Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Hansard source

The bill before us for debate today—the Families, Community Services and Indigenous Affairs Legislation Amendment (Child Support Reform Consolidation and Other Measures) Bill 2007follows two substantial pieces of legislation that were debated last year. Those bills arose in response to the bipartisan recommendations of the original report of the House of Representatives Standing Committee on Family and Community Affairs, Every picture tells a story. I was pleased to be a member of that committee, which worked very hard to try and institute some very fundamental changes both to family law and to the Child Support Scheme and the formula in particular. It was left to the committee chaired by Professor Parkinson to come up with a range of detailed recommendations that go to the heart of the Child Support Scheme.

The government announced major changes to the scheme in February last year, and, as I say, today is part of the ongoing process of trying to give effect to the recommendations of both the House of Representatives committee and the Parkinson task force.

The bill before us today contains a number of significant technical and consequential amendments that flow from the original legislation. It also incorporates relevant amendments relocated from the Child Support Legislation Amendment Bill 2004. The shadow minister has spoken at length on a number of the proposals contained in this bill and the proposed changes. I do not intend to elaborate on those in any greater detail, because I want to focus my remarks specifically on matters relating to child support.

As the shadow minister, the member for Jagajaga, outlined to the House, the introduction of the child support system back in 1988 was a very important and innovative measure introduced by the Hawke Labor government. It was important at that time because it aimed to strike a fair balance between public and private forms of support for children where marriages had broken down, and to alleviate the poverty that we all know exists in sole parent families, particularly those struggling families with mum at the head of the family unit. We all know that sole parent families raising children are likely to be very much at the bottom of the income scale and at the bottom of the scale in terms of wellbeing and living standards.

So we on this side of the chamber have always had a view that any child support policy must put the interests of children first, must aim to reduce child poverty and must operate in a way that encourages both parents, post separation, to continue to contribute to their children’s wellbeing. It must encourage both parents to maintain ongoing roles in their children’s lives. We, as members of parliament, know that hitherto that often has not been the case. So I do, in general terms, welcome many of the long-overdue changes that will come with the introduction of the staged changes to the system and to the formula in particular. But, as the member for Jagajaga made clear, our support for the package overall continues to be conditional on improved protection against income reductions for low-income households raising children. I will return to that point a little later.

I think it was regrettable that, as members of this House, we were not in a position to debate the changes to the Child Support Scheme and the formula as a total package. If we had been able to, it would have been easier for all of us to assess the winners and the losers and to take into account the equity considerations of justice and fairness that have to be part of the eventual outcomes. As we know, these changes are coming in three tranches. Today we are debating some of those changes, but the final package of reforms will only come into existence in July next year.

You cannot argue against the fact that the existing formula has been the cause of a great deal of angst in the community. Research undertaken by the Australian Institute of Family Studies found that more than 60 per cent of non-resident fathers and 45 per cent of resident mothers think the system is not working well. This was substantially confirmed in the evidence that came before us in the inquiry that led to the very important, ground-breaking report, Every picture tells a story. As I and all MPs know, many constituents who have come to see us have raised concerns about the application of a formula that they perceived to encompass many anomalies and that they believed needed to be rectified. So the changes that we have already seen are generally welcomed and supported. I want to refer to some of these because they are matters that have been the cause of complaint to me as the member for Throsby.

From July 2006, when the first major reforms came into being, we recognised non-resident parents on income support who have contact with their children for at least one night a week by the payment of a higher allowance. We enabled parents who pay child support to spend a greater percentage of their payments directly on their children and to nominate the areas that they wanted those funds to be targeted at. So up to 30 per cent of child support payments can now in fact be directly attributed to the desire of the non-resident parent as to how that expenditure should be met. We have certainly beefed up action to ensure child support is paid on time and in full. We all know cases where people have deliberately avoided their responsibilities for payment of child support. We also know of the huge number of people in the system who were paying just the bare minimum of $5 a week. Compliance was a problem, with only around half of all parents making their payments in full and on time, and I want to say a bit about that in a moment.

There was some debate about the reduction in the cap at the top level, where we saw the cap reduced from around $140,000 to $105,000. But I do believe that, in the context of the total package, this change will bring payments much more into line with the actual costs of raising children. We improved support for separating families through the family relationship centres. I am very pleased that we have one in Wollongong, which I have visited, and I know the great job that it is performing in assisting local families. We increased minimum payments. In my view they are not sufficient, but they have gone up from $5 a week to just over $6 and in future will be indexed to the CPI.

In the second stage of the changes, operative from January this year, there is now the capacity for an independent review of Child Support Agency decisions through the Social Security Appeals Tribunal. Many parents who have visited me have complained about the high legal costs in challenging decisions of the CSA when they have to go through a court process. I think it will remove the immense financial burden on people who are unhappy with outcomes as a result of decisions made by the agencies.

Importantly, too, since January this year parents will be provided with more time to work out their parenting arrangements before their family payments are affected. Previously, a separated parent was allowed only 28 days in which to take action to obtain child support payments before their family tax benefit A payments were affected. This time frame, as I know from personal experience, often caused conflict between separating parents, often undermining their ability to reach agreement on parenting arrangements or, in some cases, even to reconcile the differences which led to the breakdown in their marriage or relationship. I am pleased that, from January this year, the time limit will be extended from 28 days to 13 weeks.

Early indications of the impact of these legislative changes have in fact been very heartening. Recent data from the Child Support Agency showed that more separated or divorced couples are now embracing shared parenting arrangements—not as much as we would like, but it is heading in the right direction—and that an increasing number of fathers are taking on the role of primary carer. In 2006 about 21 per cent of new cases listed fathers as the primary care giver, compared with just 7½ per cent in 1997. I am pleased to see an increase in contact between non-custodial parents and their children, with the number of those parents who see their children 30 per cent or more of nights a year doubling—from a low base but nevertheless doubling—in the recent period. I think these factors are a growing indication of changes in attitude in custody disputes, which is a good thing, especially for children in situations of marital breakdown.

I am also pleased that the Child Support Agency and the tax office have been more proactive in putting the squeeze on what are described as child support cheats. We all know of cases where people deliberately minimise their assessable taxable income to avoid their obligations to their children. It was recently reported that more than 35,000 divorced parents, mainly fathers, have been forced to pay $13 million in a major tax office crackdown on parents who do not file their tax returns in order to avoid paying their legal child support obligations.

Senator Ellison recently commented that this new program was expected to net some $460 million in child support payments over the next four years. We certainly hope that occurs, because there have been many sole parent families left in the lurch by people deliberately falsifying or minimising their assessable taxable income to avoid their obligations of financial contribution to raising their children.

From July next year we will see the final stage of the long-awaited changes to the formula for calculating child support—a new formula that will form the basis for the calculation of child support. For the first time we will have a formula which will be based on our own Australian research and provide a more objective and realistic assessment of the actual costs of raising children. The formula will treat the incomes and living costs of both parents more equitably and take into account the fact that older children cost more to raise. It will also ensure that children from first and second families are treated more equitably. That has been a major cause of complaint from constituents who ask me why children of subsequent partnering and marriage are treated less favourably than children from the first marriage.

These changes will see parents share in the cost of supporting their children according to their capacity to pay. The new proposals and the new formula move away from the principle that the existing formula is based on—that is, the principle of continuity of expenditure, which somehow tries to artificially maintain the intact family standard of living post separation. Something that has always baffled me and I have found hard to explain to my constituents is the basis of the percentages in the current formula and how they apply in a fair way. I think that for the first time, in moving towards an income-sharing approach, we will have a far more objective and scientific basis on which to respond to those issues. I think the new formula will better reflect the principle of shared parental responsibility and better reflect the changes in workforce participation by women. It is proposed that in future the cost of raising children will be based on the parents’ combined income, with the costs distributed between the mother and the father, or the resident and non-resident parent, in accordance with their respective share of that combined income and their level of contact with their children. Both parents will now have a component for their self-support deducted from the income table.

Very importantly, in moving away from the arbitrary percentages that we have had applied in the past, we will for the first time, courtesy of the fantastic work done by the University of Canberra’s National Centre for Social and Economic Modelling, have a much more objective and realistic assessment of the actual cost of raising children. As NATSEM themselves argue, the calculations can never be perfect; but they will be as close as researchers believe it is possible to be. For example, they have estimated that for a single child up to the age of four the average cost of care is $91 per week in a two-parent family and $115 per week in a single-parent family. For a five- to 12-year old, the cost rose to $95 per week in a two-income family and $119 per week in a single-parent family. I give those examples to make the point that it will be much easier to address the constant complaints and concerns when you can say to people who come to see you that at least, for the first time, we have the best calculations possible as to the actual cost of raising children today.

Some people have argued with me that high-income earners appear to be favoured and advantaged by these changes and asked me whether I think that is fair. I guess that is a judgement people will come to in regard to their individual assessments, but I would note that a non-resident parent supporting two children under the age of 12 would still be making payments in the order of $472 per week at the top end and that those payments are in fact higher than the objective data that NATSEM has produced on the cost of raising children. So, even though initially it might appear that it skews the advantage to high-income earners, when you look at the reduction in the cap against the actual costs I think you see that there is a measure of fairness in it. As I indicated earlier, the task force recommended an increase in the self-support amount, that it should be the same for both parents and that children from first and second families and partnerships ought to be treated as equally as possible. The formula also recognises that regular face-to-face contact is an important component in assessing child support payments.

I have some concerns about the withdrawal rate for child support liability. It has been suggested that regular contact—that is, contact of at least five nights per fortnight—should entitle the non-resident parent to a 24 per cent reduction in their child support liability. I would urge the government to review that before the changes are introduced because I do feel that that rate of reduction is too high and, in fact, could have the unintended consequence of leaving too many sole parents—usually resident mums—in a more vulnerable position than they are in today. I think if we could revisit that 24 per cent reduction for the non-resident parent who has the child or children for at least five nights a fortnight, we might get to a better and fairer outcome and address some of the very important issues that the member for Jagajaga raised in her contribution. We still have time to do that before the final legislative changes are enacted.

I would like to talk about one example from evidence given to a Senate committee recently by Jaqueline Taylor from the National Council of Single Mothers and their Children. She said:

... calculating the financial impact on single mother families post July next year has actually been an incredibly difficult thing to do because there is nothing available to help us with that. There has been no modelling done by the government to actually calculate the impact that these changes will have on sole parent families and we cannot forget that this is also in conjunction with Welfare to Work and the loss of income from that.

So it would be a great tragedy, in my view, if all the positive and innovative changes that recognise the anomalies and the difficulties inherent in the current formula were to falter on the rock of leaving some people, predominantly sole parent mums, in a more precarious and vulnerable position than they are now in. It is important for the government to ensure that the overall package is correlated very closely and carefully with welfare policies and benefits to ensure that low-income households raising children are not left worse off than they are presently. I think it would be a terrible shame were child poverty levels to rise as an unintended consequence of the positive changes recommended by the Parkinson report. I am very pleased that I had the opportunity to participate in the review. I am very proud of the report we presented and I am very encouraged by the legislative changes that will shake up the family law system and child support in this country.

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