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The Sydney Morning Herald
7 June 2008
Parents split as they do the sums
By Erin O'Dwyer
New child support laws will help many cash-strapped fathers, but is the formula fair? Erin O'Dwyer reports.
Peter Maloney is a national manager with Telstra and is paid $96,000 a year. But he lives in a two-bedroom apartment in Matraville and can barely afford the $250 rent.
The father of three spends more than a third of his income on child support payments - about $27,000 each year. Each fortnight he deposits $1,046 in his former wife's account, which leaves him with $1,551 in his pocket. It goes quickly: petrol, food, rent and bills, plus mortgage repayments on a house at Shoalhaven Heads.
"My fiancee has had to give me money to survive," Maloney says. "I can't even take my car to the mechanic. I have to repair it myself."
There is light at the end of the tunnel for Maloney. A new child support formula that takes effect on July 1 will bring relief to divorced fathers who say they have been doing it tough for too long. But the new formula will leave 60 per cent of single mothers worse off. Single-parent households, mostly headed by women, are about to hit breaking point.
The windfall for Maloney is $10,000 a year - he will now be paying roughly $650 a fortnight. He plans to buy a new car, reduce his mortgage and help his children - aged 12, 15 and 17 - with clothes and computer gear. He also plans to tie the knot. "We couldn't afford to get married before this," he says. "It also means me being able to stay on at work. It got that tight for us that I was looking at having to live on the South Coast, but it's too far to commute. That house is my retirement, so I couldn't sell it, but we're priced out of the Sydney market and nobody would give me a loan because of the child support."
Both Maloney and his fiancee, Barbara Jaros, believe the changes go some way to righting an unfair system. Jaros, a mother of three girls aged 27, 20 and 17, remembers fighting for child support in the early 1980s.
"It was very male-orientated back then and I went through hell trying to get $30 a week," she says. "But I think they've gone too much the other way now and some of the guys are getting a very raw deal."
Maloney has much malice for "mogrel ex-husbands". But he says the drain on men's wallets meant they were unable to start a new life.
"I know there are a lot of deadbeat dads out there who are doing wrong by ex-wives and their kids," he says. "But some men lost their house in the marriage and they can't afford to rent anymore. They're feeling it's a step in the right direction."
Fathers might be breathing easier. But social justice advocates believe more families are about to plunge into poverty. Dr Elspeth McInnes of the University of South Australia says the third wave of child support changes are the most devastating for single mums. Combined with Welfare to Work obligations - which require single mothers to seek at least 15 hours of paid work a week once their child turns six - single mothers are the subject of "systematic discrimination".
"Every piece of research on financial circumstances after divorce continues to tell us that it's the person with the primary care of the children who is at risk of poverty," says McInnes. "But under the previous government that was not seen as a problem."
Parenting support groups are urging women to lobby their state and federal members. But this is unlikely to achieve much in the short term.
"It has taken a year-and-a-half lead time for the Child Support Agency to get the new formula rolled out, so there is no way it can simply just be stopped," says McInnes. "The current Government has no choice but to see how the changes play out and then they can look at fixing the glitches."
The new formula is complicated. Most importantly, it gives a 24 per cent discount to fathers who have regular care - two to four nights per fortnight.
It reduces support payments to children up to 12 and increases them for those aged 13 to 17. And it takes into account children born into subsequent relationships.
For the first time, both parents' incomes are given equal consideration. For single mothers, the income test falls from $39,000 to about $17,000 before child support payments are cut.
In the mothers' favour are changes to the family tax benefit. Payments will no longer be split where fathers have less than 35 per cent of care - delivering a windfall to mums. However, the maintenance income test means payments are reduced by 50 cents for every child support dollar above $24 each week.
It's this nasty little claw-back that McInnes hopes the Federal Government will reassess. It's higher than the 30 cents paid by wage earners and has not been adjusted for over a decade.
"One-parent households receive less [family tax benefit] than children would receive in intact households," McInnes says. "The very households that are in the worse earning situations are having the higher impost."
For weeks, the Child Support Agency has been sending 30,000 letters a day to parents across the country. The massive mail-out was due to be finalised this week. But many parents are still struggling to understand the changes.
"I've had a few panic-stricken emails from people," Eva Cox, of the Women's Electoral Lobby, says. "There is more allowance for fathers who share care, but a lot of the women I know who have shared-care arrangements still organise the dentist and the school trips and the washing. That is completely ignored."
Kathleen Swinbourne from the Sole Parents Union says: "We've had lots of calls from women who are losing over $100 a week. I had a call from somebody whose ex hasn't seen the children for ages. He called to say he's going to start seeing them after July."
Swinbourne says it is the children who are losing out.
"We're going to see children pulled out of private schools, mothers putting their houses on market because they cannot keep up payments, and kids having to give up sport," she says.
A Central Coast mother-of-two, Stephanie Watkeys, who will lose $58 a week, describes the shortfall as "massive". She wants to keep her children in private school but expects to rely on the public health and dental care.
"I keep going over the budget and saying, 'What can go?' " she says. "I don't know yet. I know my situation is much better than many mothers', but it's quite a disempowering process."
Another mother-of-two, from Sydney's eastern suburbs, says the shortfall of $151 a week puts her mortgage repayments in jeopardy. She already works 30 hours a week.
"Where is the justice for women that play fair?" she says. "We recognise the rights of the father but at the end of the day I can never earn what my ex-husband earns. I am still the mother of my children and the mother's role is very different."
From the other side come stories of divorced fathers getting second jobs delivering pizza so they can pay the rent.
"A lot of the guys have nothing left," says a sole parent support worker. "And they get blackmailed for more money if they want to see their kids."
Justin Dowd, a family law specialist from the Sydney firm Watts McCray, says reactions to the changes are split evenly down gender lines. But he says men will pocket only half as much as the women lose, due to the family tax benefit changes.
He believes the changes are an improvement. "The old system became a motivator for people to seek or oppose children spending more or less time with the other spouse," he says.
"The new calculation is meant to allow people to make more flexible arrangements with their children. The intent of the changes is good. Only time will tell."
- CASE ONE Stephanie Watkeys, 39, is a single mother with two boys, 14 and 6, from the Central Coast. She receives $319 a fortnight from her former husband. After July 1 she will receive $203 a fortnight, a weekly loss of $58. She does not expect to receive more family tax benefit because she is already receiving the maximum. Her former husband has the children two days a week, earning him a discount.
- CASE TWO Beth Watson*, 38, is a single mother who lives in Sydney's eastern suburbs with her daughter, 11 and her son, 9. She receives $576 a fortnight in child support from her former husband. After July 1 she will receive $274 a fortnight, a weekly loss of $151. She has a 50-50 care arrangement, and her former husband has a baby with his new partner - both factors earn him a discount.
- CASE THREE Doris McMahon*, 48, is a single mother who lives on the Central Coast with her two boys, John, 13, and Alexander, 7. John's father pays $12,000 for private school fees. He makes no other financial contribution. Alexander's father was paying $675 a fortnight. He recently lost his job and now pays $18 a fortnight. Doris expects to lose $274 a fortnight in family tax benefits because of the increased payment of John's school fees. John's father cares for his son every second week, and has a baby with his new partner. Both earn him a significant discount.
* not their real names