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Child Support shakeup in NZ

Revenue Minister Peter Dunne yesterday released a discussion document, Supporting Children, outlining wide-ranging proposals to overhaul the system under which child support is administered and seeking to make it easier and fairer for parents.

Several articles re 'child support' in NZ.

http://tvnz.co.nz/national-news/child-support-review-welcomed-3757538

Friday 3 September 2010
Source: NZPA

Child support review welcomed

Plans to overhaul rules around child support have been welcomed by single parents and child advocates.

Revenue Minister Peter Dunne yesterday released a discussion document, Supporting Children, outlining wide-ranging proposals to overhaul the system under which child support is administered and seeking to make it easier and fairer for parents.

Dunne said there were plans to make it fairer for absent parents who pay significant financial support while still having active involvement in looking after their children, and less harsh for those falling behind in payments.

He said the current scheme was introduced 18 years ago, but nowadays both parents are more likely to be working and often separated fathers had a greater role caring for children.

Parents owe about $2 billion but only about $600,000 of that is unpaid child care payments while the rest is accumulated penalties.

Compulsory deductions from wages, a reduction in penalties for those genuinely attempting to pay and amnesties and write-offs for special circumstances were among the options on the table.

"An important part of getting the scheme right will be creating a situation where paying parents are more likely to comply with their obligations voluntarily," Dunne said.

Chief Families Commissioner Carl Davidson said he wanted to see payments going directly to the carer parent and not through IRD, as overseas experience showed people were more happy to pay when government departments were bypassed.

Every Child Counts spokeswoman Deborah Morris-Travers said after 18 years of social change the review was welcome.

"There is plenty of anecdotal evidence that suggests (the system) is no longer working in the best interests of the children involved," she said.

Twenty one percent of households were now single-parent with dependent children and they were affected - for better or worse - by how well the child support system worked.

A couple of single parents spoken to by NZPA said it was pleasing to see changes were in the pipeline as the current system was fraught with downfalls.

"The system is designed to hit bad people - it tends to hit everyone who tries to be good," one father said. He said there was no leniency applied to situations where he had the children for long spells.

A mother said her partner consistently got away with skipping support payments, despite earning over $100,000 a year.

- Comments


Govt to overhaul child support system - National - NZ Herald News

2 September 2010

Govt. to overhaul child support system

The Government is to overhaul the child support system.

Revenue Minister Peter Dunne is to release a discussion document, Supporting Children, outlining proposals to change the system this morning.

Parents owe $2 billion in unpaid child care payments and penalties for non-payment.

Mr Dunne told Radio New Zealand changes included more recognition of time a child is cared for even if it is not overnight, which is the measure at the moment.

Also the Government wants the custodial parent's income to be considered when the other parent's level of payment is set.

"I don't believe that what we are proposing is going to be the right and popular solution in every case it can't be, but I think it is a much fairer set of options moving forward," he said.

"And I think if we can get to a position where people say I mightn't like what the system has in store for me but it's basically fair and reasonable they are more likely to comply."

The changes would build on previous measures such as better data matching across departments and with Australia.

- NZPA


Changes to child support system - National - NZ Herald News

2 September 2010

Changes to child support system
By Adam Bennett and NZPA

The Government intends using increased data matching abilities between departments and will introduce mandatory automatic payments as it seeks to crack down on what is now $2 billion in overdue child support payments.

However, Revenue Minister Peter Dunne also said a new formula will be developed to calculate support payments which may reduce the amount "non custodial" parents have to pay, and he indicated there could be concessions for those already owe large amounts.

Mr Dunne today released a discussion document, Supporting Children, outlining wide-ranging proposals to change the system.

Parents owe about $2 billion in unpaid child care payments and penalties.
The scheme arranges financial support for the care of 210,000 children.

Mr Dunne said it needed to be fairer.

"The options in the discussion document also seek to get a balance between the welfare of the parent who receives child support and the obligations of the parent who pays it," he said.

"In keeping with the need for this balance, the document asks whether child support payments should be automatically deducted from employees' income, and whether the penalty and write-off rules for child support need to be amended to provide better and more effective incentives to pay."

Mr Dunne said collection of the outstanding amount, $1.4 billion of which was penalties and interest would be aided by greater cooperation between Government agencies.

Two months ago Mr Dunne announced plans to beef up the Inland Revenue Department's IT systems which would throw up the wider issue of the extent to which information gathered by the IRD and other departments was shared between them.

Yesterday, he said moves to increase collection of child support fitted in with the wider data sharing strategy.

"It's consistent with the general direction we're taking." It was also consistent with recently announced initiatives to recover outstanding student debt.

"There's a pattern there."

The discussion document also proposes changes the formula used to determine the amount of child support to be paid by a parent. Mr Dunne said it could be changed to take into account factors including the cost of raising children, the degree of shared care between parents who are living apart, and the income of both parents.

"An important part of getting the scheme right will be creating a situation where paying parents are more likely to comply with their obligations voluntarily.

"They are more likely to do that if they see their obligations as fair, transparent and reasonable - and not based upon some formula that seems to have no regard for their individual circumstances."

Mr Dunne said the scheme was introduced 18 years ago and was "outdated and sometimes unfair".

Families were often more complex; both parents were more likely to be working and often separated fathers had a greater role caring for children than in the past.

It was better if parents could reach their own arrangements but the scheme was a good backstop when that could not be worked out, Mr Dunne said.

The discussion document will be on Inland Revenue's website with submissions closing on October 29.

Case Study:

Peter, an employee with a large company, owes a significant amount of overdue child support and associated penalties. His debt is now so large that he has stopped making any child support payments, as to pay it all off would leave him in serious financial hardship. His children are not benefiting from any contributions from their father.

If Inland Revenue was given greater ability to negotiate the write-off of child support penalties (which are due to the Crown) in return for Peter paying all of his core child support payments, his debt could be cleared and his children would once again benefit from his contributions.

To ensure that Peter makes future payments on time - meaning that he does not get into debt again and his children do not go without any assistance - Peter, and all other employees, will now have child support automatically deducted from their wages.


Child support may be taken straight from pay - National - NZ Herald News

3 September 2010

Child support may be taken straight from pay

Child support payments could be deducted automatically from pay under proposed changes by the Government.

Revenue Minister Peter Dunne yesterday released a discussion document, Supporting Children, outlining wide-ranging proposals to change the system.

Both parents' incomes could also be taken into account when payments are set under the proposals.

Parents owe about $2 billion in unpaid child support payments and penalties. The scheme arranges financial support for the care of 210,000 children.

Mr Dunne said it needed to be fairer. "The options in the discussion document also seek to get a balance between the welfare of the parent who receives child support and the obligations of the parent who pays it," he said.

"In keeping with the need for this balance, the document asks whether child support payments should be automatically deducted from employees' income, and whether the penalty and write-off rules for child support need to be amended to provide better and more effective incentives to pay."

Another option was to change the formula used to determine the amount of child support to be paid by a parent. Mr Dunne said it could be changed to take into account factors including the cost of raising children, the degree of shared care between parents who are living apart, and the income of both parents.

"An important part of getting the scheme right will be creating a situation where paying parents are more likely to comply with their obligations voluntarily.

"They are more likely to do that if they see their obligations as fair, transparent and reasonable - and not based upon some formula that seems to have no regard for their individual circumstances."

Mr Dunne said the 18-year-old scheme was "outdated and sometimes unfair".

Families were often more complex; both parents were more likely to be working and often separated fathers had a greater role caring for children than in the past.

Mr Dunne said the scheme needed to be fairer. At the moment, for example, a father might care for a child before and after school every day but because he did not have them for 40 per cent of nights (the present test) he was not considered to have shared care.

One option was to change the measure to a tiered system starting as low as
14 per cent of nights and recognising other periods of time.

Other options included using an estimate of how much it cost to raise a child as a basis for payments, and taking both parents' income into account
- not just the absent parent's.

Mr Dunne said it was better if parents could reach their own arrangements but the scheme was a good backstop when that could not be worked out.

The discussion document can be viewed on Inland Revenue's website, and submissions on it will close on October 29.

BLUEPRINT FOR CHANGE:

- Make it compulsory for child support payments to be automatically deducted from salary and wages.

- Reduce penalties after people have made repayments for a reasonable length of time.

- Provide an amnesty on penalty fees for people who pay the whole original debt.

- Allow penalties to be written off in some cases - for example, when someone is ill.

- NZPA


Editorial : Child support overhaul long overdue - National - NZ Herald News

3 September 2010

Editorial: Child support overhaul long overdue

The fact that $2 billion is owed in unpaid childcare payments and penalties speaks volumes about the shortcomings of the child support system.

Clearly, many parents are not only alienated by the present arrangements but are easily able to wash their hands of them. Their children are the ultimate losers.

Reform along some of the lines suggested in a Government discussion document is overdue. Eighteen years have passed since the system was last overhauled. Much has happened subsequently to warrant change.

The document, Supporting Children, has an array of options. One of the most eye-catching is that the income of both parents should be taken into account when childcare payments are set.

That seems a reasonable notion given more women are now in the workforce, especially in part-time jobs. Additionally, it is right in principle that parents should provide financial support according to their capacity to do so, whether or not they are living with their children.

Indeed, such a change would echo the situation if the parents were still together.

While some women could be dissuaded from seeking work, that hardly negates the value of this income-shares approach.

Most important, it would introduce a greater fairness. Many non-custodial parents obviously feel their financial obligations are too onerous. Some have chosen to walk away. Having done that, they face steep penalties.

Failure to pay in full and on time incurs an initial penalty of 10 per cent of the unpaid amount. A further 2 per cent is added for each month the amount remains outstanding. Unsurprisingly, $1.4 billion of the overall outstanding sum is penalties and use-of-money interest.

Not only does this indicate the futility of the present regime but it discourages those with sizeable outstanding obligations from re-engaging with the child support scheme.

Still more draconian responses, such as naming and shaming, would probably only alienate them further.

The Government should, therefore, tailor its reform to encouraging voluntary participation in a system whose fairness offers an incentive to pay and which is administered efficiently. On the latter point, the discussion document suggests child support payments could be automatically deducted from employees' income.

That seems a reasonable proposition, with the public interest outweighing any privacy concerns. Greater co-operation between Government agencies, a step that will be aided by the beefing up of the Inland Revenue Department's IT systems, is another obvious step.

Research commissioned last year by the Families Commission suggested 71 per cent of receiving parents and 24 per cent of paying parents believed the child support scheme did not work either very well or well at all.

That points to the extent to which obligations are not being met and the ease with which the system can be sidestepped. It also underlines the need for change.

Many of those angered by the present arrangements consider their individual circumstances are not being acknowledged, a situation that owes something to the formula underpinning the current scheme overriding anything else.

That might have seemed applicable in 1992, but families today are more complex. Both parents are more likely to be working, and separated fathers often do more towards caring for children. Any blanket approach will tend to founder in such circumstances.

The best of the proposals in Supporting Children go much of the way towards addressing most parents' concerns and encouraging the meeting of obligations. They should be adopted for the sake of the 210,000 children who rely on the child support scheme for financial support.

- Comments

Executive Secretary - Shared Parenting Council of Australia
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