Families, Community Services and Indigenous Affairs Legislation Amendment (Child Support Reform Consolidation and Other Measures) Bill 2007
THE INQUIRY
1.1
The Families, Community Services and Indigenous Affairs Legislation
Amendment (Child Support Reform Consolidation and Other Measures) Bill 2007
(the Bill) was introduced into the House of Representatives on 29 March 2007. On that day the Senate, on the recommendation of the Selection of Bills
Committee (Report No.6 of 2007), referred the provisions of the Bill to the Community
Affairs Committee (the Committee) for report.
1.2
The Committee received 13 submissions relating to the Bill and these are
listed at Appendix 1. The Committee considered the Bill at a public hearing on 1 May 2007. Details of the public hearing are referred to in Appendix 2. The
submissions and Hansard transcript of evidence may be accessed through the Committee's
website at https://www.aph.gov.au/senate_ca.
THE BILL
1.3
The Bill introduces several measures affecting the Families, Community
Services and Indigenous Affairs portfolio legislation.
1.4
The Bill contains the following elements:
- consolidating and consequential amendments that clarify and
refine the operation of the government's major 2006 reforms to the Child
Support Scheme,[1] including those which:
- establish a new method to calculate the cost of each child and the
resulting child support payable where one or other of the parents has more than
one child support case, and the children are of different ages;
- clarify and refine the making of provisional notional
assessments, and setting out the situations in which notional assessments may
be amended;
- restrict the scope for the setting aside of binding child support
agreements by specifying that exceptional circumstances must have arisen since
the making of the agreement and that the child or party would suffer hardship
if the agreement were not altered or set aside;
- amendments, relocated from the Child Support Legislation
Amendment Bill 2004,[2] that are still required in light of the 2006 reforms to the Child Support
Scheme, including those which:
- move provisions currently contained in regulations relating to
overseas maintenance arrangements into the primary child support legislation;
and
- aim to improve equity between the two parties to a child support
case, in access to court for review of any decisions about parentage of a
child, and streamline the internal review system for child support decisions
generally;
- amendments to the maintenance income test provisions in the A
New Tax System (Family Assistance) Act 1999;
- amendments to the maternity payment provisions of the family
assistance law (to be known as the 'baby bonus' in the future) to ensure that
claimants under the age of 18 are paid the baby bonus in 13 fortnightly
instalments rather than a lump sum, and to ensure that all parents are required
to formally register the birth of their child as a condition of receiving the
baby bonus for births on or after 1 July 2007;
- changes to allow the family tax benefit (FTB) portability period
of 13 weeks for full payment to be extended for members of the Australian
Defence Force and certain Australian Federal Police personnel of the
International Deployment Group who are deployed overseas as part of their duties
and remain overseas for longer than 13 weeks;
- amendments to the remote area allowance provisions in the Social
Security Act 1991 and the Veterans' Entitlement Act 1986 to ensure
that an additional allowance is payable for each FTB child and regular care
child of a person;
- amendments to the Income Tax Assessment Act 1936 as a
consequence of the 2006 reforms to the Child Support Scheme, which included
changes to 'FTB child' and the introduction of a concept of 'regular care
child'; and
- various amendments to the Social Security Act 1991 and the
Veterans' Entitlement Act 1986.
1.5
The financial impact of the Bill is:
Year
|
Total resourcing
|
2006-07
|
$2.1
m
|
2007-08
|
$0.8
m
|
2008-09
|
$0.5
m
|
2009-10
|
$0.4
m
|
BACKGROUND
1.6
The Department of Families, Community Services and Indigenous Affairs (FaCSIA)
provided some background information in relation to the amendments contained in
the Bill.
Child support consolidation amendments
1.7
The government's extensive reforms to the Child Support Scheme are being
implemented in three stages – Stages 1 and 2 commenced on 1 July 2006 and 1 January 2007 respectively, and Stage 3 will commence on 1 July 2008.[3]
However, these further 'minor' amendments are being made in the Bill to ensure
that the reforms operate as intended. FaCSIA advised that the consolidation
amendments contained in the Bill were drafted in close consultation with all
relevant government agencies.[4]
Matters from the 2004 child support
bill
1.8
In 2004, a child support bill was introduced to incorporate into primary
legislation provisions relating to overseas maintenance arrangements that are
currently located in regulations. These provisions were included in regulations
in 2000; however, due to time constraints on including them in primary
legislation at that time, the intention was that the provisions be moved to
primary legislation when the opportunity arose. FaCSIA advised that the 2004 bill
did not proceed due to pressure on parliamentary schedules and the impending reform
of the Child Support Scheme; the provisions from the 2004 Bill are now included
in the current Bill.[5]
Child support consequential
amendments
1.9
The child support reforms will change, from July 2008, the minimum level
of care at which a parent can receive a child-related amount of FTB from 10 per
cent to 35 per cent. This means that parents with more than 65 per cent care of
a child will have access to the full amount of FTB. This is linked to the new
recognition of the costs of regular care in the child support formula. Care
between 14 and 34 per cent (between 2 and 4 nights per fortnight) will be known
as 'regular care'. Consequential amendments in the Bill will ensure that an
additional amount of Remote Area Allowance can be paid for a 'regular care'
child on the same terms as it is paid for FTB children.[6]
Other amendments
1.10
The Bill contains provisions affecting various payments for which FaCSIA
has responsibility. Some of these amendments have been announced by the government
and have been made in response to community concerns.[7]
These include the changes to the maternity payment; these changes recognise
that 'young parents are not experienced in handling large sums and that smaller
payments are more likely to be spent for the benefit of the new child'.[8]
ISSUES
1.11
Submissions received by the Committee commented specifically on provisions
of the Bill pertaining to child support and the baby bonus. Submissions and
witnesses raised a number of concerns in relation to the Bill's child support
provisions and offered some suggestions for improvement. The amendments
relating to the baby bonus were generally supported.
Child support amendments
Complexity of the Bill
1.12
The Non-Custodial Parents Party (NCPP) and the Lone Fathers' Association
Australia (LFFA) argued that the Bill and the Explanatory Memorandum are too
complex for the average person to understand.[9]
The NCPP asserted that the Explanatory Memorandum to the Bill 'should have been
made a lot simpler than what it currently is' so that all stakeholders are able
to 'more readily have access to the reasoning behind the changes and their
consequential effects'.[10]
1.13
FaCSIA informed the Committee that it is planning very comprehensive
communication and customer service strategies to explain the magnitude and
complexity of the changes to those affected. These communication and service
strategies will 'ramp up over the next six months and become quite intense
towards the end of the year and into the new year, with people interacting with
the Child Support Agency and new assessments being issued to have effect well
before July next year'.[11]
Ongoing concerns
1.14
The National Council of Single Mothers and their Children (NCSMC)
reiterated many of the concerns it expressed previously during the Committee's inquiry
into the 2006 reforms. The NCSMC was strongly critical of the outcomes of the Bill
and argued that it goes further to implementing problematic changes developed
or recommended by the Child Support Taskforce:
There is a huge amount of upset and concern in the community
about how these changes will impact. Here we have another piece of legislation,
making further changes and continuing the implementation of this policy, yet we
are still waiting to find out what the actual financial ramifications will be
so that people can have a reliable indication of what they will mean for them.[12]
1.15
FaCSIA advised the Committee that a national stakeholder group has been
established and that ongoing discussion and consultation with stakeholders is
taking place within that forum:
That stakeholder engagement group is an evolution of the
stakeholder arrangements that the CEO of the Child Support Agency had had in
place for some time. It is now an arrangement that is done jointly between our
department and the Child Support Agency. It involved a similar membership and
some additional membership to reflect...quite a broad range of stakeholders.[13]
1.16
The stakeholder group is aiming to ensure that it addresses 'the things
that not only are of most benefit and value to the group but also will yield
the most value to the government in terms of getting feedback from the
stakeholders'.[14]
However, FaCSIA noted that:
It would be fair to say that some of the issues that...members of
the stakeholder group that represents the interests of women have raised have
been the same issues that they have been raising since the government announced
that it would proceed with the reforms. Whilst those issues have received an
airing in that group, it is not the purpose of the stakeholder group to revisit
the decisions on the formulation of the reforms that have been taken by
government and then passed by the parliament. That said, we certainly are alert
to issues that are coming up that are new, and there have been a number of
things that are more of an implementation and service delivery nature, which we
are very keen to continue to work on with the stakeholders.[15]
1.17
FaCSIA also advised the Committee that it will closely monitor and
evaluate the impact of the reforms using, for example, actual administrative
data that will flow once the new assessments are in place and other forms of
qualitative information. FaCSIA pointed specifically to the government's
acceptance of the Child Support Taskforce's recommendation that FaCSIA
undertake ongoing research into, and monitoring of, the impacts of the reforms
'not just in relation to the impacts of the changes but also perhaps some
ongoing capability to understand what is happening in relation to the child
support scheme into the future'.[16]
Costs of children and parents with
multiple cases
1.18
The Bill establishes a new method to calculate costs of children in
multiple child support cases where the children are of different ages. Some submissions
commented on the complexity of this proposed change[17]
and the unfairness that the new formula's application will create for certain
groups of both payers and payees.[18]
In addition some submissions noted that, far from being merely technical, this
proposed amendment represents a significant change to the formula embodied in
the 2006 reforms, as it applies to multiple cases.[19]
To that extent, it is not in accordance with the conclusions or the arguments in
the report of the Ministerial Taskforce on Child Support, chaired by Professor Patrick
Parkinson (Parkinson report).[20]
1.19
FaCSIA responded that it had given close consideration to the issue of
multiple-case arrangements:
...upon further analysis of the way in which the formula was going
to apply where there were multiple cases with children of different ages, we
noticed that in those multiple cases—say a single payer paying more than one
payee where the children were of different ages—the rules around the formula
that resulted in averaging could lead to some inappropriate outcomes where an
over 13-year-old child was in one household and an under 13-year-old child was
in another. We raised those matters with government and, with the minister's
agreement, with Professor Parkinson. We also reconvened a couple of members of
the task force to bounce some ideas around and we came up with their proposed
approach that is here. The task force members acknowledged that this was
something they had not thought of at the time and that this was an appropriate
approach. Indeed, I think that Professor Parkinson described it as an 'elegant'
solution to the problem.[21]
Setting aside binding agreements
1.20
Although agreeing with the proposition that binding agreements should be
more difficult to set aside than limited child support agreements, the Law
Council of Australia (Law Council) argued that the proposal to restrict the
scope for the setting aside of binding child support agreements to where there are
'exceptional circumstances' is unduly harsh.[22]
1.21
The Law Council suggested that, for the sake of consistency, the Bill
should contain a requirement similar to that included in section 90K of the Family
Law Act 1975 which allows for the setting aside of a financial agreement
where there has been a 'material change in circumstances' and, as a result of
the change, hardship would be suffered if a court does not set aside the
agreement. This 'would enable agreements to be set aside in appropriate
circumstances but would preserve the intention that a binding agreement will,
in all general circumstances, be binding on the parties'.[23]
1.22
The LFAA also expressed concern about this proposed amendment and agreed
that it may be more appropriate to relax the rules as they apply to binding
agreements:
The experience of the LFAA is that "non-custodial
parents" may enter into unsatisfactory or even oppressive agreements
through a failure to look far enough ahead. And in those cases, courts are
likely to indicate that they are not disposed to alter such an agreement at the
behest of one party only. This is, if anything, an argument for relaxing the
rules as they apply to binding agreements. It is not an argument for making
those rules any stricter, and further restricting the power of courts in
dealing with these matters.[24]
1.23
The LFAA also queried the meaning of the term 'exceptional
circumstances' and how it might be interpreted by a court.[25]
The LFAA concluded that the proposed amendment relating to the setting aside of
binding agreements should not be endorsed 'unless and until it has been fully
explained and justified, and receives community understanding and acceptance'.[26]
1.24
FaCSIA responded that the matter of the setting aside of binding child
agreements was raised by Professor Parkinson in his submission to the
Committee's inquiry on the 2006 reforms and, after further discussions with
him, the government agreed to proceed with a 'tweaking' of those arrangements.[27]
Issues of parentage
1.25
The 2006 reforms set out factors that a court should have regard to when
considering whether an order for repayment of child support should be made in
cases where the court finds that child support has been paid by a person who is
not the parent of the child. One of these factors relates to the likely
knowledge of both parents about the issue of parentage. The Bill contains
amendments which aim to make it clear that a mere suspicion on the part of
either parent that the payer was not the parent of the child is a factor
relevant for the court to consider, even when this falls short of a reasonable
doubt about parentage.[28]
1.26
The LFAA summarised its concerns about these proposed amendments as
being primarily about how such a provision might be interpreted by a court:
...I am just thinking ahead to: what does that actually mean in practice?
If a matter does come to a head and it is discovered that there is a problem
about the actual biological parentage, does this mean that a court which is
considering the matter in the context of, perhaps, repayment of child support—which
is an issue which has emerged—should be able to say, 'We think that there was
some suspicion that you may have had, and therefore the question of repayment
should not arise'? That is a possible scenario.[29]
1.27
The LFAA raised the broader issue of paternity testing in this context,
asserting that 'DNA testing should be a compulsory procedure at the birth of
every child, to ensure that the correct father is registered. And to the extent
that the procedure has not already been performed, it should be a compulsory
procedure at the time of any application to the [Child Support Agency] for the
collection of child support'.[30]
Concept of 'regular care' child
1.28
The NCSMC noted that the Bill's introduction of the concept of a
'regular care' child, in reference to a child who does not qualify for FTB
under the changes to the Child Support Scheme, 'highlights the disjuncture
between definitions used for income support and the intent and direction of the
family law and child support changes'.[31]
In particular:
Family law changes now support child-splitting and the child
support changes provide financial benefits to men who see their children
regularly, yet for income support purposes only one parent can be a Principal
Carer of a child. This means that the half-time children in the household of
the person who is not deemed under Social Security law to be the Principal
Carer will not attract the protections available to Principal Carers in the
income support system. The impact of this disjuncture in definitions is most acute
for young children whose parents are both dependent on income support and are
thus likely to be highly disadvantaged.[32]
1.29
The NCSMC suggested that the definitions of children in the income
support system be brought into line with changes in the family law and child
support systems, particularly the way that these systems recognise and relate
to children of separated parents, in order to overcome certain anomalies which
are having a direct impact on the lives of those children.[33]
1.30
Noting that the Department of Employment and Workplace Relations has
responsibility for this issue, FaCSIA advised that it had not done any
additional work regarding the possibility of changing arrangements so that both
parents could be deemed Principal Carers:
These issues were considered and, on balance, the government
determined that in relation to situations where one or both parents were on
Newstart or parenting payments, the primary focus was to be on participation
objective, and hence at the time the government decided not to further change the
arrangements that were in place for receipt of income support...(I)t was not done
as a knee-jerk reaction. There was careful consideration given to different
approaches that could be taken, and the government made the decision that it
did.[34]
Baby bonus
Registration requirement
1.31
Currently, relevant State and Territory legislation requires the birth
of a child to be registered (generally within 60 days of the birth) and it is
usually the parents of the child who have joint responsibility for registration
of the birth of the child. However, a proportion of parents delay registering
their child's birth, sometimes for an extended period.[35]
The Bill amends the A New Tax System (Family Assistance) Act 1999 to
link eligibility for the baby bonus with registration of the birth with the
relevant State or Territory authority. It is not a requirement that
registration has occurred in order to get payment, rather it is a requirement
that a claimant make a declaration that an application for registration has been
submitted.[36]
1.32
Professor Peter McDonald and Dr Rebecca Kippen from the Australian National
University expressed strong support for a system of birth registration that
leads to accurate and timely registration of all births in Australia. They
argued that Australia does not have a complete and timely system of birth
registration and that accurate birth registers form the basis of birth-rate
calculations, which feed into projections of future population at a local,
state and national level. In their view:
...as the law stands, there is little incentive for parents to
register the birth of a child. Parental payments, including the Maternity
Payment, can be claimed without proof that the birth has been registered. Proof
of birth registration is not required for immunisations, school or childcare
enrolment, or adding a child to the family Medicare card.[37]
1.33
Professor McDonald and Dr Kippen concluded that complete and timely
registration of births could be guaranteed overnight if payment of the baby
bonus was contingent upon production of proof of registration.[38]
1.34
The Australian Bureau of Statistics (ABS) advised that birth
registration statistics are used to compile population, demographic and health
statistics which are used for a wide range of purposes. In particular, population
estimates 'are used in a wide range of important decisions such as the
distribution of GST, revenue to the jurisdictions and apportioning the number
of seats in the House of Representatives to the states and territories'.[39]
1.35
The ABS anticipates that the Bill will improve the quality of important
statistics:
It is expected that the new requirement may result in a change
in parents' behaviour, and improvements in the registration of births that
would normally not be registered, or registered later than required by state
and territory legislation. If this occurs, the ABS anticipates an improvement
in the quality of birth and fertility statistics and population estimates for Australia
and the States and Territories.[40]
Fortnightly payments
1.36
The NCSMC described the proposal to make payments to under 18 year old
mothers in fortnightly instalments as effectively amounting to 'age
discrimination'.[41]
It argued that such a measure may not be universally appropriate and may lead
to adverse outcomes in some circumstances:
There are legal consequences around legal adulthood and decision
making and capacity, but it does not go to the heart of the matter which, in
our view, is whether it is good for families in particular circumstances to
receive a lump sum—for example, a violent boyfriend who might run off with the
money, a drug addiction, a gambling addiction or some kind of huge debt for
which the money could be seized and used. These are the kinds of
vulnerabilities that do not necessarily rest with age. A lump sum might be very
important to a young mum, whether she is 17 or 18, in order to get a car if she
does not have transport, to furnish a house if she has had to set up a
household, to buy basic furniture for her baby if she has not got it
already—and most do not.[42]
1.37
The NCSMC suggested that the format of the payment for mothers who are
under 18 years old should be able to be varied on the recommendation of a
qualified social worker and that, where lump sum funds are needed for major
purchases, these could be paid by direct credit to ensure that the funds are
directed to an appropriate purpose.[43]
This would be 'a much more useful way to address the particular issues in each
case and to protect vulnerable people without just arbitrarily discriminating
against then or making judgements about them based on the fact that they are of
a particular age'.[44]
1.38
FaCSIA responded that there was careful consideration of a range of
options in relation to this issue:
The government took advice and representations from the
community at large around these arrangements and took advice from the
department, of course, and weighed up options like still having some scope to
make the payment as a lump sum for under 18s, but on balance its decision was
that it would prefer to have fortnightly instalments for under 18s.[45]
CONCLUSION
1.39
The Committee supports the measures being introduced in the Bill. However,
the Committee notes the concerns raised by submissions and witnesses in
relation to the child support amendments. While the Committee considers that these
amendments are important in continuing to ensure equity within the child
support system, it also recognises that the true impact of many of the changes
will not be fully known until they are operating in practice.
1.40
The Committee applauds FaCSIA's commitment to undertake ongoing consultation
with relevant stakeholders and to monitor the impact of the changes following
their implementation. The Committee encourages FaCSIA to continue its
comprehensive work in this regard.
Recommendation 1
1.41
The Committee reports to the Senate that it has considered the Families,
Community Services and Indigenous Affairs Legislation Amendment (Child Support
Reform Consolidation and Other Measures) Bill 2007 and recommends that the Bill
be passed.
Senator Gary
Humphries
Chairman
May 2007
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