables quantify the change in disposable income between 30 June 2001 and 1 July
2001. The calculations are based on the payee having no private income and show
that for all levels of payer income above $15 000, resident parents and their
children will have lower disposable income.
While we concur with views expressed in both the majority
report and the broader community about the need to provide additional support
to non-resident parents, we believe it is completely inappropriate to achieve
this by taking income away from another group in need. Labor senators cannot
abide the robbing of Peta to pay Paul when research on relative poverty shows
that Peta is more likely to experience socio-economic disadvantage.
It is of deep concern to Labor senators that the relative
poverty of resident parents and their children was not a context in the
development of this package. The submission provided by Associate Professor
Linda Hancock of Deakin University sets out research findings from the
Australian Institute of Family Studies Divorce Transitions Project. This
recent and highly-regarded research
establishes that there are continuing disparities in post-divorce household
incomes and that the combination of being female, older and a sole parent
provides the greatest likelihood of economic disadvantage regardless of the
threshold of disadvantage adopted.
Lower income cap
for payers (Schedule 2)
Witnesses who appeared at the hearing had different
positions on the merits of this measure however there was broad support for the
view that the measure is poorly targeted. Labor senators support the argument
that lowering the cap from $102,000 to $78,000 will provide no assistance to
child support payers on low-to-middle incomes. It will provide substantive
benefits to the non-resident parents who have the greatest capacity to meet
their child support liabilities. These gains translate to substantial
reductions in the child support payments made to resident parents, as they will
not be offset by any increase in Family Tax Benefit.
The Department has estimated that 4000 payers will have
their child support liabilities reduced by $12.4 million or an average of $60
per week per payer. Scenarios provided by the CSA to illustrate the impact of
proposed measures highlight our concerns. In Scenario 6 the non-resident parent
has an assessable income of $105,000 pa while the resident parent (caring for
one child) has zero private income. The effect of lowering the cap on child
support would be to reduce the non-resident parent’s child support payments and
the resident parent’s disposable income by $85 per week. The latter effect is
of particular concern given the absence of research on sole parent poverty in
the development of the measures proposed in the budget.
The Law Council of Australia argues that the consequences of
the enactment have not been thought through. “This measure could lead to an
increase in litigation by resident parents in the form of spousal maintenance
applications to try and recoup the loss of income that they have sustained” (CA
2).
The submission from the Australian Council of Social
Security (ACOSS) makes an important point about the longer term implications of
setting the cap at 2.5 times average weekly earnings of all employees (rather
than 2.5 times average weekly earnings of full-time employees). Given the
increasing prevalence of part-time work this measure will lead to the actual
dollar level of the cap reducing over time with a corresponding drop in the
level of financial support payable to children.
The majority report sets out the Department’s argument -
supported by NATSEM research - that most payers with income in excess of
$65,000 are paying more than the gross costs of their children. It is argued
that a portion of child support payments are directed to ‘extras’ such as
holidays or private school fees. Labor senators are sympathetic to the views
expressed in a range of submissions that such benefits would have been afforded
to children had the family unit remained intact.
Disregarding
additional income earned for the benefit of second families (Schedule 3)
Labor senators are supportive of measures designed to
relieve financial pressure on second families at the lower end of the income
spectrum. The Lone Fathers’ Association provided evidence to the hearing of the
efforts made by some non-resident parents to support their second family
without diminishing the resources provided to their other children. We are
supportive of policy directions which will recognise and reward such efforts.
We similarly acknowledge the need for the development and
administration of clear guidelines by the CSA to ensure that patterns of work
and earnings cannot be manipulated with the objective of reducing one’s child
support liability. The Sole Parent Union’s support for this measure is
contingent on such guidelines. Senator Evans discussed with the Department and
the CSA how it would determine, in practice, what constitutes a second job or
overtime taken to support a second family. In a world where work patterns are
increasingly precarious and employment histories fragmented, it may be
difficult to establish what constitutes a deviation from an established or
normal pattern of work.
As the majority report states, the CSA are in the process of
developing the guidelines for administration of this departure provision. These
will be finalised following public consultation with interested parties. The
Department has provided quite detailed information about processes surrounding
changes of assessment which leads Labor to feel confident that the measure will
be fairly administered and not open to manipulation. The additional income must
have been obtained by the applicant to benefit the children in the applicant’s
current family and must not be earned as part of the normal earning pattern
established by the parent before the current family was established. Nor must
additional income come from normally expected improvements in the parent’s
income earning pattern (e.g. mandatory overtime or normal incremental
increases). As part of the decision making process, the Senior Case Officer
will be able to examine taxation returns for details of past earning patterns;
contact current or former employers for employment history; contact industry
organisations for details of employment patterns; and check CSA records for
child support being paid. In addition, the Senior Case Officer will compare the
financial situation of the children for whom the applicant is paying child
support with the position of children in the applicant’s current family. The
resources available to each will be examined, particularly any other sources of
income that could adequately provide for the applicant’s new children.
Labor acknowledges that there is a range of views on the
merits of this measure. Both the Law Council of Australia and the National
Council of Single Mothers and Their Children objected to this measure on the
grounds that it is a departure from guiding principles of the Child Support
Act. In particular, it is inconsistent
with the notion of children sharing equitably and equally in he change in the
circumstances of their parents. While the Lone Father’s Association expressed
their support for the measure, Partners of Paying Parents were concerned about
the impact of extended working hours on the well being of second families.
Increase in deductible child maintenance expenditure for Family Tax Benefit
and Child Care Benefit (Schedule 4)
Labor senators are highly supportive of this proposal for
the reasons set out in the majority report.
Restriction of
access to documentary evidence provided by the other party (Schedule 8)
Witnesses from the Law Council of Australia, National
Council of Single Mothers and Their Children, Sole Parents’ Union, Partners of
Paying Parents and the Lone Fathers’ Association opposed the restriction of
access to supporting documents. We share the view that denying parties access
to information, which may be considered by the CSA in the course of making an
assessment determination, is a denial of natural justice. A central theme in
the hearing related to the role of “perceived fairness” in determining client
and community support for the Child Support Scheme. Labor senators feel that
this measure serves to diminish the transparency and openness of the
determination process. We were persuaded by the position of the Law Council of
Australia who argue in their submission that “Instead of a reduction in the
exchange of information as proposed in the Bill...there should be an improvement
in the quality of the process so that there are means of ensuring that both
parties and the CSA have, before hearing, information which is accurate and
comprehensive.”
Senator Chris Evans (ALP, Western Australia)
Senator Kay Denman (ALP,
Tasmania)
October 2000
DISSENTING VIEW - AUSTRALIAN DEMOCRATS
CHILD SUPPORT
LEGISLATION AMENDMENT BILL (No. 2) 2000
- Schedule1
provides for amendment of the Child Support (Assessment) Act 1989 to reduce the child support percentages
where a non-resident parent has contact with his or her child for between
10% and 30%. The 1988 report of the
Child Support Formula for Australia,
(a Report from the Child Support Consultative Group) at Chapter 11
included in the development of the formula, the access costs incurred by
non-custodial parents, and weighed up the empirical evidence related to
the percentages of family incomes devoted to children, both custodial and
non-custodial. Thus, it is
incorrect to state that the present formula disregards the costs to
non-resident parents. For residence
(with the non-primary parent) up to 40% there is no evidence that the
primary parent’s costs are reduced, and it is inappropriate to merge the
principles of shared care with residence and contact. Resident parents are required to
continue to meet accommodation, clothing, education, health, childcare and
recreation costs for children even when they are on a contact visit with
the non-resident parent. Thus 10%
of time does not equate with 10% of costs.
The measure will result in reduced income
support for resident parents. FACS submits that sole parents can afford to lose
this from tax gains from 1 July 2000. The Australian Democrats
believe that tax gains to offset GST were for all Australians, and it is
untenable that sole parents should be required to sacrifice these for the
benefit of the non-resident parent.
- Schedule
2 provides for the use of the same measure to set the upper limit or ‘cap’ on payer taxable income that can be
subject to child support formula assessment, to $79,000 from the present
$101,153. The 1988 report of the Child
Support Formula for Australia, (a Report from the Child Support
Consultative Group) at Chapter 11 included as its fundamental precept
that all children of a parent share equally in that parent’s income, and
that during the children’s financial dependency they should share in
changes in parents’ financial circumstances just as they would if they
were growing up with both parents. The amendments undermine the principle
of children of the marriage benefiting from the parent’s capacity to pay;
will result in a considerable reduction in income support to many resident
parents, and are not supported by the Australian Democrats. There is no
evidence that the present cap constitutes a disincentive for work, and it
also inappropriate to assume that child support in excess of $6,000 per
year is not used for the primary support of the child.
- Schedule
8 proposes to amend the current requirement whereby supporting documents supplied by an applicant to depart from
the child support formula assessment are to be supplied to the other party
to the child support arrangements.
The Australian Democrats do not support this measure which amounts
to a denial of natural justice. It is unacceptable to create a situation
whereby a party is required to argue a case when they are not given access
to the documentation on which the other party is relying. They cannot respond to an application,
which cannot be proven on the basis of that application. The provision
directly contravenes basic legal principles of access and full and open
disclosure.
Senator John Woodley, Australian Democrats spokesperson for Child Support Oct. 2000
APPENDIX 1 - SUBMISSIONS RECEIVED BY THE COMMITTEE
|
1
|
Mr
Wayne Caldwell
|
|
2
|
Department
of Family and Community Services
Tabled at public hearing 4.10.00
-
Budget Measure to Reduce Formula Percentages
for Non-resident Parents Exercising Contact With Their Children - Modelling
of Disposable Income
|
|
3
|
The
Law Society of New South Wales
|
|
4
|
Ms
Sarah Rososinski
|
|
5
|
Family
Law Practitioners Association of Tasmania
|
|
6
|
Ms
Yvonne Chani
|
|
7
|
Associate
Professor Linda Hancock
|
|
8
|
National
Council of Single Mothers and their Children
Tabled at public hearing 4.10.00
-
The Family Law Reform Act 1995 - Has it made a
difference?, Georgina Parker
-
Lone Fathers Newsletter, 21 May 2000, p.28.
|
|
9
|
Law
Council of Australia
|
|
10
|
Council
of Single Mothers and their Children, Victoria
|
|
11
|
Women's
Electoral Lobby Australia
|
|
12
|
National
Network of Women's Legal Services
|
|
13
|
Sole
Parent's Union
|
|
14
|
Ms
Debra Jewell
|
|
15
|
Australian
Council of Social Service
|
|
16
|
Partners'
of Paying Parents
|
|
17
|
Mr
Peter Bath
|
|
18
|
Women's
Legal Centre (ACT & Region) Inc
|
|
19
|
Legal
Services Commission of South Australia
|
|
20
|
Hobart
Community Legal Service Inc
|
|
21
|
Lone
Fathers' Association Australia Inc
Tabled at public hearing 4.10.00
-
Cost of Child Support - Relative to Unemployed
Males, Property Investment Research
|
APPENDIX 2 - PUBLIC HEARING
A public hearing was held on the
Bill on 4 October 2000 in Senate Committee Room 2S1.
Committee Members in attendance
Senator Sue Knowles (Chairman)
Senator Andrew Bartlett
Senator George Brandis
Senator Kay Denman
Senator Chris Evans
Senator Tsebin Tchen
Witnesses
Law Council of Australia
Mr Denis Farrar, Member of
Executive, Family Law Section
Partners of Paying Parents (PoPPs)
Mrs Karen Caldwell, State
Representative - ACT
National Council of Single Mothers and their Children (NCSMC)
Ms Elspeth McInnes, Co-Executive
Officer
Sole Parent’s Union
Ms Kathleen Swinbourne
Lone Fathers' Association Australia Inc
Mr Barry Williams, National
President, and representative of Parents
Without Partners Association
Mr James Carter, Adviser
Department of Family and Community Services
Mr Keith Henry, Assistant
Secretary, Family and Children Branch
Mr Phil Alchin, Director, Policy
Development, Family and Children Branch
Ms Sheila Bird, Assistant General Manager, Client and
Community Branch,
Child Support Agency