Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

When I left off previously I was articulating the Greens’ concern about the combined impact of Welfare to Work with potential reduction in payments of child support and the lack of modelling of the interaction between these two. The Greens are also concerned about unpaid child care and how this has been accounted for in the proposed new formula. The proposed new child support formula does not adequately recognise the costs of unpaid child care. The cost is overwhelmingly borne by resident parents who are typically, but of course not exclusively, single mothers. The formula recognises that the financial costs of older children are higher but does not recognise that the unpaid care responsibilities of younger children are greater. It is argued that ignoring unpaid care creates a bias in the system, predominantly against women who provide the majority of unpaid care.

The opportunity costs of providing care include forgone earnings, super and career advancement, loss of access to training and professional development, and reduced social networks. Unpaid care is accounted for, in part, under the existing child support formula by the different self-support component for resident and non-resident parents. This no longer exists under the new formula, supposedly as part of the move from a one-home to a two-home model.

The argument put forward by Professor Parkinson when further questioned on this issue was that financial provision for unpaid care was mainly made in the way that the Family Court assigned assets on separation. He effectively implied that this dealt with the issue, and hence it was of lesser or no concern in the child support calculation. However, this provision in effect only applied where there were significant assets to divide—meaning that this only benefited divided families who had significant assets prior to separation. Therefore, the proposed arrangements will impact more unfairly on those on low incomes who have few or no assets.

In addition, it assumes that settlement happens as soon as couples separate. It may take years to come to court and arrange a settlement. In the meantime people do not have access to resources; sometimes they do not even have access to the family home. We acknowledge that measuring the monetary value of unpaid care has always been a problem for policy makers. We believe that more work needs to be done in this area.

Unpaid care is emerging as an important policy issue in other areas. I refer for example to aged care, where pressures are growing via an ageing population. There is a wealth of contemporary analysis around these issues which we believe could have better informed the task force’s deliberations. We need to balance the opportunity costs of unpaid care against the ongoing and future benefits of caring for children and, through them, the future wellbeing and productivity of the nation. We believe that ongoing monitoring and evaluation of this process is absolutely critical if we are to ensure that this new formula and Child Support Scheme are successfully implemented.

I would like to touch now on enforcing compliance. We welcome 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. The fact that only half of all non-resident parents meet their child support obligations in full and on time is a longstanding problem. We welcome the introduction of a minimum payment for parents who deliberately minimise their income to avoid paying child support. In his submission the task force chair, Professor Parkinson, expressed concern that these provisions of the bill may need to be strengthened to remove doubt. To this end we will put forward some amendments, which have been circulated, following suggestions made by Professor Parkinson.

We also support some of the proposed changes to deal with the current problems with defaulters. The proposed changes will allow parents to pursue unpaid child support through the courts. We believe this is a significant improvement, provided there are sufficient resources for legal support and that there is equity of access. However, we believe there is an emerging problem now that the agency has started to provide some resources to pursue nonpayment, and is serving notices on non-resident parents—in this case, mostly fathers—for large amounts of unpaid child support. Sometimes this is extending over a lengthy period of time. But there are occasions when this is starting to generate conflict, and I think this needs to be adequately addressed. That is not to say that we do not believe that these defaulting parents do not need to be chased, but we need to recognise that it can cause conflict when people are starting to be pursued after many years.

We also have some concerns about shared care agreements. While the shared care provisions are in some ways an improvement on the existing system, we believe there are some potential problems. It was identified in the evidence presented to the committee that some of the shared care arrangements are tenuous and that the most likely outcome over time is for slippage to take place, whereby the child often ends up living with one parent—usually the mother. Some of the shared care agreements end up enforcing a particular set of financial arrangements while at the same time the percentage of care with the non-resident parent often drops off considerably. The current arrangements seem to lock that in. We will propose an amendment to the bill that addresses this matter, so that arrangements can be reviewed and they are not locked in permanently. Again, that amendment has been circulated in the chamber.

In conclusion, I still have some reservations about the government’s decision to proceed with this bill without proper provision to protect low-income families who may lose income as a result of these changes. I am disappointed that the government failed to model and to qualify the likely impacts of the bill on existing child support recipients. Some significant issues were raised in the report by the Senate Standing Committee on Community Affairs which, disappointingly, were not put forward explicitly as recommendations and subsequently have not been addressed by the government as amendments.

As I said, we have developed some amendments which we have circulated in the chamber. These relate to issues identified by Professor Parkinson, the task force chair, and discussed by the committee. I understand there is a willingness on the part of government to consider these recommendations. As I said at the beginning of my speech some weeks ago, we do support the need for reform of the child support system, so we will be supporting this bill with the amendments that I have circulated. I believe they address some of the concerns that were expressed to the community affairs committee inquiry. I believe the amendments will strengthen the bill. However, as I said, the Greens will be supporting this bill because we believe that there is a need for change in the child support area. We believe that the bill represents a step ahead, even though we have articulated some concerns with some aspects of the approach that has been taken.

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

The Democrat view on the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006 is similar to that just expressed by Senator Siewert. There is a need for reform and we are prepared to support it, but we also acknowledge that the reforms contained in the legislation could be improved through amendment.

The issue that this legislation deals with is a fraught one, of course, as I imagine pretty much everybody in this chamber and in the wider community realises. Child support issues, whether they are financial calculations or other aspects to do with access to children, division of property and all those other things in the family law area, are incredibly fraught and very difficult, particularly when circumstances are such that people are not able to work things out between them to their own satisfaction anymore and require another party, a court, legislative compulsion or whatever to come in. That is always going to be a less than forensic mechanism for ensuring the closest approximation of fairness in every circumstance.

At the end of the debate on the previous legislation I was talking about the value of truth and ensuring that our deliberations are based upon some sort of verifiable fact and evidence rather than just pronouncements that have no consideration about whether or not they reflect reality. That is certainly true but, as this area reminds us all, that is just the start. Trying to actually base things on facts, truth and evidence is necessary but not sufficient. In this area, perhaps more than most, one person’s undeniable, blatant, obvious fact is another person’s blatant pile of nonsense. There are incredibly conflicting views and opinions between people caught up in the child support system about what they believe is fair and reasonable. Such things will inevitably be influenced by the perspective that the individual is coming from.

Of course, in many of these circumstances, which involve a lot of personal hurt and emotional pain, perceptions can be further influenced by those immediate personal factors. As legislators we cannot and should not make decisions solely based on reacting to such personal hurt and pain but nor should we be completely oblivious to it. We do need to recognise it and seek to address it as much as possible. We also need to try to get an outcome, which, above all else, is as close to consistently and universally fair as can be done. Any legislation in an area that deals with the myriad individual circumstances that people find themselves in is going to have difficulty managing fairness every time.

It is about trying to apply a mathematical formula that will deal with every situation. It is a mathematical formula with different components to enable it to be flexible enough for different situations, but it is still just a formula. Then there are a group of public servants who have to implement and administer it and use their discretion to ensure it operates fairly. That is always going to leave some people dissatisfied. That should not be used as an excuse to not try to continually make it better but it must nonetheless be acknowledged that, even with these changes and even if we make amendments to get the legislation as close to perfect as we like, there will still be a lot of dissatisfied people.

As we all know in going through this process, there are dissatisfied people with regard to this legislation. Some think it has not gone far enough, some think it has gone too far and some think at least components of it are off the track altogether. But it is the end of a very long, considered process and, unlike the previous legislation, it does at least reflect an attempt to engage with the conflicting realities and circumstances, the competing demands and the competing and conflicting principles involved. To that extent I think it should be acknowledged that the Senate committee process once again proved its worth by identifying some areas where further improvement could be made in weighing up legitimate concerns that some had that there was an excessively unfair impact on some with high incomes. It is worth trying to address that. The fact that people have high incomes does not mean that the fairness of the situation should be completely discounted but it certainly should get lower priority than ensuring fair outcomes for those on lower incomes.

There is legitimate concern that some aspects of the reforms put forward in this legislation will impact negatively on some with low incomes without adequate reason, I might say. That is something that I think does need further examination and certainly the Democrat view is very much to align ourselves with the amendments that will be put forward in the committee stage of the debate by Senator Siewert and potentially by others. I might leave any further contributions I make until we get to that stage of the debate.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Child Support Legislation Amendment (Reform of the Child Support Scheme—New Formula and Other Measures) Bill 2006. This bill 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.

Labor acknowledges that there is considerable concern in our community about the fairness of the formula for assessing child support obligations under the regime that was set up by the Hawke government in 1988 and accepts the need for reform of the Child Support Scheme. Labor’s approach to child support reform has always been guided by a belief that the interests and wellbeing of the children must always come first. Central to this is Labor’s belief 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 where they are safe, they are encouraged and they learn to develop into strong adults free from fear, knowing that they are accepted and loved.

After careful consideration, Labor has decided that the new scheme is likely to be fairer and more focused on the needs of children. The ALP recognises 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.

When this bill becomes law, 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 fewer than five nights a fortnight. Non-residential parents who have care of their child for at least 14 per cent of that time, that is one night a week, will continue to be eligible for the rent assistance component of family tax part A and 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.

The most important aspect of the changes to the child support formula is that it treats first and second families more equally and more fairly. Senators will know that a constant concern raised with us 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 bill before us today is the culmination of a process which started with the inquiry of the House of Representatives Standing Committee on Family and Community Affairs into family separation issues which led to the report titled Every picture tells a story. That inquiry recommended the establishment of a ministerial task force to examine the Child Support Scheme, including an examination of the cost of raising children in a post-separation household. I place on record my congratulations to Professor Parkinson and the 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 to arrive at a far more objective child support formula. I also acknowledge the role that the Chief Whip of The Nationals, Kay Hull, played when she chaired the House of Representatives Standing Committee on Family and Community Affairs that delivered the report. On my side, I acknowledge the roles that the deputy chair—the member for Fowler—the member for Throsby, the member for Franklin and the honourable member for Chifley played on that committee. The committee demonstrated the very best traditions of this parliament—government and opposition members on a parliamentary committee working together in the best interests of the Australian community.

The centrepiece of the reforms is the new child support formula based on new Australian research on the costs of caring for children and reflecting community values on shared parenting. 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. Whilst we know that people with higher incomes spend more money on their children than people with lower incomes, they spend less as a percentage of their income. The current formula treats the income of resident parents more generously than it does the income of non-resident parents and does not compensate a non-resident parent who looks after their 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 current formula also fails to distinguish between the ages of children, so the significantly higher expense that comes with teenagers goes unrecognised.

The new formula, on the other hand, will explicitly be based on the costs of children as drawn from Australian research showing the real costs of children according to the level of income of parents and the ages of children. In the new formula, parents who care for their children for 14 per cent of the time, which equates to a night a week, will be recognised and compensated for the cost they incur. In the new formula, during the first three years after separation, parents who are using income from second jobs and overtime to help re-establish themselves will be able to apply to have their child support calculated taking into account their re-establishment costs.

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. In the new formula, an income share approach will be used so that both parents will have the same amount deducted as self-support. The incomes of both parents will be taken into account in establishing the cost of the children, and the resulting cost will be apportioned between the parents according to their share of the combined income.

I think the most important change to the child support formula proposed in this bill is the attempt to ensure that all biological and adoptive children be treated as equally and as fairly as possible. Under the old formula, more money would go to supporting children of the first family than to a new child in the second family. Parents who have financial responsibility for stepchildren will now be able to apply to have the stepchild treated as a dependant under the child support formula for the parent’s first family.

Debate interrputed.