Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

I rise today to speak on the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006. This bill follows up on the first stage of the reforms that were enacted in June through the Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006. The bill implements the second and third stages of the child support reform package. Under the second stage of the reform package, due to commence on 1 January 2007, the bill will, firstly, introduce independent review of all Child Support Agency decisions by the Social Security Appeals Tribunal; secondly, broaden the power of the court to ensure that child support obligations are met and strengthen the relationship between the courts and the child support scheme; and, thirdly, allow separating parents more time to work out parenting arrangements before their family payments are affected.

Under the third stage of the reform package, due to commence on 1 July 2008, the bill will introduce a new child support formula that will change the way child support payments are calculated, change the treatment of income from second jobs and overtime, change the treatment of parents with dependent stepchildren when calculating their child support liability, simplify the ‘change of assessment’ rules for altering the amount of child support that is payable and, lastly, change the arrangements for parents who wish to make agreements for ongoing child support or lump sum payments.

Labor accepts the need for reform of the Child Support Scheme. The regime that was set up by the Hawke government in 1988 has become an international model for child support arrangements, yet we acknowledge significant ongoing concerns about fairness, the assessment formula and compliance. While there are divergent views about the impact of this package, Labor believes that there is strong community acceptance of the need for change. Labor’s approach to child support reform is always guided by a set of core principles, central to which is a belief that the interests and wellbeing of the children must always come first.

The legislation before us today is the culmination of a process which included the House of Representatives Standing Committee on Family and Community Affairs inquiry into family separation issues which led to the report Every picture tells a story. The inquiry recommended the establishment of a ministerial task force to examine the Child Support Scheme, including an examination of the costs of raising children in post-separation households.

The Ministerial Taskforce on Child Support reported in May 2005, and its recommendations form the basis of the government’s reform package. Labor recognises the work of the task force and acknowledges that in undertaking the first systematic evaluation of the scheme it has provided a strong basis for reform. The task force found that the scheme needed to be updated in light of changes in society and the circumstances of many families since 1988. The package of reforms developed by the task force is the result of expert research and analysis and looks for sound intellectual principles on which to balance competing factors and attempt to produce a balanced package of measures. The centrepiece of the reforms is the new child support formula, but it also includes increased compliance activity, use of courts for debt recovery, a new approach to parents who are understating income and access to administrative review through the Social Security Appeals Tribunal.

The task force has developed a new formula for child support liability based on evidence of the actual costs of raising children, shared parental responsibility for those costs and recognition of each parent’s level of care. The task force identified several problems with the current formula. Firstly, the current formula uses fixed percentages of income, assuming people spend the same proportion of their income on children regardless of their level of income. This assumption is incorrect, as people with higher incomes spend more on their children in a dollar value than people on lower incomes, even though they spend less as a percentage of their income. Nor does the current formula distinguish between the ages of the children, so the higher expense in dollar terms that comes with older children goes unrecognised. The current formula treats the income of resident parents more generously than it does the income of non-resident parents, and does not take account of contact by the non-resident parent with the children for up to 29 per cent of the time. Second families are also unfairly and inconsistently taken into account under the current formula.

The new formula, on the other hand, is explicitly based on the costs of children and varies according to their age and the income of the parents. An income shares approach is used so both parents will have the same amount deducted as self-support and both parents’ incomes will be taken into account in establishing the costs of the children. The resulting costs of children will be apportioned between the parents according to their share of the combined income. In the new formula, parents who care for their children for 14 per cent or more of the time will be recognised as contributing to the costs of the children through their care.

It is also worth noting that these measures soften the link between the family tax benefit and the number of nights of contact with the non-resident parent. This has long been problematic for some parents who have more flexible contact arrangements, and when they do agree to more contact in one week they find themselves losing money as a result. This bill will allow resident parents to keep all of the family tax benefit where a non-resident has care of their child for less than 35 per cent of nights in a year—that is, fewer than five nights in a fortnight. There will also be equal treatment between first and second families by using the actual costs of the children from the second family, rather than a flat amount, in working out child support payable for the first family. As I said, resident parents will keep all of their family tax benefit if the non-resident parent has care of their child for less than 35 per cent of nights in the year.

Given that the new formula has its basis in research into the actual costs of raising children in separated families and takes into account levels and costs of care by both parents, Labor believes that the new formula has a strong intellectual basis. It is worth noting, however, that many people have criticised the fact that the new formula does not take into account the value of unpaid work. For example, the National Council of Single Mothers and their Children said that the argument that costs are lower for younger children only holds true as long as the costs of non-cash inputs of unpaid care work are ignored. The higher expenditure on teenagers is accompanied by a reduced direct load of unpaid care, enabling parents to more easily increase hours of paid work. They further said that because women undertake the majority of unpaid care work the failure to acknowledge the costs of unpaid care inputs embeds a structural gender bias against women within the formula, and the provision of unpaid care work is further socially devalued. The Australian Institute of Family Studies has also commented that the task force did not engage with the issue of forgone earnings.

However, on balance, Labor have decided that the new scheme is likely to be fairer and more focused on the needs and costs of children. Labor have previously expressed our principal concern about the financial impact of the reform package, and obviously our principal concern is the effect it will have on low-income households. Single parent households are among the most financially disadvantaged group in our society. Single mothers’ groups have noted that 46 per cent of sole parents with dependent children live on very low incomes, and these families are at the highest risk of poverty of all family types. Labor are also concerned that those single parents who were disadvantaged by the recent welfare changes may now face the prospect of further cuts in their family incomes.

Labor believes that there is a responsibility on the government to ensure that the wellbeing of children is not compromised by the combined impact of these two policy changes. Labor acknowledges the concerns of many resident parents that they will receive lower child support payments under the new formula for calculating these payments. We also note that the task force chair, Professor Parkinson, does not disagree that a significant proportion of single parents will receive lower payments as a result of the bill, noting in evidence to the Senate inquiry that around 55 per cent of assessments will decrease under the new formula. There has been some concern that we have not been able to get a straight answer from the government about who will lose and by how much. The upside of the new formula for some parents is that those parents with older children may see an increase in their payments. Unfortunately, people with children under the age of 12 may see their payments reduced.

At the request of the task force, NATSEM modelled some of the impact of this new formula. It seems from NATSEM modelling that resident parents on low annual incomes of $26,000 or under will incur the biggest reductions in child support payments. For example, according to this modelling, where the non-resident parent earns $78,000, a resident parent with an income of $26,000 will be $50 a week worse off. Obviously, that sort of money is a big deal for families who are struggling on $26,000 a year.

These families are already amongst the most economically marginalised in the country. Ninety-one per cent of these families, according to the Child Support Agency’s own data, are headed by mothers. Only four per cent of these families have incomes over $50,000 per annum and 75 per cent raise their children on incomes below $20,000. We know that supporting parents who are getting by without paid work or who are managing on part-time wages are frequently surviving on incomes well below the poverty line.

The Parkinson report said that in order to fix the anomalies in the current system some payments will go up and some will go down and that we should not compare the outcomes under the current system with the outcomes under the new formula. Professor Parkinson tells us that there will be some winners and some losers.

Labor’s view is that there has been a failure to make adequate transitional arrangements, for a start, for the people who may lose out under these new arrangements. We do understand that the reduced income due to the formula is likely to be offset in part by other aspects of the reform package, such as the new family tax benefit arrangements, the introduction of minimum payments for parents who deliberately minimise their assessable income and a strengthened compliance regime.

Witnesses to the Senate inquiry also noted the real increase in family payments since the current formula commenced in 1989. Professor Parkinson sought to make that point in evidence to the Senate inquiry when he claimed that family payments now meet most or all of the cost of the care of children in low-income families. We also note Professor Parkinson’s view that under the existing formula many child support payments across the spectrum are too high while others are too low. The reason for the inconsistency was the fixed income approach used in the current formula and the failure of the scheme to take account of the fact that the cost of children differs substantially according to their age.

A more equitable and consistent formula is required, and Labor considers that the new formula is on the way to doing that. Labor’s social security spokesperson, Senator Chris Evans, has said in the past that the underlying intellectual integrity of the package recommended by the task force attempts to provide a balanced range of measures. Labor has decided that to attempt to unpick the task force’s recommendations by seeking to amend certain elements would undermine the integrity of the package as a whole. The ALP has also recognised that establishing a new formula based on fairer and sounder principles means that some payments will go up and others will go down and that child support payers and payees will be affected in different ways according to their income, the number of children involved, who cares for the children, how often they care for the children, the age of the children and whether or not second, third or even fourth families are involved.

We accept that there are significant difficulties in assessing the true impact of the change in formula and that the workload that the Child Support Agency and other government agencies now face in undertaking the new assessments is substantial. We understand that around 760,000 child support assessments will have to be reviewed if this bill passes into law. A whole range of new information will need to be collected from families before any new child support assessments can be issued, and obviously that will be a time-consuming process.

We do not, however, accept that these difficulties excuse the government from making provision to protect low-income single parent families should they suffer financial disadvantage because of the changes in this bill. In fact, we would have to say that there is an increased need for protections and assurances for low-income families given the level of uncertainty that these new arrangements bring. Such provisions were clearly contemplated by the report of the ministerial task force when it noted on page 261:

... the Government may wish to give consideration to the position of those whose liability or entitlement will vary to a large extent as a result of the recommendations, to avoid causing hardship in the short term.

These concerns formed the basis of recommendation 25 of the report, which said that the government needed to comprehensively consider the management of transitional issues regarding the implementation of the new formula.

Unfortunately, this does not seem to have happened. I can see no provision made in the bill to protect those families, particularly families on very low incomes, who may suffer financial hardship as a result of the changes to the scheme. My Labor colleagues and I will continue to press the government to ensure that these families are protected. These are the same families, of course, that may be affected by the Welfare to Work changes. The interaction of these two areas of government policy, although not considered by Professor Parkinson or by the government, is of significant concern to Labor.

Currently, sole parents are getting $244 a week if they are on the parenting payment. For their youngest child’s eighth birthday, a sole parent pensioner will get that pension cut by $29. Labor’s concerns in this area were not allayed when government witnesses to the Senate inquiry admitted that no work had been done on the combined impact of the child support changes and the welfare cuts on single parent families. Added to that is the fact that when these parents move on to Newstart the amount out of every dollar earned that the government will claw back will also be much higher. For every dollar sole parents earn from working, they will lose up to 75c of their Newstart benefit. We have vigorously opposed these Welfare to Work changes because they punish sole parents and many of the other most vulnerable members of our community. We need to be very vigilant to ensure that these changes do not lead to increased poverty and to increased child poverty in particular.

The other area that I wanted to discuss was monitoring and evaluation. While Labor are concerned about the failure of the government to make any attempt to quantify the impact of the bill and to make provision to protect low-income families, we note that work is in progress to establish monitoring and evaluation systems once the new formula is introduced. Ongoing monitoring and evaluation will clearly be critical to the successful implementation of the new scheme. If the changes lead to income reductions for low-income families, they could undermine any other improvements that may occur in the overall child support scheme. Labor will move to establish a Senate inquiry in 2007 to properly examine the impact of the bill on existing child support recipients and in particular whether any of these families will be worse off as a result of the changes.

Strengthened compliance and the new minimum payments provisions are something that we are very supportive of. Labor welcomes the long overdue enhancement of the Child Support Agency’s compliance capabilities, which will better enable the agency to pursue non-resident parents who fail to provide any support for their children. Until now, there has been no mechanism for external administrative review of child support decisions except through the courts, which is expensive and time consuming for parents. The new arrangements will improve the consistency and transparency of child support decisions and will provide a review mechanism that is inexpensive, fair, informal and quick. The fact that only half of all non-resident parents meet their child support obligations in full and on time is a problem that has needed to be addressed for some time. Labor also welcomes the introduction of a minimum payment for parents who deliberately minimise their income to avoid paying child support. However, Labor recognises the concerns of Professor Parkinson that these provisions of the bill may need to be strengthened.

In conclusion, Labor will be supporting the bill overall, subject to the concerns that I have raised today. I am going to move a second reading amendment that relates to these concerns. We support the move to make arrangements that are based more firmly on the evidence about the costs of raising children. We are concerned about the potential for some of the most vulnerable people in the community to be worse off under this and consequently we urge the government to commit to very careful monitoring and to making any necessary transitional arrangements. We recognise the work of the House committee and its report and the work of Professor Parkinson and the ministerial task force. I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House expresses its serious concern about:

(1)

the Government’s decision to proceed with the bill without providing any protection for low income families who may lose income as a result of changes to the child support scheme;

(2)

the failure of the Government to properly manage transitional issues in circumstances where parents are worse off under the bill, as recommended by the Ministerial Taskforce on Child Support;

(3)

the failure of the Government to make any attempt to quantify the financial impact of the bill on existing child support customers;

(4)

the failure of the Government to provide up to date demographic information about existing child support customers;

(5)

the unreasonably short time frame imposed by the Government on the Senate Inquiry into the bill, particularly given the extent of the changes to the child support scheme and the potential financial impact on low income families; and

(6)

the overly-complex nature of the changes in the bill”.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I stand to support the government’s Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, a most dramatic move, and to reject the amendment put by the member for Sydney. The amendment, it seems to me, is very much of a simple kind. It does not in any way alter or change a word in the legislation. It seems that these pious amendments have become fundamental to this parliament, when in fact the opportunity obviously exists for the opposition to assist the government in complex matters—if they have the capacity to do so—by putting forward real and true amendments that represent a change to the legislation. This government would always consider them if they were for the better. It is probably worthy of comment in that regard that I had the misfortune to serve for 13 years in opposition in this place and was charged with a number of duties during that period on behalf of the Liberal Party. For a long period, I was the Deputy Manager of Opposition Business and obliged to sit in on policy decision making and question time.

I got a shock the other day when the Leader of the Opposition was the first person in this House to ask a question about North Korea and the indicated explosion of a nuclear device. I said to one of your colleagues, Mr Deputy Speaker, ‘That’s the best question he’s ever asked in this place, because it was the question of a statesman.’ I have to say that the next day the first question on that matter came from this side of the House.

It was always the case within the Liberal Party during their term in opposition—maybe to the longevity of the Hawke government, in particular—that if the government had a good idea we supported it wholeheartedly. You might remember, Mr Deputy Speaker, when I stood shoulder to shoulder with Con Sciacca on the excellent initiative of the Keating government, Australia Remembers—which was the ceremony to celebrate 50 years since the end of the Pacific war. I could not find any criticism of the government, and my principal reason was that the remaining veterans deserved the applause of the Australian people as delivered by the incumbent government.

This initiative before us today is one that does not need a pious amendment. If there are issues within it that could be improved by a substantive amendment, it should have been put forward by the opposition; otherwise, they should get with the government on initiatives that are good for the country—as, the record shows, was the practice of the Liberal Party in opposition. Just to be agin everything is not, I think, appealing to the Australian people.

To the best of my recollection, when the original child support legislation was brought into this place—by, I think, Mr Howe, who might have been the deputy leader of the Labor government at the time—the Liberal opposition supported the proposal. We had every opportunity to go out and describe some of the inadequacies of that legislation and to start a fear campaign, but of course we recognised that there was an obligation to fix the arrangement, which was pretty unsatisfactory. The original change to the Family Law Act was introduced by Senator Lionel Murphy, and it actually required the Family Court, before requiring maintenance, as we once knew it—and I might refer to my knowledge of that a little bit more—to add up all the welfare payment opportunities that existed, which were of course provided by taxpayers typically with viable families. After that, if a bit more money was needed, it would be by way of a maintenance order delivered by the courts to the non-custodial parent.

Living in the north-west of WA as I did at that time, and employing people in the hotel industry, it was not unusual to have a barman snatched from behind the bar and taken off to jail because he had not paid his maintenance. Of course, one of the reasons he was in the north-west was that he was hoping to escape that liability. I was a bit put out about this because I would have to go and do his shift behind the bar. Further to that, I was often called upon, if they were able workers, to settle the amount and hope that I might get it back some day. One of the more dreadful aspects, nevertheless, was that the maintenance bill went on while they were in jail. So when they came out they owed more money than they did when they went in. It was a pretty unsatisfactory arrangement, and Mr Howe came to this parliament with something that was better than that.

Nevertheless, its inadequacies and, more importantly, its unfairness in a modern society have become very apparent. It took a long time for those members who had significant constituencies of such people—and there is a demographic and a geography about it, for the reasons I pointed out a minute ago—to address the problems. The circumstances are that it was based on principles that do not stand up in modern society, one of the first being—and I think there is still a bias in this regard—the principle that the female partner is necessarily the best equipped to look after children. That can no longer be sustained. I have, within my broader family, a very successful niece whose husband has been the houseparent virtually throughout their married life. They have three very nice kids. We can all remember the time when once the female was considered the carer and the person who was at home. It certainly applied during my childhood. My mother never had paid work, and I do not think my father would ever have approved of it.

Times have changed. Consequently when a marriage has unfortunately broken down, liability for the future maintenance of children should be equally shared. Of course, as we also know, those in a broken marriage should not be consigned to isolation in terms of their relationships for the rest of their lives. It frequently, and properly, happens that they make new relationships, and it is unfair for one party to be denied that opportunity because, under the terms of the payments they must make, they cannot afford to start a new family or to marry someone who already had a family. They would also be disadvantaged.

All of those problems were only compounded, unfortunately, by a very rigid system and an excessive empowerment of a bureaucratic agency with powers of garnishee. Imagine garnisheeing the bank account of a person whose small business is trading in motor cars, a person who buys and sells them to achieve a profit and, from that profit, makes payments to the Child Support Agency. If, because he gets behind, they take all this money out of his bank account, he can no longer trade motor cars and then he has nothing. He is like the poor devil, historically, who was put in jail for failure to pay maintenance and when he got out of jail the amount of maintenance was even higher. It does not say much for the mentality of the public servants that they could not understand that.

In my electorate the problem is people having payments demanded on the basis of the average profit potential of their farming enterprise, even though the land may be in total drought and the bank has taken their chequebook back and put a big stapler through it. Farmers in my electorate have had settlements demanded on the basis that their farm a couple of years ago, or five years ago, in a bumper season made a lot of money. That is a silly proposition, and there needed to be a much better response. To a very significant degree, that particular problem is being addressed with this new legislation. I find it very encouraging, as someone who has had—as many of us in this place have—traumatised people in their electorate office saying, ‘How do I manage?’

I have often made the point that in our earlier debates there was a view that this was a male-female dichotomy. If I go back through the correspondence I have received on this matter, the majority of it is from females and, more particularly, from the mothers of non-custodial fathers, who frequently have an inner knowledge of the marriage breakdown and are outraged about how their sons are being treated. I also receive correspondence from women who have fallen in love with a non-custodial parent and have found themselves on the breadline while they try to carry on a new relationship.

All of these matters, to a degree, have had to be addressed by the taxpayer. You cannot get the perfect formula and the perfect distribution of cost, but it has always been argued that this is a process to guarantee the maintenance of children. That can only be applauded. And yet we have had some peculiar views at the legislative and bureaucratic level about the cost of raising children. It appeared that the richer you were the more expensive each and every child was. It appeared that, if there was one child or four children involved, the cost individually was always the same. Most of us who have raised a number of children know that is not the case. My notes say that kids get more expensive when they are teenagers. You ought to try some that are 30 or 40 years old! There is always a demand on parents. I hold the opinion, by the way, that in the Australian context you provide for your children so that they can provide for theirs. As we know, in countries adjoining us the reverse applies.

We looked at all these matters, and we had to come up with better solutions. Cases are brought to our electorate offices of a supporting parent earning—because they have that ability—three times the salary of the non-custodial parent, then receiving a very high percentage of the non-custodial parent’s salary, calculated before tax. This is patently unfair and silly. To say that children’s needs increase in proportion with a parent’s salary is also silly. Clearly there is a fair and reasonable cost, and if you are a high-wealth person then there are decisions that you can make when it comes to education, and even quality of clothing, I guess. I am not sure that kids who get designer clothes to wear to school are necessarily any better off than those that do not, other than when facing the sort of peer pressure that might arise.

After taking all these things into account, what have we done? We have created a new formula for calculating child support. The new formula is based on new Australian research on the cost of children—surprise, surprise—and better reflects community values around shared parenting. It better balances the best interests of parents and children. The formula treats both parents’ incomes and living costs more equally and takes account of the fact that older children cost more. It also ensures that children from first and second families will be treated more equally. What could be fairer than that?

Then there is a proposal for ensuring a minimum payment—and it is a very small amount of money—for all children. It commences at $6 a week. I know that is not much, but there will be circumstances where that is all the non-custodial parent, male or female, might be able to pay. The FaCSIA fact sheet says:

Parents who deliberately minimise their income to avoid paying child support (payers who claim to have very low incomes, but actually have higher real incomes or resources) will have to pay $20 per child per week, unless they can prove their incomes are in fact very low.

I hope the bureaucracy will be a little careful when they are assessing farming families in this regard.

We are looking more sensibly at the treatment of second jobs and overtime. One of the more stupid things in the past was: the harder you tried to raise an income, possibly to support a new family, the less you got and that money may have been passed to a person who did not need it and whose children did not need that level of support. We are also taking account of stepchildren—in most cases, the children of a secondary relationship. We are taking note that they represent a liability and somehow an adjustment has to be made. In some cases, because of the generosity implied in some of the formula for payment, the taxpayer is going to have to be a contributor—but certainly not to the level of the original Murphy family law arrangements.

There is also a modification to the change of assessment rules. The current change of assessment processes and rules for parents are confusing and are not widely understood. Under the changes being introduced, the rules under which a parent can apply to have a change of assessment of their child support liability will be made much clearer. There are other measures in this bill, but I have used up most of my time. I am sure that I can rely on my colleagues to make those points.

In closing, I must refer to the establishment of the family relationship centres. I am already getting good reports about those centres. It is an excellent measure. I wonder what the next speaker might say when I quote my mother—someone whom I admired and who had a great influence on me. She was from the Irish side of the family. She explained to me that, in her era, there was, unfortunately, nowhere for a married woman to go if she was having relationship problems. In fact, even if you went home to your mother, she was pretty keen to get you re-established in your own relationship because she did not really want to have to support you and your children in her household.

I know that this is a simplistic argument, but the point my mother so often made was: the reality of the irredeemable fight tonight—something I guess most of us in this room have experienced—is often hard to establish the next morning but, if you walked out that night, it is irretrievable. Consequently, I think that, when people are having relationship problems, it can be a good thing to keep them in the field of counselling and negotiation rather than have them go to a lawyer, who will profit from the disagreement. That is not to excuse family violence or other acts that cannot be tolerated, but too many marriages break down over a simple argument or maybe a simple mistake made by one party—even to the extent of that word ‘adultery’. (Time expired)

Julia Irwin (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

The Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 represents the next instalment in the reform of the child support payments system and follows measures passed earlier this year. As I said at the time of the debate in the House on those earlier amendments, I have been closely involved with this issue through my role as Deputy Chair of the House of Representatives Standing Committee on Family and Community Affairs—and I thank the honourable Chief Opposition Whip for his assistance on that committee.

That House of Representatives Standing Committee on Family and Community Affairs, as it was then known, reported to the House in December 2003 with Every picture tells a story. That inquiry only partly addressed the issue of child support payments. This legislation owes much to the Parkinson task force and the modelling undertaken to establish the costs of raising children in separated families. The committee’s report reached the conclusion that:

... it is imperative that independent modelling of the cost of children in separated families should be undertaken and published to establish what the impact would be if child support payments were based upon those results. In any event, the results of the study should be used to determine the basis of future child support payments.

Given the major changes to family payments since the original child support formula was introduced, it can be appreciated that substantial change was necessary. But it was also valuable to have a more realistic assessment of the true cost of each child in a separated family, and that became the starting point for the new formula.

A major assumption in the original formula was the acceptance that people spend the same proportion of their income on children. The old formula, therefore, took a fixed percentage of the remaining portion of the payer’s income. Those percentages were set at 18 per cent for the first child, 27 per cent for two children, 32 per cent for three, 34 per cent for four children and 36 per cent for five or more. It sounds like the ‘cheaper by the dozen’ principle.

The Parkinson review drew on international research showing that, the higher the household income and the more parents spend on their children, that expenditure declines as a percentage of their income. The review also commissioned its own research, carried out by the National Centre for Social and Economic Modelling. I must admit—and I am sure that more than a few members would be in the same boat—that interpreting graphs is not one of my strengths, but Parkinson clearly shows that for middle to higher income payers, the current child support payment exceeded the estimated gross cost of children. It is clear that the often claimed unfairness of the child support scheme is borne out by the research.

I should also note that the studies showed that, for lower rates of payer income, the cost of children exceeded the amount of payment. While it is assumed that family benefit payments would make up for much of this shortfall, we cannot assume that no resident parent will be worse off under the new formula. I will come back to this point later, but I must say at this stage that none of the reports or research has been able to put a figure on just how many resident parents will be worse off and which particular income bands those payer and payee parents fall into.

I will come back to the question of the fairness of the child support formula. Parkinson concluded that the fairest reference point for the Child Support Scheme was the continuity of the expenditure principle. This principle requires that a non-resident parent should contribute the same amount towards the child after separation as they would if they were living with the other parent. As we have seen, expenditure on children rises with income, so a formula based on the parents’ incomes would be fairer, rather than a fixed sum. But Parkinson also concluded that it was not feasible for child support to maintain the child’s living standards, as this would involve a degree of spousal maintenance and the effect of new partners, all of which would lead to a much more complex formula. The task force concluded:

... it is proper for child support obligations to be based on the best available evidence of how much children cost to parents with different levels of combined household income in intact relationships, and for the costs of children in separated households to be considered in evaluating how to take account of contact arrangements and shared care in the formula.

Another factor in looking at the cost of children is the age of the child. The task force presented figures prepared by NATSEM which showed a great difference in the cost of children according to age. The percentages for middle-income households ranged from six per cent for a child aged nought to four and up to 27 per cent for a 16- to 17-year-old. These large differences led the task force to consider special allowances for the age of the child. I am concerned, though, that there will be some losers under the new formula and that for low-income families the cost of children is greater as a percentage of income. If we look at the figures given, we can see that for a low-income family a 13- to 15-year-old costs 28 per cent of income and a 16- to 17-year-old costs 39 per cent. The costs of those children may be met through other forms of assistance. Again, we will find that some families will struggle as children grow into their teens.

Another issue which concerned the House of Representatives Standing Committee on Family and Community Affairs, as well as Parkinson, was the question of the use of before- or after-tax income in the formula. The task force went to considerable lengths to find a fair solution to this problem. Its report shows that the Australian Institute of Family Studies community attitudes survey found that 87 per cent of non-resident fathers and between 71 and 79 per cent of men and women in the other three groups believe that child support payments should be based on net rather than gross income. The family and community affairs committee agonised over the issue but gave reasons of simplicity and the impact on low-income families for not preferring after-tax income. But the final choice of before-tax income recommended by the task force adds the deciding factors that its costs are based on expenditure on children in intact families, where combined before-tax income is considered, and allow for family benefit payments.

The other factors follow the task force’s recommendation that the percentage of income for higher income payers should decline. While the amount would still be higher for higher income earners, the percentage of income devoted to child support payments would be less. In deciding on the percentages for each income bracket, the impact of income taxation can be taken into account. There will, I am sure, still be those who would advocate that before- rather than after-tax income should be used in the formula. I think that it is essential that the point I have just made—that is, that income tax rates are taken into account when setting the percentage—should be made clear to all child support payers. At a time when we have seen this government lavish tens of millions of dollars on advertising, and with an election year coming up, I am sure we will see even more money spent. I think it is not too much to ask that some of that money be spent to explain the new formula. That should include issues like the calculation of child support based on before-tax income.

I also refer to the principles that the task force used in their proposal to redesign the Child Support Scheme. Those principles included the expectation that children who do not live with both parents should have an adequate living standard and that the non-resident parent should provide support based on what they would be likely to spend if the two parents were living together. The second principle was that parents share the expenses at a level appropriate to their income and in proportion to their capacity to pay. The third principle reflects the change in family assistance since the introduction of the old formula.

We all remember the words of former Prime Minister Bob Hawke that no Australian child will live in poverty. While many may have scoffed at the idea at the time, the children most likely to live in poverty when that statement was made were children in single parent families. We have come a long way since that promise. While I do not think we can yet say that no Australian child lives in poverty, the expansion of family benefits since then has meant that we should consider the effect of those benefits when calculating child support payments.

I said earlier that we know that the new formula will leave some low-income non-resident parents worse off. While government funded family benefits provide the bulk of income for a great proportion of single parent families, we should not lose sight of the principle that a non-resident parent has a responsibility to support his or her child or children, and that takes priority over all financial obligations other than those necessary to support themselves and any other legally dependent children.

While it is clear from the findings of the task force that government-provided family support payments make up the great bulk of support for more than half of all children of separated families, we do not have a realistic measure of whether those payments are sufficient. To give the House an indication of the cost of a child in a single parent family, I quote the figures presented in the task force report. Where the average weekly income is $583, the cost of nought- to four-year-olds is estimated at $115 per week. For five- to 12-year-olds it is $119 per week, for 13- to 15-year-olds it is $140 per week and for 16- to 17-year-olds it is $240 per week. So you can see for a single parent family on that fairly low income the high proportion of income that goes to meeting the cost of the child.

That brings me back to the matter I raised earlier: that we can be certain that some resident parents will be worse off as a result of this legislation. I would have hoped to have had a better guide to exactly who and how many would fall into that group, and I should add to that the effect of this government’s Welfare to Work requirements. During the deliberations of the family and community affairs committee on this issue, one principle stood out as being essential for any new arrangements. That was that no resident parent should be worse off and, in particular, no low-income resident parent should be worse off. With the new formula to come into effect in July 2008, we will not see its effect until after the next election—and that is something government members may take some comfort in.

However, bearing in mind that these changes will be coming into effect following the introduction of Welfare to Work changes, I think it is reasonable to assume that many thousands of low-income resident parents will find themselves worse off under the new formula. In the time available until then I think that, as a matter of priority, agencies involved in providing benefits and support should do their best to get some hard data on those who stand to lose from the changes. For those reasons I support Labor’s second reading amendment so that we can get some accurate figures on the effect on low-income families.

It is shameful that the Senate inquiry was given so little time to look at this important question. It seems that the government does not want to acknowledge that there will be losers under this new formula—and there definitely will be losers—and that it does not want to be put in a position where it will need to make up for the loss of income. We should, at the very least, be trying to find out who the losers will be. Only then can we consider ways of minimising the impact on those families. We may even have the chance to make further adjustments to minimise the impact on those families.

I note the provisions in this bill to allow for an independent review of child support decisions by the Social Security Appeals Tribunal. This measure is welcomed by Labor members as it will provide an inexpensive, fair and speedy means of reviewing decisions. As almost every member of this House will have encountered someone who claims to have been harshly dealt with in claims for child support, I am confident that this review procedure will provide a transparent means of reviewing child support decisions.

One common grievance which is addressed in this bill is the matter of income from overtime and second jobs. The complaint from a non-resident parent seeking to establish a new home after separation is that, if you work harder or longer to try to get ahead, you are required to make higher child support payments. The possible exclusion of that income in the first three years will be appreciated. However, I question, as I am sure many child support payers will, why it is limited to three years.

On the earlier bill I expressed my concern that the minimum payment was indexed from $5 per week to the grand sum of $6.15 per week, so I am pleased to see that parents who deliberately minimise their income—and there are a lot of parents out there who deliberately minimise their income to avoid paying child support—may be required to pay $20 per child per week. I believe this is consistent with the principles of the Child Support Scheme and better reflects the community’s expectation that parents have an extended responsibility to provide support for their children.

The bill also allows further flexibility for parents to make arrangements between themselves, and that is also very welcome. Other changes make the system simpler and fairer. This legislation is welcomed for providing what should be a fairer system of child support payments. It would be a great shame if this improvement, with all its benefits, were to cost some of the most disadvantaged children in Australia because of its failure to ensure that no low-income resident parents would be worse off. There is time to take a closer look, to do the research and to come up with measures that will avoid that happening. We will definitely just have to wait for a Labor government at the end of next year to do that as a matter of high priority—and that Labor government will do it.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

I want to begin by recognising the tremendous work and dedication of Maggie Deacon and Pat Dunn, two of the officers in the Child Support Agency in Townsville. All of us receive all sorts of complaints about the Child Support Agency and its operations, but I can tell you that both Maggie and Pat are wonderful people and certainly have a customer service ethic that is beyond question.

About two weeks ago, I was able to attend an information night put on in Townsville by the department for those interested in child support matters. There was very good attendance. All sorts of other agencies attended on that particular night. When I explained to those who were there the changes contained in the bill that is before the parliament today, the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, there was virtually universal happiness. Those who had great concerns about the operation of the current system were certainly pleased to see the very positive changes that have been brought forward in this bill. It is a very complex and detailed bill, but this is an area where there are a lot of changes needed, and we have to be mindful of getting the right outcome.

When I was sitting in my office and I heard the first Labor speaker on the bill introduce a second reading amendment to the bill, I was quite surprised. When I read the amendment, I was even further surprised. I do not know why the Labor Party has to be so negative and carping on a bill that delivers such benefits to people who need them.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

We’re supporting the bill.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Member for Chifley, I understand that you are supporting the bill but I have in front of me a list of points in the amendment which I find negative and carping. Let us look at some of them. They include ‘the failure of the government to provide up-to-date demographic information on existing child support customers’. I certainly had that available to me; I do not know why the Labor Party did not have it available to it. Another is ‘the failure of the government to make any attempt to quantify the financial impact of the bill on existing child support customers’. I certainly had that available to me. I saw all of that information, I asked all the questions, and I am sure that if the Labor Party had been interested enough to ask the questions, it would have received the information. It was freely available. That is why I am surprised to see this amendment come forward.

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

Ms George interjecting

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Throsby!

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Well, I am just telling the Parliament of Australia that I had access to all of the information which this amendment claims was not available.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Read it into the Hansard record.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

You can make all the noise you like in the parliament but I am telling you that I had access to and I saw the information. I made it my business to see the information, and you should have made it your business to see the information. I do not understand why you are not doing your job as a member of parliament in getting hold of this information.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

You don’t know what you’re talking about.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The Chief Opposition Whip!

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

In relation to the point about the unreasonably short time frame imposed by the government on the Senate inquiry, for heaven’s sake! For how many years have we been talking about this? The member for Chifley knows when he first became involved in this issue. He knows, having seen the bill, what a great step forward it is; what a landmark step forward it is. He knows that he will support it and that the government will support it, because it is in the interests of people in the Child Support Agency area.

In relation to the final point in the amendment, ‘the overly complex nature of the changes in the bill’, I suppose the next thing you are going to complain about in the next set of amendments is that it is 31 degrees in Canberra today. That is the sort of rubbish that we are seeing in these types of amendments. It is just ridiculous.

The previous speaker whinged about some parents being worse off. Yes, they are. But she failed to understand what this bill is all about. The central piece of this bill is about fairness. Having had such a lengthy inquiry and report and a long response time for the report, I find it amazing to see the Labor Party rejecting fairness as the central tenet of this bill. It is absolutely amazing. Because the bill is so complex, I cannot cover everything that is contained in it.

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

Unbelievable! You just had a go at the amendment.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I am having difficulty hearing myself at the moment. I ask you to bring the House to order.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The honourable member for Herbert has the call.

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

There are a number of issues contained in the bill. One of the issues that I want to deal with is the more flexible arrangements and the better legal protection. I questioned this when it was brought before the government backbench policy committee because it seemed at odds with the normal operations of the Commonwealth of Australia that we would require couples to have received legal advice before certain other things happened. That seemed a bit odd to me. But when I inquired, I was satisfied that it was in the interests of both parents to have taken legal advice. The problem is that the courts are generally less likely to vary an agreement, if there is an appeal, where legal advice has been obtained by both parents when compared to cases where only one of the parents received legal advice. So by incorporating this requirement in the bill, we are actually protecting both parents against potential adverse outcomes later on. Parents will only be required to have received legal advice if the agreement is less than the current child support assessment. What finally convinced me to support this particular measure is that parents will have access to free or low-cost legal advice through the duty lawyers at the Family Court and through community legal centres. This condition is not onerous because either free or low-cost legal advice will be available.

The process and rules for determinations of orders made under the Child Support (Assessment) Act to depart from the administrative assessment provisions where some parents reside a fairly significant geographical distance apart is a matter which all of us have had a lot of constituent contact about. The formula allowance for costs enabling contact with a child may be inadequate as the costs of travel for the children to and from their non-resident parent’s home, or for the parent to travel to see the child, can be significant. In this bill, we are allowing for that; this justifies an increased allowance beyond the allowance made in the formula for regular care. Parents in this situation will certainly welcome the fact that the government has recognised the issue.

I was very happy to see that schedule 4 of that bill provides for other reforms that commence on 1 January 2007. In particular, the relationship between the courts and the new Child Support Scheme will be simplified, particularly in relation to percentage. Parents will have better access to court enforcement of child support debts—which is very welcome—and courts will have increased powers to seek information and evidence in those cases and to make interim arrangements for child support cases generally. That is a good outcome. Certainly those parents who have unpaid child support will welcome this particular arrangement.

I am sorry, as is the government, that all of these amendments cannot be enacted more quickly, but it was just not possible. When we saw that major amendments could not be started until 1 July 2008, we were really disappointed, but there are very good reasons. It is just something that cannot be avoided. Parents who are in the child support system will certainly look forward to the new child support formula, the more flexible arrangements, the better legal protection, the income definitions for certain tax-free amounts, the residential parent keeping their family tax benefit, the minimum child support payments and being able to use income from second jobs and overtime to help re-establish themselves during the first three years. They will welcome the introduction of these measures, along with the simplified process to suspend child support payments and the appeal process to the SSAT, which are long overdue. There is a whole raft of changes. Talking to my constituents in Townsville I know that they see this as a very welcome piece of legislation. They do not see it, as the Labor Party does, as overly complex in nature. They will welcome it and I certainly strongly support it.

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

Before I talk about the substantive issues that I want to raise in relation to the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, let me respond to the comments made by the member for Herbert. The member for Herbert was trying to imply that our amendment was not based on genuine issues of concern. I think he said, ‘If you want to find out the impacts, everyone can; I know the impacts in my own electorate.’

Just for the record, we were briefed by the department just 48 hours ago and in great detail. In that briefing, the department made it very clear that no-one in the department was able to estimate the degree of disadvantage that some people will face in the new system. They have undertaken to examine 700,000-plus cases between the carriage of the bill and the implementation date of 1 July. If the department, the Minister for Families, Community Services and Indigenous Affairs and Professor Parkinson cannot tell us with any degree of certainty what the actual impacts on a range of people in the child support system are, I find it amazing that the member for Herbert can get up and mislead this parliament by suggesting that somehow people are failing in their duties if they are not able to know the exact impact of this legislation on the people that they represent.

I think that the amendment moved by our shadow minister points, in a very objective and rational way, to the limitations of the debate on this bill. I am concerned that I am debating a bill not knowing precisely what the outcomes are going to be, particularly for sole parents—who are predominantly women—and low-income families. We do know that, despite the best endeavours of the formula to bring into being a more objective basis for setting the costs of raising children, statements made by Professor Parkinson indicate that there will be losers in the system—that is, people who are going to end up with less child support by way of child support payments than they are currently receiving. We hope that they will be compensated by an increase in family tax benefit payments, but no-one has any degree of certainty about what that outcome might be—save, it seems, the member for Herbert, who must have some crystal ball whereby he can predict the actual outcomes for the people that he represents. It is important to make that point, and I think the member for Herbert displayed quite a remarkable degree of ignorance about the outcomes of this legislation.

I want to speak in support of the bill—notwithstanding some of the limitations that are so properly picked up in our amendment—as a member of the House of Representatives Standing Committee on Family and Community Affairs that worked very hard on the bipartisan report Every picture tells a story. This led to a major overhaul of the family law system in this country and is gradually leading to an overhaul of the child support formula, which we as members of parliament all know causes enormous grief to people we represent.

I want to place on record my congratulations to Professor Parkinson and members of his task force, who have done a very solid task in reviewing all of the empirical research both in Australia and overseas to try and arrive at a far more objective setting for the implementation of the child support formula. In so doing, I think it is going to relieve a lot of the concerns that we constantly hear from people whom we represent.

The intention of the change is to improve the fairness of the Child Support Scheme and to encourage active involvement of both parents in their children’s lives after separation. The legislation before us is highly complex and highly technical. You only have to read the Law Council’s submissions to the hearing of Senate Standing Committee on Community Affairs, brief though it was, to understand that even lawyers see complexity in the system. It seems that everyone, except the member for Herbert, acknowledges that it is complex, although he did later concede that point.

Cut to its core, the bill will usher in a new system for assessment of child support payments. It is based on far more objective criteria than we have had in the past. As we know, a lot of constituents come to us with concerns about a formula that has been based on percentages. Those percentages often do not specifically relate to the actual costs of raising children. It is not unreasonable for people to want to know what the actual cost is of raising children at different income levels, at different ages and in different family formations. We have finally got to the stage where we can, with a greater degree of certainty, say to the people whom we represent that the new formula will be based on an income shares approach, whereby the cost of caring for and raising children has been based on Australian research and objective data. I want to acknowledge NATSEM’s very valuable input of the modelling that has been done to arrive at this formula.

In future, the costs of raising children will be based on the combined incomes of both parents. I think that is a very important principle. Those costs are going to be distributed between the parents in accordance with their capacity to meet the costs of raising children. Another very important element is that it treats first and second families more equally, thereby more fairly. As we know, a constant concern that is raised with members of parliament by people who repartner is that the children of the second relationship are not currently treated on an equal basis by the application of the formula. I think we overcome that problem in the new formula. The costs incurred by parents who provide regular or shared care of their children—the non-resident parent’s costs—are better reflected and recognised in the new formula.

I want to talk about the positives before I come to what I think are the limitations of the bill. The present formula does not take account of or compensate a non-resident parent who looks after children for up to 29 per cent of the time, and that has been a source of concern. Non-resident parents often say to me that there are costs incurred that are not properly compensated. In the new formula, parents who care for their children for 14 per cent or more of the time, which probably equates to a night a week, will be recognised and compensated for the costs they incur.

Under the new scheme, all biological and adoptive children are to be treated as equally and as fairly as possible. The costs to a parent of caring for resident dependent children outside of the child support case are also acknowledged. This corrects a cause of constant concern expressed by constituents who say that currently second families and the children of second families are unfairly and inconsistently taken into account.

I think the changes address what we know are the conflict points between parents over the splitting of family tax benefit by allowing resident parents, who are predominantly female, to keep all of their family tax benefit, except where there is shared care, which is defined as 35 per cent or more of the time. Very importantly, minimum child support payments will now be indexed to the CPI and will apply to each support case up to a maximum of three cases, rather than being divided among children in different family situations, as is the case at present. Parents who deliberately minimise their income to avoid paying child support—and we know there are a lot of people in the system who do that and who have done it in a regime where compliance has not been as effective as it could be—will have to pay $20 per child per week up to a maximum of three children, unless they can prove the basis for their low-income status.

Also very importantly, for the first three years after separation parents will be able to have income from second jobs and overtime excluded from child support calculations when the extra money they earn is being used to help with re-establishment costs. A maximum of 30 per cent of total income will be able to be excluded, to ensure adequate support for children. I think that is an important issue. It is constantly raised with me that when relationships break down the costs of repartnering, establishing new households and establishing new care provisions are not properly compensated in the current formula. I think all of those positives in this legislation will go a long way to addressing the longstanding grievances that are expressed both by payers and by payees in the system.

But I have to talk about some of the inadequacies in the legislation. The inadequacies are not necessarily the fault of anyone in particular, but nevertheless it places us in a position where we are voting for a piece of legislation while not knowing the actual outcomes and the impacts. I am particularly concerned about the impacts on the most vulnerable, the low-paid and the sole parents in our community.

If the member for Herbert does not think this piece of legislation before us is complex and technical, let me quote the Family Law Section of the Law Council of Australia:

We as lawyers … have the greatest difficulty working out a great number of the clauses … It is also fair to say, from the clients we see across our desks day by day, that the present scheme is almost impenetrable to the average person. The new scheme is going to be no less transparent and possibly even more complicated. It may achieve better outcomes, but in being able to understand and follow how it gets to those outcomes it is going to be a considerable challenge, not only for the payers and payees but also for those who are advising them at each level, including their legal advisers.

I say to the Law Council: it is interesting that you make this comment about the complexities of the bill and yet we have a member in this House who seems to think it is all readily understood.

I am pleased that it is the department’s intention, as I understand it, to undertake a plain English rewrite of this legislation as soon as possible. I do accept that the implementation period between the carriage of the bill and the actual day of operation will hopefully give the department and the minister’s staff the opportunity and the time to explain the changes in a way that is more readily understood not just by the people administering the new system but also by the people who are both payers and payees in the system. I think one of the justifications for the early carriage of the legislation has been that it will require that implementation phase to explain the complexities to the community.

With the implementation of the formula changes scheduled for 1 July 2008, we should have the opportunity in that 18-month implementation period to explain to our constituents and the families we represent how the changes will affect them. It is important that all members of parliament are in a position to gain access to the plain English rewrite of the legislation, because they will often be the first port of call for people in the community wanting to know how this legislation will affect them. We need to understand that the complexity of the changes coming into being, while very worth while, is very daunting.

Now I want to say something about my substantive concerns—concerns that have been picked up in the amendment moved by our shadow minister. The child support formula should—and does in this proposal—reflect to the best of our ability our knowledge about the true costs of raising children. That being the case, we need to understand that one of the consequences of the proposal is that there will be some reductions in the amount of child support paid to resident parents, particularly where the non-resident parent has a higher income. There is no publicly available modelling to estimate the impact of the new system on existing child support recipients and payers. The lack of analysis is very concerning, given that we know from Professor Parkinson’s comments that a significant proportion of single parents will receive lower child support payments under the new formula—how many we do not know, and how much they will lose is also unknown. We have been told—and I take this at face value—that the Child Support Agency will reassess all client payments once the bill is passed and before the operative date. That evidence will then give us a much clearer idea of the impact on people.

There will be households, no doubt, that will find themselves worse off under these changes, as confirmed by Professor Parkinson. While conceding that it was difficult to give a reliable estimate of that impact, Professor Parkinson said:

My best guess is that the majority of assessments will go down … my estimate of 55 per cent is probably much closer to the mark than the 60 per cent that was reported in the media. It is nonetheless just a very general estimate.

The National Council of Single Mothers and their Children have argued:

Most single parent households will be financially worse off as a result of the formula changes. An estimated 60 per cent of primary carer households will be worse off as a result of the formula changes.

So I am genuinely concerned that we are debating a bill whose impacts and consequences are not known to us other than we know that the potential impacts could hurt the most vulnerable in our community. Professor Parkinson told the Senate committee:

We did model—and very carefully—the impact of all these changes on those who are currently on welfare. What we found was that the trade-off between family tax benefit not being split and the child support changes was going to be either neutral for them or advantageous—that is, it would make a dollar difference here and there with that group because they are not typically receiving much child support. When they get all the FTB, it is actually more valuable for them. Obviously some are going to be worse off as a result of the child support changes, but they will still be getting a lot of child support. Where their former partner is a high-income earner there will still be significant amounts being transferred. We did model all of that very carefully and we are comfortable that the trade-off between the payee getting all the FTB and the child support changes did create a fairly equitable balance.

That is the hope that I have too—that any reductions the resident parent faces as a result of the changes in the formula will be compensated by the changes to the rules about the splitting of the family tax benefit. I think we all hope that is the case, because we all know that the sole resident parent with children is among those who suffer the highest degrees of financial hardship and those who could find themselves in poverty without adequate income support.

I am not sure, and nor can anyone be sure, that Professor Parkinson’s wish for the equitable balance that he talks about will eventuate. And I guess we will not know until the Child Support Agency does all the detailed calculations that need to be done. I am concerned, however, that the National Council of Single Mothers and their Children took into account the drop in income due to reduced child support at some levels and the expected increase in family payments, and they argue that it still results in an overall drop in income of between $10 and $20 per child per week—and this is without the impact of the Welfare to Work changes factored in.

Witnesses from the Institute of Family Studies told the Senate that no work had been done on modelling the combined impact of the welfare changes and the prospect of reduced child support payments on single parents. This is of significant concern to me given that I represent a lot of sole parents, and I am appreciative of the already dire financial circumstances faced by these families. We know that 46 per cent of sole parents with dependent children live on very low incomes and that these families are at the highest risk of poverty of all family types. So I think it is quite proper for the shadow minister to have moved the amendment in her speech on the second reading, because when the new formula comes into being those people who are going to be affected adversely by it need to know that there were people in this parliament who appreciated they were voting for a bill without exactly knowing the ramifications at all levels of family formation. So we are flagging that that is a potential problem that both sides of this chamber need to keep in mind and may have to address. That is why I support the calls for both a Senate inquiry and an independent inquiry to properly examine the impact of the bill on existing child support recipients.

It is a great pity the positive reforms in this bill are diminished by the government’s decision to proceed without any guarantees of protection for low-income families who may lose income as a result of these changes. While I support the bill and am pleased that I was able to be part of the process, I end my comments by yet again highlighting my serious concern about the potential negative financial impacts of these new arrangements on low-income families and particularly on female sole parents. (Time expired)

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

As a local member, probably the most difficult issues I have had to deal with are those involving family breakdown and child support. They are difficult and distressing for all parties involved: for the resident parent, for the non-resident parent and for the children. On one hand there are women who come into my office whose husbands have deserted them and left them with a number of children and no support, with the husband or the father avoiding his responsibilities and not paying child support payments. On the other hand there are men who come into my office devastated that their wives have left them and have taken their children. They are often cut off from any contact with their children, not even knowing where they are, and denied access to those children, whom they love dearly. At the same time, over a period of time, they are being forced to pay what they consider extremely harsh or excessive amounts of child support for children they cannot see; and sometimes when they do see those children it is obvious they are not benefiting from what the father is paying and the payments they make are seen more as spouse support payments than as child support payments.

And in the middle of all of that are children, traumatised by the separation of their mother and father and by the reduced access to one or the other—usually to the father—and, sadly and tragically, often used as weapons in that struggle between two feuding parents and sometimes seen as a prize, somehow, for the winner in a Family Court case. These are often traumatic, tragic and very distressing circumstances. It is a sad irony, isn’t it, that families that are the fundamental building blocks of our society and on one hand can bring the greatest joy and fulfilment to those involved can, on the other hand, when broken cause the greatest pain to all involved.

The figures are quite sobering. In 2004 there were 52,747 divorces, an increase of 9.2 per cent from 1994, 10 years earlier, and an increase of 22.3 per cent from the figure in 1984, 10 years before that. And 49.8 per cent of divorces in 2004 involved children. In 2003, just over one million children under the age of 17 lived in single parent families. That is, 22 per cent of children lived in single parent families, and most of those—87 per cent—lived with their mothers. In my electorate of Macquarie there are just over 4,000 child support cases, involving 6,146 children. I dare say a whole lot of other children are also living in single parent families but are being supported not through the child support system but by other arrangements.

The family law system, which came into place in its initial iteration in the mid-1970s, and the child support system that has been operating since 1988 have not really adequately assisted families in this situation. In fact, some would argue that rather than assisting they have exacerbated the difficulties. The changes involved in this legislation, along with those changes to family law that we had last year and earlier this year, attempt to reduce the burden and the pain of family breakdown. Clearly we cannot prevent family breakdown; we cannot remove or totally ameliorate the emotional and psychological damage that that causes. But we can try and help partners and children cope. We can try and address the practical and financial issues related to that.

The family law changes that came into place earlier, for instance, involved a commitment by this government of just on $400 million for the establishment of family relationship centres. Earlier this year I was pleased that the Attorney-General visited Penrith, just near my electorate, to open the family relationship centre at Penrith, which aims to serve the areas of Penrith, the Nepean, the Hawkesbury and the Blue Mountains and is already providing an incredibly valuable resource for parents. This includes parents struggling to hold their relationships together and, hopefully, in some cases, it is saving marriages by providing that essential support and counselling. It is also helping separated partners to cope with life after separation.

This legislation currently before the House, the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, involves the second aspect of those changes to try and reduce the pressure and to try to provide support for families wracked by breakdown. These are changes to the child support system to allow the partners to better cope with the financial and practical aspects of separation.

Most of the aspects of this legislation come out of the recommendations of the House of Representatives Standing Committee on Family and Community Affairs that some years ago produced that excellent report Every picture tells a story. After intense consultations and hearings around the country, it made a list of excellent recommendations about how to try and address these issues. Then of course the government set up the ministerial task force headed by Professor Patrick Parkinson, who did extensive research into how best to apply the recommendations of the House of Representatives committee.

We have in this legislation today a number of key changes aimed at reducing some of the trauma, particularly the financial trauma, associated with family breakdown. Probably the first and most significant one involves the changes to the child support formula. Fundamentally and importantly, those changes involve basing the formula on the cost of raising children as ascertained by independent and extensive research, rather than basing it on an arbitrary percentage of the payer’s income, which was the way the old formula worked.

The new formula, as well as being based on the cost of raising children, will take into account both parents’ incomes. The resident and the non-resident parent’s incomes will be treated in the same way. That is much fairer than the old system, where the excluded income amount was treated differently for the payer and the payee, or the resident and the non-resident parent. The new formula will better allow for the amount of time that each parent spends with their children and the costs involved in that.

The formula will treat first and second families more equitably, and this is a very important step. Under the old formula, second families really suffered. Where a family had, sadly, broken down and the payer, usually the father, was trying to undertake his obligations and responsibilities to look after his natural children from the first family, the first marriage, he really struggled when he entered a new relationship and tried to establish a second family. This formula very fairly tries to much better balance the costs and the needs of the second family with that of the first family. The formula also recognises that children cost more as they get older. The cost of raising a teenager, as all the parents in this place will know, is substantially more than the cost of looking after infant children.

In all, this new formula is fairer, more objectively based and will more equitably deal with the issues involved. Clearly not every payee will receive more money out of this formula. It is axiomatic that, if there were problems with the way the old formula worked—both sides agree that there were issues with that and the formula has to change—some people will be better off and some will be worse off. It is disappointing in that context to hear some of the speakers from the opposition somehow arguing that no-one ought to be worse off. If there is an acknowledgement that the formula was faulty in the first place and that faulty formula is to be changed then, unless taxpayers are going to be asked to dig into their pockets, some people will be receiving less in child support payments than before, and that is understandable. The important point is that the new formula is based on the extensive work done by the House of Representatives committee, including members of the opposition, and on the extensive, quality work done by Professor Patrick Parkinson.

Some other aspects of this legislation are also very welcome and very valuable. The external review of the Child Support Agency decisions to give an external or objective avenue of appeal is a welcome change. One of the extremely frustrating aspects of the process for many people who have had to deal with the Child Support Agency over the years has been that, if they want to object to the way the formula is calculated and the way it works, they have to go through an appeal process using Child Support Agency staff. They, again, try to do their job correctly and do the right thing, but nevertheless they look at the situations through pretty much the same eyes as the staff who made the first decisions. This legislation will provide an external appeals process through the Social Security Appeals Tribunal from 1 January next year and will bring a much greater degree of objectivity into that appeal process. That will be welcomed by parents who have experienced the frustration time and time again of not being able to get a fair hearing through the Child Support Agency.

The third measure in this legislation provides for better arrangements for parents making their own agreements between themselves. They will be better able to formalise those agreements without having to go through the Child Support Agency and will be able to formalise them in a way that gives greater certainty not only to the payee but also to the payer and ultimately, of course, to the children.

Fourthly, there is a better alignment between child support payments, the family tax benefit system and childcare payments. For example, parents with over 65 per cent access to their children will keep all of the family tax benefit that accrues for their children instead of losing some of it. Low-income non-resident parents who spend more than 14 per cent of contact time with their children will receive rent assistance, the healthcare card and the Medicare safety net.

It is important to point out here that there will be substantial costs to the government, several hundred million dollars, over the next four years as part of this. This is not a revenue-saving device for the government. We are putting extra money into this to make sure that families are not disadvantaged, and a substantial amount at that.

Another change is the three-year exclusion of the second income of a payer who is trying to set up a new home. When a family breaks down, the payer often leaves the family home so that the mother—usually—and the children still have a place where they can live. The payer leaves and often has to pay rent for a new home while trying to support his children, often in very difficult circumstances. We made a change some years ago so that a payer who took on a second job or did overtime to support a second family would have the income from that second job or the overtime excluded from the formula, and that was a very welcome step. This legislation goes a step further to recognise not only the cost of supporting a second family but also indeed the cost of setting up a new home. For the first three years, a payer who does take on a second job to try and support himself and to establish a home will have the income from that second job excluded from the formula—a very sensible and equitable approach.

Another change is the better inclusion of the costs of supporting stepchildren in assessing the way that the child support formula works. Stepchildren, if there is no other support for them, will be treated, quite appropriately, in the same way as the natural or biological children of the parent. As well, there will be the introduction of an increased minimum payment where a payer is not working and is still supporting children. Where he is supporting children in more than one family, instead of that minimum payment being split between the two families—or indeed in some cases even three families—that minimum payment will apply to each family. This is quite a reasonable arrangement. Another initiative is that where payers are deliberately minimising their incomes that minimum payment will be raised to $20 a week so that they cannot get out of their obligations to their children.

These are very substantial changes, and are well overdue and very welcome improvements to the way that the child support formula and system works. When added to the family law changes that we saw earlier, these constitute a very significant improvement for families suffering the trauma and distress of family breakdown. We will never stop families breaking down, we will never remove the trauma associated with that, but these changes will provide very positive steps in the right direction in helping partners and in helping children particularly cope with the financial and practical aspects of those family breakdowns.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I rise as a member of the Labor Party, a party which is supporting the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006. I concur with the comments of my colleague the Chief Government Whip in his contribution to this debate. I also acknowledge that sitting in the gallery we have Barry Williams, who has devoted more than a decade to trying to establish changes to child support and who in fact served on the very first advisory committee under Justice Fogarty when the legislation was first introduced. It must be a pleasing moment for him. I acknowledge the personal contribution that he has made to the legislation on behalf of his members.

Let me be a little ungenerous and talk about the member for Herbert. His contribution was juvenile. He suggested that the opposition were making carping amendments. The reality is that we are not assured of what the impacts of these significant and major changes are going to be. It is quite reasonable for an opposition to want to place on record its concern about the fact that it has not been possible to get all the modelling information and ascertain what the impacts of these changes are going to be. Let me reiterate that I and my colleagues on this side of the House are supporting this bill.

I would like to acknowledge the role that the Chief National Party Whip, Kay Hull, played when she chaired the Standing Committee on Family and Community Affairs that delivered the report Every picture tells a story. The committee demonstrated the best traditions of this parliament: government and opposition members on a parliamentary committee working to a crushing deadline to bring down a very decent report. In particular, on my side I would like to acknowledge the roles that the deputy chair, the honourable member for Fowler, and the honourable member for Throsby played on that committee. It was a very powerful report and it has led to a number of changes.

I want to make the point that we can be at risk of crowing that we have things totally right. In this area, there are always three pillars that you have to operate under. The first is family law, the second is child support and the third is counselling. These days, it is very hard to provide pre-relationship counselling, basically because so many of our fellow Australians are choosing not to have either a religious or a civil marriage ceremony and thus the logical intervention point for counselling does not exist for all of us. But I cannot stress enough how important it is—not only at the beginning of a relationship or marriage but during it, in the middle of it and at the end of it—for people to feel comfortable about seeking counselling and advice. The men of Australia never doubt the value of getting a second opinion about their car or changing a builder, a carpenter or whatever, but it is so hard for so many to talk about difficulties in relationships.

Without going to the detail of the bill, my party’s position is that we support the legislation but are committed to a Senate review to see how it goes. Personally, I am of the view that we should do more than that. Twelve months after the operation of not only stage 2 and stage 3 but the whole package we should have an independent review to see how it is working and to see whether it is achieving the things that we all hope it will. Notwithstanding the fabulous work that Professor Parkinson has done, it should not be Professor Parkinson who does that independent review.

I say to the Minister for Families, Community Services and Indigenous Affairs, Mal Brough: I think that this is really worth while. If I look back at the history of the introduction of the Child Support Scheme, I think it was a major mistake to have Justice Fogarty—good man that he was—who played such a key role in the design of the scheme, overseeing how it was implemented. Not unexpectedly in such a radical shake-up, he felt, and the review indicated, that all was working well. And we know from history that, sadly, all was not working well.

Let me also put it on the record that in the mid-1990s there was a House of Representatives review of child support, and one of the key recommendations was to try to move away from the overseas formulas that were inherent in the Australian scheme and to try to establish an Australian cost of living study. I am not saying that the Howard government did not do it; I think that the Howard government would be as disappointed as I was that that review has really not stood the test of time. The Parkinson-NATSEM studies really now, for the first time, give us something solid in Australia to work off, but I express my disappointment that we have lost a decade through not having had that proper and vital bit of information.

This bill introduces not stage 2 of the changes but stage 2 and stage 3. Stage 2 introduces an independent review of the Child Support Agency decisions by the Social Security Appeals Tribunal. I have said in this place on a number of occasions that we need a proper independent review. Under administrative law, the internal review established by the Child Support Agency—which was a welcome change from what had operated previously—was not a proper independent review under administrative law. This change actually recognises it. I might remind honourable members that, prior to the initiative that was started by my good friend Con Sciacca, when he was parliamentary secretary, if you wanted a review you had to go to the Family Court. So, as flawed as that internal review was, it was a huge improvement. But this now sets the record straight, and those people who are subject to the Child Support Agency now have a proper internal review.

Stage 2 broadens the powers of the court to ensure that child support obligations are met. One of the great difficulties of the scheme has been that often, in certain situations, there are people who can drive a horse and buggy through their obligations. I have always suggested that, when you are introducing fairness on one side, you have to make sure that you have got some draconian legislation so that solicitors and accountants who are advising their clients will not want to run the risk of being found to be trying to avoid their obligations. I particularly welcome the provision in stage 2 that allows separating parents more time to work out parenting arrangements before their family tax benefit is affected—or maybe perhaps even reconciling. I do not see that as a failure, should that occur.

Stage 3 is the one with the ‘big bang’ changes. What is particularly significant about these changes is that it is not only a change of the formula but a proper work-through of the formula plus family benefits and their interaction, and it is very welcome. I welcome the changes about income and overtime from secondary employment. I also welcome the changes to the treatment of parents with stepchildren when calculating the liability. I often remember the brother of a resident in St Clair, Mr Forno. He was happily married, but his wife had five children by a first marriage, and they were not getting a zack in terms of child support. There was no way that the support he was giving his stepchildren was being taken into account under the formula. That was particularly absurd.

Another absurdity occurs where children are treated differently—that is, children are valued differently depending on the primacy of the relationship they come from. Under the old formula, more money would go to support children of the first family than to a new child in the second family. That absurd situation has now been rectified with more than an attempt to treat each child fairly. The honourable member for Macquarie talked about pressure on second families. I always remember that, when it was publicly announced that I was chairing the review into child support in the 1990s, a woman came to see me from Merrylands, of all places. She really quizzed me about whether this was going to be a serious attempt to deal with the difficulties of child support, and I tried very hard to assure her that that was the case.

By and large, the report was a very good one. My particular tragedy was that it was not implemented by the Labor Party government at the time. The easiest elements of administration were implemented, but the real guts of the report were not. Sadly, before we had completed the report, the financial pressures on that second family were such that the man committed suicide. The lady did not argue that that was the only reason why he committed suicide, but certainly it was a contributing one. The point I am trying to make, I guess, is that it is traumatic enough for people to have a relationship bust-up and go through all the tragedy and trauma of that, but when they repartner it is actually even harder. The rate of failure for second families or second relationships is higher, and we do not want government constructed schemes adding even more pressure on them.

There is another point that I have often observed. I can relay any number of accounts of men who have not wanted to accept their responsibilities properly but when they divorce they tend not to do it in a sort of clinical, lawyer-oriented way. They say, ‘Yes, you can have the car; you should stay in the house,’ et cetera. They often give away some elements of their right to consideration of some property decisions they make in terms of lump-sum payments.

Let me make a couple of other points. The best sorts of agreements are those that parents make between themselves in the best interests of their children—not lawyer imposed, not made in any other way. Part of the pressure that a parliament needs to impose is to try to encourage that to happen. I certainly believe that there is great value in trying to have some intervention in a relationship before it collapses, before it is dead and buried. Ironically, all too often the Commonwealth dollars flow when the last breath has been breathed in the life of a relationship. But there is value in intervention, in trying to get parents to set up good communication as they then tackle their mutual responsibilities with children.

The pre-existing Child Support Scheme was a radical scheme. It was a necessary scheme, but in my view and in that of a number of others it was actually never about the best interests of children. Although that was an objective of the scheme, in its administration it was always more about clawback of Commonwealth dollars than about dollars going to children. It is true that children benefited from the scheme—I am not trying to suggest otherwise, nor that the families the children resided in were not better off absolutely as a result of the scheme. But the pre-existing arrangements were an absolute disgrace. I note that the task force report is called In the best interests of children. I think that always ought to be our focus, not clawback.

In child support there are always three players: both parents and the government. If you make changes, there are always going to be winners and losers; some people are going to pay more and some are going to pay less. I acknowledge that the government, when this is fully implemented, is going to be paying an extra $130 million for the scheme. I welcome that and I support it. It is not possible for us to have a perfect scheme. It is not possible for us to have a scheme and make changes in which there are no losers. So I again make this plea. The Labor Party is committed to having a Senate review of these changes shortly after they come into operation, but it is vital in my opinion to have an independent review 12 months after the operation of stage 3 so we can see what we have got right, we can see who the winners and losers are and, in particular, we can assess whether or not we need to make some adjustments. We should never be afraid of having further independent reviews, because out there in voter land, out there in families, change is a constant. It is always changing. This is about people, it is about children, and we will always need to adjust.

In conclusion, let me make this point. I have been privileged to serve on the Standing Committee on Family and Community Affairs, chaired by Kay Hull, the member for Riverina, with the member for Throsby and the member for Fowler. I was also privileged to be added onto the Standing Committee on Legal and Constitutional Affairs when they looked at the family law changes. There is one element that still stands out, begging for us to have a look at it—and that is in no way to diminish what has gone before. It is the amount of money parents still pay on the legal profession. I thought it was—I will not say disgraceful—unhelpful in the extreme when the Attorney-General floated the idea that having a tribunal would cost some $600 million, probably three or four times the current cost of the Family Court. That was absurd. But we can never be satisfied until we see dollars going to children or dollars going to parents re-establishing their lives, rather than dollars going to the legal profession.

As I stand here today, after more than a decade of interest in this, I cannot tell the House or honourable members the quantum that Australian parents have paid, are paying or are likely to pay the legal profession in family law. It is an outrage. There have got to be better ways of doing it. I certainly hope the relationship centres work. I hope they exceed our expectations. But they have not eliminated, in my view, the burden of the huge harvest the legal profession takes from disputing parents. We need to look at a no-frills approach. I have always argued that. Hopefully that will be the subject for legislation on another day. The Labor Party unambiguously supports this legislation and will be voting for it. We have expressed some concerns in the second reading amendment, and I think it was proper that we did so. I hope we will all be able to look back and say that, since the implementation of this legislation, the children of separating families are much better off, as are their parents. (Time expired)

Louise Markus (Greenway, Liberal Party) Share this | Link to this | Hansard source

In speaking to the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006, I would firstly like to acknowledge all the hard work of honourable members who have worked in a very bipartisan way to achieve the best outcomes for the people involved in families affected by separation and divorce. Many families do not desire these situations; it is not a choice that they would automatically make. Many people join together in marriage because they are committed and desire to have a healthy family life and a future. But, because of circumstances often beyond their control, and at times due to challenges that individuals within that family face, the decision to separate and divorce comes about, resulting in the children being impacted in many ways.

This bill is important in providing change and implementing structures that will make it much easier for families. It reflects the government’s strong commitment to continued overhauling of the child support scheme. This legislation will provide the means for these reforms to move forward. This work has come about largely, as I have mentioned already, due to the House of Representatives Standing Committee on Family and Community Affairs and their report on child custody arrangements, Every picture tells a story.

When that report was first released I was working as a private practitioner, working with many families who were experiencing divorce and separation. At that time, I was writing reports for the Family Law Court, often appearing on behalf of families and endeavouring to communicate the best interests of the children. In reading Every picture tells a story, the thing that stood out to me was that, wherever possible, we need to encourage families and couples to work out the decisions about residency, access and division of property between themselves as much as possible. I saw many families who had spent tens of thousands of dollars in the Family Law Court endeavouring to come to a decision. In the process, often grandparents had to remortgage their homes.

The committee recommended that a ministerial task force be established to examine the Child Support Scheme. This task force was chaired by Professor Patrick Parkinson. The task force concluded that these reforms were required. Stage 1 of the reforms has already taken place this year. The bill will provide the legislative basis for stages 2 and 3 of the ongoing reforms. Each stage of the reform process will enable the Child Support Scheme to better work in the best interests of children and better balance the interests of parents, while also reflecting community values.

The main purpose of the reforms is in line with the government’s new family law system, which aims to encourage shared parenting and to reduce conflict. This bill better recognises the importance of both parents remaining actively involved in their children’s lives after separation. I have spoken with many children over the years and have found that, while there may be conflict between their parents, they require and desire to have a relationship with both parents. I need to acknowledge at this point, though, that there are exceptions. Of course, changes to the Family Law Act have acknowledged that—that is, that, where there is actual violence and abuse, the children are protected.

The other main aspects of the reforms include: a new child support formula; external review of the Child Support Agency; better arrangements for parents who want to make their own agreements about child support; improved interaction between child support and family benefits; recognition of the extra costs of setting up new homes after separation by allowing income from overtime and second jobs for this purpose to be excluded for three years; and recognition of step-children where no-one else can financially support them.

As the Child Support Agency now has 1.3 million parents who are registered and nearly 1.1 million children who benefit from receiving child support payments, there is no doubt about how important these reforms will be to both parents and children now and in the future. The aims of these changes are to provide and deliver a system that acts in the best interests of both children and parents. Above all, these reforms are about ensuring that Australian families are supported throughout the process.

From 1 January 2007, the role of the Social Security Appeals Tribunal will be expanded to include independent administrative review of Child Support Agency decisions. This independent review is critical. This will ensure a review mechanism that is inexpensive, much fairer, more informal and speedier. It will also improve the consistency and transparency of child support decisions—something that parents have been crying out for. This process will broadly mirror the process currently available for Centrelink decisions about the family tax benefit and other payments, which a large proportion of child support parents would already be familiar with. Families who are already facing new situations that are filled with uncertainty and challenge must have a system that is reliable and which will be able to support them through the process of appeal.

Another fundamental element of these reforms is the new formula for calculating child support, which is based on new Australian research on the costs of children. This is the first time we have used expert Australian research on the costs of raising a child. This new formula will take into account both parents’ incomes, how costs change with income increases and how costs are borne when the child spends time with both parents. The income of each parent will be treated in the same way, with the same self-support amount applied to each and will take into account that children cost more when they are teenagers and less when they are younger. Furthermore, first and second families will be treated more fairly, as the allowance made for them will be worked out in the same way as the costs of the children for whom child support is paid. All care that is between 14 and 34 per cent will receive the same credit of 24 per cent of all the costs. This was recommended by the task force, based on their extensive research on what parents with this level of care need to spend. This will cover most of the regular contact arrangements and will remove the financial incentive for parents to argue about small changes in care, thus removing another point which may create conflict between parents.

This bill also introduces the new arrangements for parents who wish to make their own arrangements about child support. It is critical that this system, with these changes, provides for greater flexibility for parents to talk and work things out with one another. Critically, this will remove the need for high costs for parents, for children and also for the taxpayer. There will be two types of agreement: binding financial agreements and limited child support agreements. Binding agreements will provide a greater level of certainty for parents. They will also require parents to obtain some legal advice. This is primarily because these arrangements can provide less than the formula would have provided. Limited agreements, however, will not require legal advice and will ensure that children have adequate financial provision. This type of agreement will also be easier to end, should the parents’ circumstances change.

Other changes that will further ensure that adequate financial provision for children is guaranteed include the following. Where parents have more than 65 per cent of care of a child, they will keep all of the family tax benefit for that child. The costs that the other parent bears during contact will be recognised through the Child Support Scheme. This will make the system much simpler and there will be less financial reason to argue over care arrangements—again, eliminating or reducing conflict. Also, for non-resident parents who are paying the minimum amount of child support, which is around $6.15, and who have more than one family with children, this amount will be payable to each of those families, rather than in the previous situation, which was to divide that amount between the families.

Parents who deliberately minimise their income to avoid paying child support and who claim to have very low incomes but who actually have higher real incomes or resources will have to pay $20 per child per week unless they can prove that their incomes are in fact very low. In addition, parents will be able to have income from second jobs and overtime excluded from their child support calculation when they can prove that the extra money they are earning is used to help with re-establishment costs. This will be very beneficial to people who are setting up new families and want to ensure that, with the additional pressures, the second family, the second relationship, is successful.

With more than 20 years of experience of working with families who have experienced separation and divorce, I know that these changes will make the Child Support Scheme more flexible, more transparent and a lot fairer. I indeed welcome the focus on children. I also welcome parents being supported and assisted not only during the separation period but in the longer term. The encouragement for parents to work on the arrangements and make decisions about their children with regard to this and other arrangements across the family law system is indeed a welcome change. I commend the bill to the House.

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Link to this | Hansard source

The Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 implements the next stage of the government’s child support reforms. It does four main things: it introduces a much needed independent review of all Child Support Agency decisions by the Social Security Appeals Tribunal; it broadens the powers of the courts to ensure that child support obligations are met and it strengthens the relationship between the court and the Child Support Scheme; it allows separating parents more time to work out parenting arrangements before their family tax benefit is affected; and it introduces a new child support formula by which child support payments are calculated, with this measure to commence on 1 July 2008. These, combined with the previous changes to family law, represent the government’s response to the Parkinson review, In the best interests of children: reforming the child support scheme, and pick up on some of the recommendations of the report of the House of Representatives Standing Committee on Family and Community Affairs entitled Every picture tells a story: report on the inquiry into child custody arrangements in the event of family separation.

When speaking on the previous family law changes, I started by setting out the principles that are central for me in this debate. I want to reiterate those in my contribution today. Central to this debate, for me, is that it is the responsibility of both parents, whether they are living together or apart, to provide a loving, nurturing environment for their children to grow up in—one where they are safe, they are encouraged and they learn to develop into strong adults, free from fear and knowing that they are accepted and loved. Part of that responsibility requires that both parents take financial responsibility for the needs of their children. We must acknowledge that the impact on children of the separation of their parents should be minimised. The psychological and emotional stress that separations can cause is often compounded by the current child support regime. Any change to this that will reduce the negative impact on children deserves the support of both sides of the House.

Many of us who have worked in the welfare sector, and in our work as MPs, and see the cases that come through our offices know what a fraught and divisive issue child support payments can be. That children are caught in the middle of such wrangling is something that we must do everything in our power to avoid. These are some of the most difficult cases to work through, and there is often a great deal of emotion and anger involved in them. Not only do immediate and extended families have to cope with the emotional turmoil of a separation and the inevitable fallout of anger and emotion but, at the same time, they are expected to deal with and navigate an extremely complex child support system. Too often, issues about joint parental responsibilities get caught up in disputes about child support contributions. The feelings of fear that parents can experience when they engage in the current child support regime that they will be denied access to their children is all too real for many parents.

The occurrence of domestic violence in this country, linked to separation and financial issues, is well documented. It is important that women and children, who are overwhelmingly the victims of domestic violence, are supported not only through counselling and housing but also through navigating what is an extremely complex and potentially overwhelming child support system. These women and children are some of the most vulnerable members of our community, and any legislation that will enable a reduction in their stress is most welcome.

This legislation, in essence, attempts to provide a more realistic framework for avoiding such disputes. For the first time, there has been a very serious attempt made to estimate just how much it costs to raise children of different ages, and the child support formula in this legislation is designed to reflect that. I will mention some of the positive aspects of the formula before I go on to what I see as—and which have been highlighted by previous speakers—the major areas of concern. The new child support formula is based on recent Australian research on the costs of caring for children. It takes into account both parents’ incomes after equal self-support amounts are deducted, recognising care of the child for more than 14 per cent of the time and treating first and second families more equally.

The role of the Social Security Appeals Tribunal is being expanded to include independent review of child support decisions, providing a review mechanism that is inexpensive, fair, informal and far quicker. The family tax benefit part A maintenance income test is being changed so that payments are reduced only for those children in the family for whom child support is paid. Income definitions for certain tax-free amounts, with foreign income and fringe benefits used to calculate child support, on the one hand, and family tax benefit and childcare benefits, on the other, are also being better aligned.

Residential parents will get to keep all of their family tax benefit where a non-residential parent has care of their child for less than 35 per cent of nights in a year—that is, less than five nights a fortnight. Non-residential parents who have care of their child for at least 14 per cent of the time—that is, one night a week—will continue to be eligible for the rent assistance component of FTPA and will continue to be eligible for the healthcare card. Parents who have financial responsibility for a stepchild in a second family will now be able to apply to have the stepchild considered when calculating the child support for the parent’s first family if no-one else can financially support the stepchild.

I also want to focus on some of the more concerning aspects of this legislation. One of those is that we just do not know what the impact of the changed child support formula is likely to be on low-income sole parents. It is difficult to fully and unreservedly support these changes, given that low-income sole parents are already faced with so many structural barriers. Without comprehensive modelling that takes into account the impact of the government’s Welfare to Work changes and Work Choices and other social policies on low-income and sole parents, we cannot categorically rule out that this will not have a significant negative impact on these families.

Modelling undertaken for the Parkinson review showed that low-income families were most likely to experience reductions in child support payments under the new formula. In evidence before the Senate Standing Committee on Community Affairs, Professor Parkinson and the Australian Institute of Family Studies agreed that this was likely to be the case. However, they argued that for families on very low incomes, the cost of children is largely met through the family payment system, not necessarily through child support. The Minister for Families, Community Services and Indigenous Affairs’ own department has also been unable to produce any modelling or analysis that supports this claim.

It is ironic that at the same time as the government is engaged in rhetoric about reforming the welfare system it is now suggesting that low-income single parents should currently raise their children almost purely on welfare. This certainly is not a policy position that is supported in the wider community, nor is it one that the majority of single parent low-income families will be comfortable with. Further to this, the department has not proposed any measures to protect low-income families who may incur reductions as a result of changes in the bill. So the most vulnerable of the vulnerable are once again pushed to the side by the Howard government, and we are left with a bill that is half-hearted in its approach to reforming the child support system.

Single parent households are already the most financially disadvantaged group in our community. They can experience high levels of poverty, homelessness and often social dislocation. I am extremely concerned about the impact of these changes on this group of parents and concerned that the government and the department are not able to tell us with any confidence just what that impact is likely to be. It is absolutely the responsibility of the government to ensure that children in households adversely affected by the changes to the child support formula are actually looked after. This bill does not contain any provision for children in those households that are likely—not possibly, but likely—to be adversely affected by these changes. I am concerned that there appears to have been little thought given by the government to this.

I understand that there is to be a ministerial statement shortly, and I will conclude at this point. I seek leave to continue my remarks later.

Leave granted; debate adjourned.