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CSA claim parents back new child support / Worthy and unworthy winners

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Most parents who pay or receive child support believe the new scheme implemented in full on 1st July 2008 is fairer than its predecessor.

Two articles FYI.

The Sydney Morning Herald
11 October 2008

Parents back new child support
By Adele Horin

Most parents who pay or receive child support believe the new scheme implemented in full on July 1 is fairer than its predecessor, research for the Child Support Agency shows.

Based on a sample of 300 payers and 300 payees, the research shows that by August 63 per cent of parents who received support, and 76 per cent of payers, agreed the system used a more balanced formula to work out payments. The proportions in agreement had increased since May last year when the first survey was undertaken.

More than 1.4 million parents are in the child support scheme.

The Minister for Human Services, Joe Ludwig, presented the findings to a private meeting of the Child Support National Stakeholder Engagement Group on Thursday.

He told the meeting he understood the introduction of the new system had been a trying time for parents. But the research showed confidence in the system had been boosted by the new rules.

"We have a fairer child support scheme in place which should be allowed to be bedded down before we consider further significant changes," he said.

Groups representing child support payers and payees are both lobbying the Government to make further changes, especially for the high proportion of low-income parents who are worse off under the new system.

Research released in August by the Department of Families, Housing, Community Services and Indigenous Affairs showed almost 50 per cent of child support recipients had lost some income under the new scheme.

The Howard government initiated the changes, the most significant in 20 years. It recommended a new formula that took into account for the first time the incomes of both partners on an equal basis, the costs of children, and the costs incurred by non-resident parents who have children for at least one night a week.

The telephone survey of parents' perceptions had a sample error of 5.5 per cent.

It shows that earlier this year paying parents were concerned with only 58 per cent expecting the new initiatives to make the system fairer. But after its introduction support rose 17 per cent.

Both payers and payees believe the agency is putting greater effort into delivering more money for children of separated parents, with 64 per cent of payees (up from 52 per cent last year) in agreement, and 70 per cent of payers.

However, Mr Ludwig told the meeting the hard numbers from the agency showed only 50 per cent of paying parents paid their child support in full and on time. A large number did not lodge tax returns within a reasonable time, and an estimated 30,000 may be deliberately avoiding child support through the use of income minimisation schemes. In the last 12 months an extra $73 million had been collected as a result of stepped up compliance by the agency. This would help offset the $70 million in reduced income to separated families that had resulted under the new rules.

Researchers at the Australian National University have begun a more detailed analysis of the impact of the new scheme over time involving 5000 parents.


Note the bias, in favour of women, in the next article, where all examples of 'victims' are only female.

There is no mention of the fathers who have been hit for significantly more 'child support' (and experiencing increased impoverishment) or who have been denied access by the mother in order to maintain her level of income from the children.

This reporting reveals a pro-woman bias on the part of the SMH and the writer (presumed to be Adele Horin).

The Sydney Morning Herald
11 October 2008

Worthy and unworthy winners

Revised child support rules have produced some odd results.

In the great shake-up of Australia's child support scheme, everyone knew there would be winners and losers. But in the three months since the dust has settled, Susan Smith*, a divorced mother of three, is still marvelling at how she came to lose $400 a month in child support.
Her former husband had the chutzpah to produce an 11-year-old Family Court order that said he had access to his children every fortnight from Friday night to Sunday. It had been an ideal arrangement while it had lasted, but it had lasted only a year.

Mr Smith had moved down the coast, repartnered, and taken up a Saturday sport. And although the children were happy to visit, and she supported their contact and was keen for a break, he had taken them only a dozen times over the past two years. The visits are marked on her calendar.

Under the new child support rules, however, Mr Smith's court order puts him in the category of a "regular" provider of overnight care to his children, defined as at least one night a week.

And as part of the sweeping reforms, his assumed contribution and costs incurred have been acknowledged for the first time with a sizeable reduction in his child support obligations. It did not seem to matter to the Child Support Agency that he did not comply with the court orders.

"Before the child support rules changed on July 1, I got $1200 a month, and after I got $770," said Ms Smith. "I'd be even happy to lose the money if he took them when he's supposed to."

Since July, Mr Smith has made more of an effort to see the children but the overnight stays have been half what is stipulated in the old court order, and would not qualify him to pay reduced child support.

Ms Smith is studying full-time to be a nurse, and relies on the parenting payment (single). She has a wry sense of humour, and does not appear as bitter and angry as many caught in the maelstrom of child support wrangles. But she says, "It doesn't seem fair that money for the main care-giver has gone down when nothing much else has changed. We've had to tighten our belt."

The first major changes to Australia's path-breaking child support scheme since its inception in 1988 are starting to reverberate through the vast community of separated and divorced parents. Overall 50 per cent of parents who receive child support (payees) have lost income, 37 per cent have gained, and 51 per cent of payers are paying less, according to a study by the Department of Families, Housing, Community Services and Indigenous Affairs.

There is a grab-bag of winners and losers, depending on a range of factors such as the age and number of the children, and the parents' relative income. Many primary carers with teenagers have gained, as well as higher-earning primary carers.

The Minister for Human Services, Joe Ludwig, told a private meeting of the Child Support National Stakeholders Engagement Group on Thursday the new system was fairer and should be "bedded down" before the Government considered further significant policy changes.

He released market research based on 300 payers and 300 recipients of child support and commissioned by the Child Support Agency. It showed 76 per cent of payers and 63 per cent of recipients thought the new system was fairer.

But early indications give rise to some concerns. And both Elspeth McInnes, a prominent spokeswoman for sole mothers, and Barry Williams, the national president of the Lone Fathers Association, are pressing the Government for more changes.

Under the new system, separated parents overall are getting $70 million less, even after an increase in family tax benefit, according to the departmental study. Who is bearing the loss? Many parents who are the main carers of children have lost child support although nothing else has changed in their lives. And the major losers are the poorest parents in Australia, both women and men reliant on the Parenting Payment, the Disability Support Pension, or the Newstart Allowance. The study shows 51 per cent of the primary carers on government benefits - about 160,000 sole parents - have lost money and more than one-third of the payers on government benefits - about 44,000 - are also worse off.

More than half the mainly female sole parents who work part-time have lost out because now income between $18,252 and $45,505 is taken into account in the calculations, usually to reduce their child support. The other losers are parents, such as Susan Smith, whose former spouses are paying less child support for doing what they have always done - taking the children every second weekend - or in some cases failing to do so. Another smaller group who felt the cut when the initial stage of the child support changes took effect two years ago are women with wealthy former partners. The maximum income considered for the child support formula was significantly reduced.

The eminent ministerial task force of academics appointed by the Howard government in 2004 to review the creaking old child support scheme made radical changes in homage to changing times.

In the end a complicated formula was arrived at, based partly on an empirical study of what it costs to raise children. As well, the primary carers' income was counted for the first time once earnings exceed $18,252 - to acknowledge the new duty of mothers to contribute to the financial support of their children; the costs that non-resident parents incur in having to set up a room for their children to stay at weekends and school holidays is also acknowledged, as well as the higher cost of raising children over 12.

But the rules came into effect at a time of rising food and petrol prices. Many low-income primary carers have lost income on the grounds that previously they were being overpaid. It is a tough message to comprehend for parents already living frugally.

That is what Aija Dowling, mother of two boys aged 9 and 11, finds so galling about her $140 a week loss in child support under the new rules. When she rang a radio talkback program recently on which the head of the Child Support Agency, Matt Miller, was a guest, he told her she had probably been getting too much under the old scheme.

"All I know is that four years ago, when I separated, I was entitled to more than I am now," said Ms Dowling. "Living costs have exponentially increased but none of this has been taken into account. It's been a sudden shock to my finances."

Ms Dowling works part-time but her total income with part-parenting payment amounts to $27,000 while her former husband's taxable income is over $70,000. She has no argument with her former partner, only with the new system that judged her previous payment of $15,000 a year too much and reduced it overnight to $8600.

Sally Brown* is wondering whether the point of the changes was to force women like her, sole parents who worked part-time, into full-time work. She had chosen part-time work because the family, when together, had moved around a lot because of her former husband's job, and her son, now 12, had been disturbed by the moves and the break-up. "He needed me." A research assistant, she is among the 101,000 sole parents whose child support was reduced. She found that her child support was cut in half overnight from $13,000 to $6000.

"Unless I moved to full-time work I was going to be financially worse off," she said. "I had cheap rent, and the child support covered it. When it fell I was in strife."

Her former partner was happy to keep his previous payment up for a while but she did not want to be "beholden to his generosity". So she found a full-time job and has increased her salary from $38,000 to $65,000 as a result. "For the money, I wouldn't have done it, not until my son was in high school. But I couldn't live on $6000 less."

Of most concern are the sole parents who rely on a government benefit and who have lost child support, even if the reduction for most is $20 a week or less.

Kris Fry, a divorced mother of three children aged eight, five and four who is on the parenting payment (single) thought the Child Support Agency had made an error in the calculations when learnt she would lose $400 a month in child support post-July.

"I was prepared for maybe a $100 loss," she said. A teacher, she works one day a week but is not prepared to increase that until her youngest is in school. "I'm robbing Peter to pay Paul, and I've very supportive parents I borrow money off," she said. Her former husband has the children twice a month.

Ms Fry is so incensed, that she has started a lobby group, based in Brisbane, called Sandbag Child Support Advocacy to "get our voice heard".

Parents were led to believe that reductions in child support under the new rules would be compensated with increased family tax benefit, she said. In fact the poorest primary carers who already receive the maximum rate of FTB do not get any compensation at all when their child support is cut. And FTB is clawed back from primary carers at 50 cents for every dollar of child support received above a low threshold, reducing the net value of the child support payments.

As well, many of the poorest payers, mainly fathers, can no longer claim a proportionate share of FTB under the new rules as they were previously able to do, unless they have the children more than 35 per cent of the time. The loss of FTB has plunged many fathers into deeper poverty, with less chance of being able to see their children even twice a month, Mr Williams of the Lone Fathers Association said.

No one believes major changes to child support are likely. It has been a mammoth effort to put the scheme in place, involving recalculations for the 1.4 million parents in the system.

Barry Williams and Elspeth McInness both want the FTB clawback reviewed to improve the finances of both low-income payees and payers.

Susan Smith is wondering whether her ex will start seeing his children every fortnight as he told the Child Support Agency he was doing, or at what point she should inform on him, and try to recoup some of her lost child support.

One part of her hopes a new era might begin between her ex and his children, and another is dismayed it would take a financial inducement to prompt his greater effort. In the brave new world of child support, new dilemmas are born.

*Names have been changed.

SMH reports on a grab-bag of losers

It is interesting to see the same example re-hashed time and time again from ill informed news reporting who fail to get the big picture view. The reporting obtaining any shred of evidence at the extreme end of the spectrum satisfies the soothsayers of doom and gloom who are abundent these days. They simply try to undermine the credit for care that was introduced in the current legislation. The real story was reported by the SPCA in a recent news story.

Minister Ludwig's full speech as presented to the CSNSEG (Child Support National Executive Stakeholder Engagement Group) on the 9th October is reproduced in the news item link including supporting graphs and is reproduced below.

Minister Joe Ludwig speaking to CSNSEG in Melbourne

Speech to the Child Support National Stakeholder Engagement GroupThank you for coming today to continue our engagement on child support now that the new formula is in place. Today we meet in the traditional lands of the Wurundjeri people and I want to pay my respects to the local elders for their traditional custodianship of this area.

Today I want to talk about three key points:

  • We have a fairer child support scheme in place which should be allowed to be bedded down before we consider further significant policy changes.
  • We will continue to focus on improving the effectiveness of compliance and enforcement as an important element in improving the overall efficacy of the Scheme.
  • There are opportunities still out there for government to better help separated and separating families by looking to join up service delivery across the broader family law system.
Before I start on those topics, I recognise that it has been a trying time for parents and stakeholders as we have been bedding down the introduction of the new child support formula.

I believe that the implementation stage has been successful. It has been a long journey getting to this point, as so many here intimately know.  There was the House of Representatives Committee Inquiry "Every Picture Tells a Story", the Ministerial Task Force "In the Best Interests of Children", the legislative process and the difficult road of implementation.

I want to recognise the hard work done in getting us here. It has taken hard work from the CSA staff, everyone from Matt and Sam down and right to the front line. But also I recognise the effort you as stakeholder groups have made into building this formula and seeing it through, and you too all deserve the thanks of the Government. In the most recent phase, as stakeholder representatives you have been particularly helpful in alerting the social service sector and CSA customers to the nature and effect of the reforms, and for that we as a Government are grateful.

We are now in the post-implementation phase of the reforms.  It's time to take stock of where we are and look ahead to the future.

The role for Government and the CSA in particular, now shifts to monitoring how well the new system is working.

1. Better and fairer system

We all know the key elements of the new formula now in operation:

  • The incomes of both partners are dealt with on an equal basis,
  • The child support obligation recognises both the share of care of the children, and the cost of supporting children has been independently calculated to better reflect contemporary family realities.
The two key elements of the child support equation are made to interact in a sound way: the incomes of the partners and their share of care.  If the incomes of both parents are equal and the care is shared 50/50, then there is no transfer from one partner to the other.  As one partner's share of combined income increases so does the obligation. Similarly, as the share of care increases the child support obligations falls in proportion.

The system fairly balances income earned with care obligations undertaken.

The incentive structures are there.  Parents are encouraged to share parental responsibilities.  This preserves the original vision of Child Support legislation introduced in 1989 that parents share the cost of supporting their children according to their capacity to pay while providing adequate support to care for the children.

In short, the new scheme is, as I have stated, a better and fairer system. However, I understand there will be teething problems, which is why I want to hear from you where the pressure points are in this massive new system that transfers $2.8bn for children.

This message is being recognised within the child support community.  Today I am releasing some of the latest independent market research results of parent satisfaction with the new Scheme.

Since 2007, the Child Support Agency has conducted surveys of CSA clients using a standard set of questions in May and August 2007 and February and August 2008.

This allows us to track the concerns of separated parents over time.

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Statements re the new Child Support Scheme

Some of the results are really quite instructive.

These first three questions relate to the fairness of the whole system.  These green bars relate to the paying parent part of the community, the orange bars refer to receiving parents.

The research shows there's been a boost in confidence in the child support system since the introduction of the new scheme.

Earlier this year, there was some concern about the new scheme with only 58% of paying parents expecting the new initiatives would make the system fairer.  But in August after the scheme's, introduction this has risen 17% percentage points to 75%.

If we take the average of the first three research periods (May and August 07 and February 2008) on the issue of whether changes improve fairness, we measure a positive response in about 62% of cases.   So the most recent result of three quarters acceptance is much more positive than we could have expected.

The research also shows that 76% of paying parents now believe the formula is more balanced.  All previous responses had a 4 in front, a three year average of about 43% acceptance.  It's a positive shift.

It's good to see that this positive view of the new arrangements is also occurring in the receiving parents group.

Between February and August this year there has been a jump from, 52% to 63%, about ten percentage points, on the issue of whether the new formula is more balanced.  If we look at the average of the first three times the survey was conducted a positive result was received in only 51% of cases.  The most recent responses show a much more positive result than could have been expected.

So there is evidence of growing agreement across the customer base that the more recent changes are both fairer and more balanced.   So we need to continue to monitor how the scheme is operating.  This will probably take about 12 months before we have any real feel for how well the new scheme is working.

2. Improving the effectiveness of compliance and enforcement

I now wish to turn to the 2nd theme - the importance of continuing to improve the effectiveness of compliance and enforcement activities.   We need to deliver more timely and complete child support payments to receiving parents and to strengthen the integrity of the system.

This is all the more important now we are in the post-implementation and monitoring stage.

I strongly believe a fair formula and a fair Scheme cannot be genuinely fair until the obligations assigned under the Scheme are in practice actually met. I am determined and unshakeable in my resolve to ensure children get the support they are entitled to under the new formula.

The issue of compliance was canvassed in the research and I would like share the attitudes that were observed.

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Statements re Conmpliance

The question asked in the survey was whether "CSA is too soft on parents who don't do the right thing?"

Paying parents said yes 54% of the time in August compared to 49% in February this year, and receiving parents said yes to the question 81% in February but in August this figure dropped to 58%, a fall of 23% percentage points.  So there is the perception that non compliance is less of a concern.

Still what do the hard numbers tell us?

  • Only 50% of paying parents pay their child support obligations in full and on time - 40% pay 75% or more of their liabilities
  • We have a large number of parents who are not lodging their tax returns within a reasonable time, often leading to underpayment of child support until returns are lodged
  • We have an estimated 30,000 parents who may be deliberately avoiding their child support responsibilities through use of income minimisation schemes.
  • Many people have multiple child support cases in areas.
  • Total child support debt has increased to over $1bn.
Earlier this year in June, I launched the CSA's new Compliance and Enforcement Strategy and also announced additional initiatives to enhance the effectiveness of this work. I am pleased to report today that since that time, another key Memorandum of Understanding has been affected between CSA and Department of Immigration and Citizenship to share information on passenger movements and facilitate more timely enforcement intervention where appropriate.
During the 14 month period from 1 July 2007 to 31 August 2008, this compliance and enforcement work has resulted in the collection of an additional

  • $22.6 million from tax refund intercepts
  • $37 million from intensive debt collection activities
  • $12.5 million from litigation
  • $11.4 million from investigation of income minimisers
  • $5.4 million from application of Departure Prohibition Orders.
In total, this work has so far collected nearly $20 million more than forecast to this time. In the last 12 months an additional $73 million was collected and this is an important offset to the net movements in total child support (a forecast reduction of $210 million) and Family Tax Benefit (a forecast increase of $140 million) as a result of the new Scheme.

It is clear we need to maintain and further enhance our efforts in this area.

3. Joining up service delivery across the broader Family Law system

Perhaps the most exciting and most promising area for further work is improving the connectedness of the broader Family Law system for separating and separated families.

I am sure we all agree separating and separated families are confronted by a complex and largely fragmented service delivery system. Much of this fragmentation is sustained by existing bureaucratic structures and Ministerial portfolio responsibilities and well-intentioned passion to achieve outcomes within the various silos. This still leaves the families needing to access the system and its services to struggle to make sense of what they should do.

My sense is that as stakeholders in this system, we ought be looking to find ways to support parents navigate the system and where possible provide more joined up service delivery not just in government services but also with non-government providers. I believe we need a new portal to these services - one which provides an easier entry point and where the various referral pathways can be identified for the parents.

Further improvements to service delivery has to include a focus on early intervention initiatives including improved access to parent support services such as financial counselling, improved referral processes, greater use of Family Relationship Centres in realising agreement between parents on their respective parenting responsibilities and more holistic approaches to parents' circumstances by Centrelink and CSA.  I think there is also value in looking to how we can improve the linkages between the Courts and the administrative arm, and between the stakeholders and the decision makers.

I have asked my Department through the CSA to explore how we can start on this new work to determine what appetite exists to engage in this thinking and development work over coming months. At the same time I will be discussing this opportunity with my Ministerial colleagues- Hon Jenny Macklin, Minister for Familiesand the Attorney-General Robert McClelland.

Conclusion

The three elements I have outlined today are mutually reinforcing.

We have a better and fairer system, a more balanced system, but it only works if separated parents accept it and strive to comply with the obligations they face.

We need a tough compliance regime, but improving compliance also requires building greater confidence in the system. This can possibly be done by providing more integrated services to families considering separation.

The results of CSA's research indicate that the child support community appears to have accepted the recent changes and is moving forward.  Let's work together to consolidate this progress and seek opportunities to support separating families in caring and providing for their kids. After all, the system exists to serve the children.

Media ContactJoe Scavo 0413 800 757.

Secretary Spca said
The Ministers comments are in line with views put forward at a recent meeting between the Shared Parenting Council in Sydney which included Michael Green QC and the FLRA (Family Law Reform Association) and Margaret Anderson and her attending members from the Attorney General's office. Margaret was engaged to look at a range of factors impacting family violence and early intervention strategies were discussed such as locking in intervention hearings tied with contact orders and intensive early interventions as used successfully in the United Sates in some states.

Executive Secretary - Shared Parenting Council of Australia
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