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Emerging Issue 136 Child Support Overpayments

Child Support Overpayments. The Shared Parenting Council continues to raise emerging issues with Child Support through the CSNSEG. We are going to start publishing to get some responses from members.

The Shared Parenting Council continues to raise emerging issues with Child Support through the CSNSEG (Child Support National Stakeholder Engagement Group). We are proposing publishing these to get some responses from members.

The Issue
Child support overpayments often occur when there is a material change in parents' circumstances and the care regime. Most commonly there is a time lag of receipt of the information and the CSA acting on the information, which can result in overpayments, leading to one parent overpaying the other.

The time lag between the Agency acting to suspend garnishee withdrawls from the paying parents' wage or salary via payroll systems, can lead to one or more excess deductions being made, resulting in an overpayment of child support.

Parents seeking to recover the over paid amounts taken through deductions and garnishee arrangements have reported that the Child Support Agency response to recovery of monies is lacking in enthusiasm and urgency.

A common perception held by those impacted by overpayments is that the CSA is slow to act due to the recovery of monies more often impacting women who are more often in receipt of overpayments.

The view that gender politics underlies the lack of resolve of the CSA to recover overpayments is somewhat underlined by the fact that the Agency lacks the IT Systems to recover money directly via the other parent's Centrelink Payments.

That there is no software or hardware or both in place to deduct money from Centrelink after significant funds were allocated post 2006 to overhaul the Agency's IT and operations is of concern.

When a parent does not agree to repay the overpayment, the Agency will inform the paying parent seeking redress of the Agency's options which are expressed here as taken from correspondence received from an affected CSA client:-
"…statutory powers to recover the overpayment by:

- withholding an amount from future payments of child support to the 'parent' (Section 79(2) of the Act; OR

- arranging for Centrelink to withhold an amount from any Centrelink payments to the 'parent' (Section 1228 (2B) of the Social Security Act 1991); OR

- withholding an amount from the 'parent's' income tax refund under section 72 of the Act."

Furthermore the Agency advises that:-
"Although we have statutory powers to deduct an overpayment from Centrelink payments, our Information Technology systems do not currently have the capacity for this to occur."

What this effectively means is that CSA do not recover funds from Payee accounts through Centrelink deductions because they say they have no IT infrastructures to do so.

It is surely a simple matter for the CSA to issue a directive or other form of formal notification to Centrelink as a result of any overpayment decision or finding, instructing Centrelink to withhold future monies from the Centrelink account of the overpaid parent. This would at least circumvent the lack of any IT infrastructure and ensure that monies would be repaid
Who is impacted
Children and parents bearing the financial loss who cannot easily recover the overpayments for years or sometimes not at all.

Solicitors and legal counsel who would charge the parent to follow up the Agency or take legal action to recover the overpayment.

The overpaying parent is impacted because there is a transfer of burden and responsibility for recovery of the overpayment debt, from the Agency to the parent who overpaid. The CSA in a number of cases where they have not easily been able to collect have simply suggested collection by private arrangement as an alternative to Agency collection.

This is unlikely to ever succeed as it forces parents into private litigation between each other, which could lead to issues of abuse and violence.
What are the impacts?
There are a range of impacts.

The over paying parent's home budget is adversely affected. Mortgage payments might be missed leading to arrears on other debts.

Any dependant children and partner of the overpaying parent forfeit funds that are necessary for food, clothing, school fees and uniforms, medical and other needs.
Outcome sought
The most immediate and effective collection of overpaid child support would be to transfer funds from the parent's Centrelink payments.

It is recommended that the CSA establish the software link to Centrelink's computer systems to effect collection.

Alternatively a simple system of notification to Centrelink byway of letter should be implimented.The deductions should be calculated the same way / formula, used for normal payer deductions (protected earnings) and these deductions should be credited to the CSA who in turn pay out the overpayment in due course.
Has this been raised in other forums?
No it has not been raised in another forum and it is fair to say that most persons would expect that the CSA already has the power and the systems in place to deduct from Centrleink as the two Agencies share premises and resources and have been largely merged throughout Australia.
What was the outcome?
Nil
Suggested approach
Write a system functional description of the operation of software to recover child support overpayments from Centrelink.
Task a group of business software analysts and systems architects, as well as software programmers to design, code and implement the collection facility linking the CSA and Centrelink computers.

Prepare a form template for these sorts of cases so that CSA can simply advise Centrelink by mail.

Create a working agreement between the CSA and Centrelink to effect collection as set out under the existing Section 1228 (2B) of the Social Security Act 1991.
Official Response from CS
Overpayments are rarely, if ever, caused by a time lag in withdrawing or adjusting a garnishee notice. Most overpayments are caused by retrospective amendments to a liability. This can occur for example when DHS only becomes aware of a change of circumstances sometime after the event or when DHS attempts to determine the current care regime but cannot contact both parents to gather the necessary evidence.

When such an overpayment occurs, DHS acts as quickly as possible to adjust or withdraw any garnishee notices in place (if appropriate).

It is important to note however that many employers have rigid payroll processing timeframes and this often means that no matter how quickly DHS attempts to withdraw a garnishee notice, further deductions may be remitted by the employer. When these excess amounts are received by DHS they can be immediately refunded to the paying parent but this process can also be delayed if DHS is unable to contact the paying parent to determine their preferred payment method.

DHS acknowledges it is currently unable to make deductions from Centrelink payments to recover an overpayment. Manual solutions such as creating individual garnishee notices for service on Centrelink have been explored but Centrelinks own ICT infrastructure does not allow deductions to be transmitted to the child support system. DHS has recently commissioned the design of a child support Replacement System and this particular issue will be addressed as part of the design parameters.

Finally, its important to note that overpayment recovery is fully effective in most cases. Over 80% of child support overpayments are fully recovered within 6 months of their creation. This is often due to fully automated offsetting against the ongoing child support liability. Furthermore, DHS is receptive to the financial situation of the overpaying parent and will explore various options for preventing hardship where appropriate. For example, if Commonwealth error caused or substantially contributed to the overpayment, DHS can consider making a lump sum refund to the paying parent and enter into a long term repayment arrangement with the payee parent.
Our comments in response

The CS comment that its important to note that overpayment recovery is fully effective in most cases is hardly exciting to the 20% of Payers who do not get their overpayments recovered. This is especially more worrying at the end of the Child Support Liability where overpayments are firstly requested to be written off by CS and secondly are unable to be collected where a Payee Parent refuses to repay the overpayment. We have documented cases where this is happening. Surely an adjustment to some Centrelink payment can be made to correct matters and for Centrelink to reimburse the Payer overpayment.

What do our members have to say? Should we close this issue at this point or raise additional material?

Executive Secretary - Shared Parenting Council of Australia
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It is not acceptable that DHS allow child support overpayments to occur.

DHS acknowledge that many employers have rigid payroll processing time frames. Employees are aware of payroll closing times for any leave applications or other pay related purposes. DHS should therefore also be aware of these closing dates and ensure that the necessary written instructions are communicated to employer payroll offices using email, fax, mail or other means to ensure receipt before the payroll closure date. A phone call from a Child Support Officer to an Employer's Payroll Officer should be sufficient where time is off the essence and payroll close-off is imminent. This can always be followed up with the necessary paperwork afterwards.

The problem is that DHS has no single person monitoring each case. They rely on automated systems. It is a system design failure that does not provide pre-emptive action (by the child support IT systems) to prevent an overpayment. Nor is the IT system providing an alarm notification to the SCO in order to take action.

For DHS to leave the problem in place and accept that 20% of overpayments are not remedied, that is, paid back in a timely fashion or not at all, is simply a derogation of duty and is not acceptable in my view.

DHS apply a rigid and blunt approach to the commencement of child support payments and garnishee. The payer, once identified, has little recourse but to start paying or having pay deducted automatically. That is, payers have little or no control over the transfer away of their personal income.

DHS hold payers to this high standard and scrutiny and automated deductions, with or without payers' approval.

The same high standard and rigour needs to apply to the prevention of overpayments, that is, garnisheeing more money than should legally be taken. And overpayments, when they occur, should be held and returned to the owner, and not transferred to the payee which makes recovery difficult and more often than not, impossible.

The IT Systems within DHS should be interlinked with Centre-link to enable recovery of over paid monies from Family Tax Assistance 'A' and related benefits. In the absence of automated systems to pre-emptively warn of impending overpayment and generate and send the necessary letter to employers, Child Support Officers should review daily their case files looking specifically for signs that the danger of overpayment is imminent, in order to act early enough to notify employers' payroll.

Federal Director  -  Shared Parenting Council of Australia
From the responses it seems that the DHS are unaware that as much as an underpayment, which I believe they will still chase to the grave (as per the 2 Joe's), is a loss to the child or children that very frequently an overpayment is also a loss to the child or children. That is the DHS do not appear to be able to comprehend that to take too much from a paying parent is to deprive the child or children of the correct amount of financial support that the paying parent can provide. In fact it could very easily be argued that it is in fact worse as shorter term care is very often a greater cost per a period of care. However, I very much doubt that the DHS/CSA will ever consider such facts as relevant as it is very evident that their priority is collection (eg Richmond report).

I believe that the only way to solve this issue is by amending the legislation so that it adheres to the objectives of the acts i.e. section 4 (assessment act) and section 5 (collect and registration act) to ensure that children are provided with the proper level of financial support rather than an ongoing improper level due to overpayments.
MikeT said
That is the DHS do not appear to be able to comprehend that to take too much from a paying parent is to deprive the child or children of the correct amount of financial support that the paying parent can provide. In fact it could very easily be argued that it is in fact worse as shorter term care is very often a greater cost per a period of care. However, I very much doubt that the DHS/CSA will ever consider such facts as relevant as it is very evident that their priority is collection (eg Richmond report).
Thanks very much for that view MikeT as it was not an angle or view we had delivered to DHS in submissions.
MikeT said
I believe that the only way to solve this issue is by amending the legislation so that it adheres to the objectives of the acts i.e. section 4 (assessment act) and section 5 (collect and registration act) to ensure that children are provided with the proper level of financial support rather than an ongoing improper level due to overpayments.
The issue you raise here are two I believe.

Firstly the proper level of care. What is not understood is that when parents separate they cannot get the same level of lifestyle they had and we have many situations where one parent is far worse off than the other who is worse off. So there are two worse off parents and one often far worse off. So what is the proper formula? When the majority group pay just the minimum and Centrelink pick up the support what is the proper formula ? Is it a flat rate on salaries/earnings paid monthly but reconciled at tax time with the tax return??

Secondly that there should be a simple way to recover the overpayment via Centrelink or ATO. It should not require another billion or three dollars thrown at a software system. Simply an A4 form on paper provided by CS to Centrelink or ATO to Debit this account and pay that account. If they wanted to get fancy they could make it a pdf file and email it !

Executive Secretary - Shared Parenting Council of Australia
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Wayne,
           many know that the formula is lacking in that it doesn't properly consider all aspects of a very complex issue rather. I don't think that there is formula that would correctly suit.

     However, when it comes to overpayments I believe that it should be treated the same as an underpayment/arrears. That is, exactly the same measures that exist for collecting what is owed to a recipient are applied to overpayments as they are, as explained, as much a need for the child as are payments to recipients. That is that the collection legislation and policies adopted by the CSA should apply equally to overpayments as it does to the collection of child support for recipients. In fact I'd go as far as to suggest that those who collect (oops that's all of the CSA, as per Richmond) are not made aware of whether the monies being collected are a liability or an overpayment that the monies are simply what is owed to a parent.
I think that is a great idea. Collections = collections, regardless if it is an overdue payment or an overpayment. Equality!
Centrelink/DHS has a robust but fair overpayment collection process for any of their payments (FTA/FTB, rent assistance).

We were overpaid for rent assistance for 4 weeks after buying a home & we then paid it off (as a reduction in FTB payments) over the ensuing 2 months. All sorted and very painless.

I can see no reason why CS recovery should be any harder.

"I know that you believe you understand what you think I said, but I'm not sure you realise that what you heard is not what I meant."

 

New Child Supprt - Future Wealth Builder

I Have been a "Payer" of Child Support through CSA for around 5 years paying around 8k per year .
What I know is that the model is flawed on 3 sides .
1- From the Payers side because there is no audit / visibility on how the money is spent .With Technology this is easily fixed.
2- From the Payees side - I can only imagine there could be frustration
3- The overworked people at CSA - who do a great job despite a system which most acknowledge as being over complicated , hard to administer etc.

So everything I read about reviews and changes is really about band aid solutions which are never going to really fix anything .

Here is a concept and model I am working on :

We need to immediately move away form the current model of Payer and Payee .
The new system needs to be an account based - transactional system - Looking at current banking systems - technology you could easily build something state of the ART.

Create an Online account in the 'childs / children's name "
The Payer has read only access to the account and deposit access .The payer will be able to actually see how the money is being spent .Fair don't you think ?
The Payee has withdrawal and deposit access also ( and should also contribute to the account as well.
It is a high interest bearing account with 10% of deposits being locked until the Child is 18 ( Would go a long way to helping out with Uni fees and Home deposits , first car etc )

You might say that all the money should be able to be withdrawn by the payee as soon as it lands in the account to cover the cost of raising the child …..
Say for example to pay the Payees' electricity bill …. But I have a theory on that in that if the bill was $200 for the month and the child was with the Payee for 65% of the time then I reckon the bill would still be close to 200 if the child was only there 20% of the time ….food for thought !

So I pay about $700 per month at the moment . i have no idea where it goes , how it is spent etc.

Wouldn't it be awesome if I could simply login online check the account and see that the little fella got a new pair of runners , or had his school fees paid .
And then I could also see that some money was left  sitting there - building his wealth.

We need to only look at super and long term saving to see that there is a better way for us to provide for our childrens immediate needs as well as there future needs.

I am sure that a new system like this woud take a lot of the against on both side of the fence .
We could close down the CHILD Support system all together and introduce a new system which would be easily maintained ( I reckon a bank would love the opportunity to model this )

This could also be introduced when a child is born . Establish the account before the breakdown of the relationship between the parents. and there are easy controls that cant be placed on the account to prevent a parent cleaning it out.
phoenix, I can completely understand your frustrations my husband currently pays a similar amount to you.

On the other side though, I receive $500 a year in child support. If that had to be put into a separate bank account I think that would be a complete waste of my time. IF my ex pays his CS (and he has quit jobs to avoid paying), it goes against a loan account I have as a bonus payment. I pay for everything for my daughter and spend well over $500 a year doing it. Why should I be accountable for such a pittance, and why should a whole system be set up to ensure that I am spending it on my child?
Willfred said
Centrelink/DHS has a robust but fair overpayment collection process for any of their payments (FTA/FTB, rent assistance).
Part of this is the withholding of some funds (up to $726.35) until year end (for those who receive FTB payments over the year i.e FTB Part A supplement).

Wilfred said
I can see no reason why CS recovery should be any harder.
The main difference if that CS can (and is) used as a means of enacting revenge whilst welfare payments are basically from an anonymous benefactor.

phoenix21 said
The payer will be able to actually see how the money is being spent .Fair don't you think ?
This would only really show detailed information if the account were used directly and even then it could very easily be abused e.g. pay for someone else buying the item get the cash from that person and spend it elsewhere.

phoenix21 said
Create an Online account in the 'childs / children's name "
The Payer has read only access to the account and deposit access .The payer will be able to actually see how the money is being spent .Fair don't you think ?
How would this cope with the needs of the child or children when in the care of the other parent?

I believe that a measure more comparable with what I think was/is called the NT initiative were adopted, where welfare payments were restricted. That is that the CS funds (and also FTB and also the portion of PPS that is greater then Newstart Allowance, ie monies provided, other than by the parent, for the child or children) is securely restricted/limited to what it can be spent on.

I do remember some years ago in an interview with Matt Miller (The head of the CSA) that he retorted to the idea of accountability measures with words to the affect of "it would be impossible". Accountability and protection of the child/children against neglect and or exploitation have been factors put forward for many years. However, I believe that there are some strong voices that want to deny such protection of children as it goes against their ideals.

Another potential positive for accountability is that it could be used to formulate rates that reflect actuals rather than pie in the sky figures. e.g. figures that mention averages that are beyond what is possible. Something like 1/2 million for the average child (till 21)when the average wage was then $50k.


phoenix21 said
This could also be introduced when a child is born . Establish the account before the breakdown of the relationship between the parents. and there are easy controls that cant be placed on the account to prevent a parent cleaning it out.
Food for thought. Why not make all parents pay child support according to the formula ito an accountable account? What would be wrong with ensuring that all parents met the financial needs?

Overpayment inequity

The CSA were extremely efficient increasing my repayments based on taxable income for 2013 /14.

When I phoned on August 19 to make an estimate of my income for 2014/15, I was told I could not submit that until September 1.

When I phoned on September 1 I was told the new repayment schedule would not come into effect until September 25. In the meantime my pay September 11 was reduced $*** instead of $***. When I phone to tell them that in fact I have overpaid, they say they can do nothing about it. They say you can have it on your account as a credit. Since then I have received statements saying I am in arrears by $****.**. They say the advice I got on August 19 was wrong, but they will not do anything about it. Does it look like they are more interested in extracting money than getting a fair outcome? I have my own kids to provide for, and I can't do it paying 150% on what I legally should be paying.
phoenix21 said
I Have been a "Payer" of Child Support through CSA for around 5 years paying around 8k per year .
What I know is that the model is flawed on 3 sides .
1- From the Payers side because there is no audit / visibility on how the money is spent .With Technology this is easily fixed.
2- From the Payees side - I can only imagine there could be frustration
3- The overworked people at CSA - who do a great job despite a system which most acknowledge as being over complicated , hard to administer etc.

So everything I read about reviews and changes is really about band aid solutions which are never going to really fix anything .

Here is a concept and model I am working on :

We need to immediately move away form the current model of Payer and Payee .
The new system needs to be an account based - transactional system - Looking at current banking systems - technology you could easily build something state of the ART.

Create an Online account in the 'childs / children's name "
The Payer has read only access to the account and deposit access .The payer will be able to actually see how the money is being spent .Fair don't you think ?
The Payee has withdrawal and deposit access also ( and should also contribute to the account as well.
It is a high interest bearing account with 10% of deposits being locked until the Child is 18 ( Would go a long way to helping out with Uni fees and Home deposits , first car etc )

You might say that all the money should be able to be withdrawn by the payee as soon as it lands in the account to cover the cost of raising the child …..
Say for example to pay the Payees' electricity bill …. But I have a theory on that in that if the bill was $200 for the month and the child was with the Payee for 65% of the time then I reckon the bill would still be close to 200 if the child was only there 20% of the time ….food for thought !

So I pay about $700 per month at the moment . i have no idea where it goes , how it is spent etc.

Wouldn't it be awesome if I could simply login online check the account and see that the little fella got a new pair of runners , or had his school fees paid .
And then I could also see that some money was left  sitting there - building his wealth.

We need to only look at super and long term saving to see that there is a better way for us to provide for our childrens immediate needs as well as there future needs.

I am sure that a new system like this woud take a lot of the against on both side of the fence .
We could close down the CHILD Support system all together and introduce a new system which would be easily maintained ( I reckon a bank would love the opportunity to model this )

This could also be introduced when a child is born . Establish the account before the breakdown of the relationship between the parents. and there are easy controls that cant be placed on the account to prevent a parent cleaning it out.
 

Yeah, that would be lovely. Another way for my ex to perpetrate family violence and control over me. Considering its been about 5 years since I broke off our relationship and the still constant abusive calls, text messages etc. Absolutely no respect for handling a high needs (disabilities) child by myself when he dropped the ball.
 And locking 10% wouldn't help at all. My son needs his therapy costs covered NOW. Otherwise, he might not ever been independent enough to buy his own house, car, hold down a job etc.
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