14 June 2008
Ms O'Hanlon saidDespite the critics, the reforms were long overdue…
We haven't had a major overhaul of the legislation in 20 years, she told The Advertiser.
First changes in 20 years about to revolutionise the way payments are made Parents nervously await big shake-up
Ms O'Hanlon saidNow, when you look at the formula, it is based on the individual costs of raising children, instead of being based on a fixed price.
By Laura Anderson, Political Reporter, Canberra
Single parents are bracing for a significant shift in their finances.
A major revamp of child support payments is about to change the financial position of many of Prime Minister Kevin Rudd's cherished "working families".
Come July 1, the child support formula, which has been in place for 20 years, will change. It will now be the costs of raising a child - rather than the income of the father - that will be paramount.
The aim of the new scheme is to place a greater emphasis on shared parental responsibility after separation.
But the reforms have led to much criticism - particularly from single mothers.
It was a decision made not by Mr Rudd but by his Coalition predecessors and yet it will be a politically sensitive topic. Child Support Agency assistant general manager of child support scheme reforms Mary O'Hanlon
said, despite the critics, the reforms were long overdue.
Ms O'Hanlon saidA 2005 Ministerial Taskforce report into child support had uncovered major problems with the existing system - with most parents not paying for the real cost of their children. We haven't had a major overhaul of the legislation in 20 years. Society was quite different then. The taskforce found that child support needed to be updated to be reflective of social change. A 2005 Ministerial Taskforce report into child support had uncovered major problems with the existing system - with most parents not paying for the real cost of their children.
Single mothers are concerned they will be disadvantaged by the reforms.
Ms O'Hanlon saidThe overall philosophy of the new system was to "encourage shared parenting". Now, when you look at the formula, it is based on the individual costs of raising children,". Instead of being based on a fixed price, there will be an interplay between the income parents earn and the amount of time they spend with their children.
Solo Mothers Australia for Family Equity convenor Elspeth McInnes said she was concerned that under the reforms 60 per cent of child support recipients would be worse off financially. The author of the reforms, Sydney University law professor Patrick Parkinson, said under the proposed changes, 55 to 60 per cent of parents would pay less child support.
She cited examples of women whose payments would drop by as much as $300 a month under the new scheme.
Elspeth McInnes saidThis means at least 60 per cent of households where children primarily reside will have less money to support those children in their day-to-day lives. The reforms were well-intentioned for "wealthy men who don't care for their children"
In response to those criticisms, Ms O'Hanlon said the new formula was highly dependent on people's individual circumstances.
McInnes saidThey are absolutely concerned, they will be changing the costs of running that household, giving up the private schooling or tuition in schooling or sport, having to change address to a cheaper rental, not being able to afford to run a car
"Some assessments will go up, some will go down," she said.
"We are expecting July 1 to go smoothly."
Under the new arrangements, child support payments will no longer be calculated based on a fixed percentage of income.
The new formula will be calculated by looking at the costs of raising children, and by taking both parent's incomes equally into account.
Costs will be divided between parents according to their share of the total income.
Mr Stanton said he believed the new scheme would encourage fathers to spend more time with their children. However, Ms McInnes said if a parent would not see their child unless there were financial benefits "it is not a good indicator of a positive relationship".
Lone Fathers Association SA branch president Rodney Stanton saidThe picture was not all rosy for single dads under the new reforms.
Some dads he had spoken to would be paying $40 to $100 a month more in child support under the new arrangements.
That is a big increase in the cost, but that is the cost of the child.
Human Services Minister, Senator Joe Ludwig saidThe new system was "more balanced", and put children at the centre of the equation.
Everybody recognised that something had to be done about the old system. There were constant complaints from paying parents and receiving parents.
The old system set a standard percentage as payment for each child - no matter what the circumstances of the paying parent or the receiving parent.
It didn't take into account how much time and involvement each parent was putting into bringing up the child.
- NAME: Harold, 61
- CHILDREN: 4 children. Shares custody of Elisa, 11, with his ex-wife
- CUSTODY: 50/50 shared with his ex-wife
- INCOME: Very low income
- CURRENT CHILD SUPPORT PAYMENT: $114 per month
- UNDER THE NEW SYSTEM STARTING ON JULY 1: $0