House debates

Thursday, 3 June 2010

Child Support and Family Assistance Legislation Amendment (Budget and Other Measures) Bill 2010

Second Reading

12:49 pm

Photo of Annette EllisAnnette Ellis (Canberra, Australian Labor Party) Share this | Hansard source

I rise to support the Child Support and Family Assistance Legislation Amendment (Budget and Other Measures) Bill 2010 and I am glad to have the opportunity to address the issues that it raises. The Child Support Scheme, as we know, was first introduced over 20 years ago by the Hawke government. It was implemented to ensure that separated parents share the cost of raising their children, subject to each of their financial capacities to do so. The system was, however, subject to heavy criticism over many years at a variety of different levels. It was subject to confusion, to misunderstanding and, in some cases, to misuse. Many parents felt that the child support formula was unfair and, whilst parents could understand the need for a system that looked after children, they felt that the system in place did not in some cases give them a fair go. For instance, many parents felt that it did not take into account the often large costs that were incurred by the non-custodial parent when the children were under their care.

The 2003 report by the House of Representatives Standing Committee on Family and Community Affairs entitled Every Picture Tells a Story found that, of the 597,000 families who had a child with a natural parent living elsewhere, 41 per cent  received no child support, 42.3 per cent received cash child support and a further 16.3 per cent received only in-kind child support. In the report of the Ministerial Taskforce on Child Support entitled In the best interests of children—reforming the Child Support Scheme, a number of issues were identified. For instance, the report found that, under the fixed percentages that were paid in child support, it was assumed that people across the income range spent the same proportion of their income on children. However, the research of the task force found that, while the higher the household income the more parents spent on their children in dollar figures, expenditure actually declined as a percentage of their income. The report also found that, in setting the percentages paid in respect of children regardless of their age, the scheme did not adequately reflect the much larger cost of caring for teenagers, which was estimated at two to three times the cost of caring for younger children. The report also found that the system in place at the time did not take into account the issue of parents who had started new families with children and the extra associated costs that those children brought to their lives. These were just a few of the issues raised. There were many more.

In response to the Ministerial Taskforce on Child Support, the system was subject to a major overhaul between 2006 and 2008 to provide a fairer and more flexible calculation of child support. A key element of the reforms was the development of a new formula to calculate how much child support would be paid by using an income shares method, which calculates and shares the costs of children between the parents according to their share of the combined income. Currently, approximately 1.1 million children are supported through this scheme.

The amendments put forward by the government aim to build on the recent changes already made to the system. Firstly, they allow for the implementation of the 2009 budget measure of aligning care determinations between family assistance from Centrelink and from the Child Support Agency. This will create simpler rules for separated families. Currently, the Family Assistance Office, which covers Centrelink and Medicare, uses rules to determine care levels for child support and family assistance that are different to the rules used by the Child Support Agency, creating inconsistent processes and decision making between the two agencies. Under current arrangements, where the rules between the Family Assistance Office and the Child Support Agency differed, many parents did not receive their correct assessments unless they notified each agency separately.

It would be fair to say that many separated families undergo the strains of tense and acrimonious circumstances. Many members in this place, including me, can attest that very strongly. The fact that parents had to deal with two different sets of rules under the two agencies created additional strain within these families. This need not happen. These amendments will make a single determination of care for both child support and family tax benefit purposes, thus removing the acrimony that can be created by separate decisions. It is expected that it will also reduce the number of objections and appeals that are lodged as a result of the two different determinations from the two agencies. Therefore, it has the added bonus of saving Australian taxpayers money—money that was spent unnecessarily on appeals—through simple clarification of the system.

Secondly, the amendments will correct anomalies that occur where parents estimate their income. Some parents estimate their income, and this estimate is reconciled against their actual income to ensure that the correct amounts have been paid and received. Under the current system, parents can estimate their income for a period of up to 15 months. This period has the potential to cross over into three different financial years. Understandably, where this means that parents have to estimate income over multiple financial years, it can easily lead to inaccuracies in their estimates.

One of the outcomes of these amendments will be to align estimate periods with financial years, thus making it easier for parents to estimate their income. Once their actual income is known, it will allow the Child Support Agency to reconcile the estimate automatically. These amendments do not affect the length of the child support period, which will remain at 15 months. However, they will change the period over which the estimates are reconciled from 15 months to a financial year.

Thirdly, the amendments will put in place more flexible and fairer arrangements where fortnightly payments are ceased for parents who fail to lodge tax returns. Following recommendations in a 2007 Australian National Audit Office report into the reduction of family payment debts, new rules were introduced to encourage family tax benefit recipients to lodge tax returns in order to ensure that they received the correct amount that they were entitled to, thus reducing overpayments. These amendments will retain those arrangements. However, they are also more flexible in that they will allow payments to continue in circumstances where people do not have a family tax benefit debt, or where the cessation of payment would cause hardship.

There will also be the provision to suspend the loss of entitlement of family tax benefit where special circumstances apply. This measure is to target certain vulnerable sections of society, such as those affected by severe illness, domestic violence or bereavement. These measures build on and strengthen the comprehensive changes previously made to the child support system. The amendments make many improvements, particularly in the area of the estimation of family income. We are hoping, in fact we are planning, they will make the system fairer and more flexible.

As other members have said and as I wish to say as well, this system will probably never be perfect for the reason that, with this legislation and this area of public policy, probably more so than in any other area, we are dealing with human nature and intimate family relationships at a level that only those who are in those relationships can understand. It really can be a very difficult and very fraught area of public policy. The intent of these amendments and the intent of the legislation generally is to ensure that children in families where separation does occur are at the centre of the argument, the discussion and the debate, and that their ability to be cared for is uppermost in all of our minds. I know from the experience I have had in my office with some very difficult cases the lengths that people of both genders have gone to in the past to avoid their responsibility or to use the situation to pay back for some relationship issue they have had in the past. Where children are concerned, that cannot be countenanced. Where this legislation is concerned, everything we are doing is to put in place as safe and as secure a system as we can to allow the CSA process to work for the benefit of the children and the families concerned. I commend this bill to the House.


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