Additional comments by Labor and
Greens Senators
Overview
While Labor and Greens Senators support the recommendation of the
Chair's report on the Inquiry into the Child Support Legislation Amendment (Reform of
the Child Support Scheme – New Formula and Other Measures) Bill 2006 (the Bill)
that the Bill be passed, we consider that the report raises significant issues
that should be addressed through amendments to the Bill.
The Bill represents
an opportunity to implement fundamental change to the child support scheme.
Labor and Greens Senators do, however, hold serious concerns about
the potential impact of the Bill on low income households. These
concerns are particularly acute when considered alongside income cuts that many
of these same households are already experiencing as a result of welfare
changes implemented by the Government earlier this year.
A number of other issues were raised during the public hearings,
including the need for some amendments proposed by the chair of the Ministerial
Taskforce, Professor Parkinson. While these are noted in the Chair's report, it stopped short
of actually recommending that they be pursued. Labor and the Greens believe
that they should be.
Conduct of the Inquiry
Labor and Greens Senators are seriously concerned about the
unacceptably short timeframe for this Inquiry. All witnesses appearing before
the Committee were critical of the timeframe.[1]
Labor and the Greens believe that it is unreasonable for the
Government to expect witnesses to respond and express their views on such a
complex and lengthy piece of legislation in such a short period of time.
While Labor and Greens Senators are mindful that there are major
implementation issues with aspects of the Bill, these issues are not
serious enough to have warranted the restricted timeframe imposed on the
Committee by the Government.
Labor and the Greens are also concerned by the failure of the
Child Support Agency (CSA) to either appear before the Inquiry or to lodge a
submission. As the agency responsible for administering the new system, and
the beneficiary of substantial additional funding under the Bill, Labor and
the Greens consider that the CSA had a responsibility to give evidence to the Inquiry.
The
need for child support reform
Fundamentally,
Labor and the Greens accept the need to reform the child support scheme. The
existing scheme has been in place since 1989, and most witnesses appearing
before the Inquiry accepted that circumstances had changed to the point where change
was needed.
Labor and the Greens' approach to child support reform are guided
by a set of core principles. Central to these is a belief that the interests
and wellbeing of the children must always come first. As far as possible, child support policy should serve to support the child in secure
and economically sustainable and acceptable conditions.
Labor and Greens Senators take the view that policy should aim to
ensure that both parents contribute to the wellbeing of the children and, as
far as possible, maintain active and ongoing roles in their lives. Labor and
the Greens believe that shared parenting is beneficial to both children and
their parents and that there should be a fair balance between parents in
meeting the costs of a child's upbringing.
To serve the interests of children and parents, the CSA needs to
be competently administered and sufficiently resourced. Labor and the Greens advocate
strong enforcement and compliance measures so that the obligations of parents
are met.
Labor
and Greens Senators note that the Parliament and the Government have undertaken
a number of reviews of the scheme in recent years, culminating in the report of
the Ministerial Taskforce on Child Support which was handed down in 2005.
Labor and the Greens consider that
the work of the Taskforce provided a strong basis for reform, and notes that
its recommendations form the basis of the Bill.
Financial
impact of changes in the Bill
Labor
and the Greens have previously expressed its concern about the financial impact
of the Government's reform package on low income households.
These
households are among the most financially disadvantaged group in our society.
In their submission to the Inquiry, the National Council of Single Mothers and
their Children (NCSMC) cite research that 46 per cent of sole parents with
dependent children live on very low incomes, and that these families are at the
highest risk of poverty of all family types.[2]
The
Committee also heard evidence that single parents – predominantly women – now
face further cuts in income on top of the reductions that occurred as a result
of the welfare changes implemented by the Government on 1 July 2006.[3]
Labor
and Greens Senators are concerned that the combined effect of the Government's
welfare cuts and the new child support scheme could result in these families
being pushed further into financial hardship, and in the worst case scenario,
into poverty.
Witnesses
from the Australian Institute of Family Studies (AIFS) indicated that no work
had been done on modelling the combined impact of the welfare changes and the
prospect of reduced child support payments on single parents.[4]
This is a significant concern for Labor and Greens Senators, given the already
dire financial circumstances confronted by these families.
Labor
and Greens Senators acknowledge the concerns of single mothers' groups that up
to 60 per cent of resident parents will receive lower child support payments
under the new formula for calculating these payments.[5]
We also note that Professor Parkinson does not disagree that a significant
proportion of single parents will receive lower payments as a result of the
Bill, claiming in additional information to the Committee that:
'My best guess is that
the majority of assessments will go down. My estimate of 55 per cent is probably
much closer to the mark than 60 per cent. It is nonetheless, just a very
general estimate'.[6]
However,
Labor and the Greens acknowledge other evidence from Professor Parkinson and AIFS that reduced
income due to the formula itself may be offset by other aspects of the reform
package and the 250 per cent real increase in family payments since the current
formula commenced in 1989.[7]
However,
calculations by NCSMC that take into account the drop in income due to reduce
child support and the expected increase in family payments still result in an
overall drop in income of between $10 and $20 per child week – and this is
without the impact of welfare to work factored in.[8]
It is further noted that the
250 per cent real increase in family payments since 1989 could simply reflect that
these payments came off a low base. The fact that a large number of single parent
families live below the poverty line still remains, and the question of how
many more may be doing so as a result of these changes needs to be addressed by
the Government.
Labor
and the Greens are very concerned, however, that there is no publicly available
modelling to estimate the impact of the new system on existing child support
recipients and payers. The lack of analysis is doubly concerning given that
the Government has made no provision to protect low income families who may
lose income as a result of the Bill.
It
is our understanding that the CSA will reassess all clients' payments under the
new formula once the Bill is passed and before it
comes into effect on
1 July 2008.[9]
The
Department of Families, Community Services and Indigenous Affairs, as the
agency with policy responsibility for the Bill, should produce modelling to quantify the
impact on existing child support customers, and make provision to protect low
income households who may lose income. Such protections are critical given the
risk of poverty already confronted by these families.
Labor
and Greens Senators are also concerned that only one parent under the welfare
to work changes can be registered as a 'principal carer', and that this could
result in further reduction in income for low income shared parenting.
While
the Department did not produce any analysis of the impact of the Bill, it noted that work was
in progress to establish monitoring and evaluation systems once the new formula
is introduced.[10]
The Department indicated that it would work with other agencies to monitor the
combined impact of the child support reforms and other recent policy changes,
including the cuts to income support for single parents that occurred as part
of the Government's welfare changes.
Labor and Greens Senators take the
view that ongoing monitoring and evaluation is critical to the successful
implementation of the new scheme. If the changes do lead to income reductions
for low income families, it would undermine any other improvements that may
occur in the operation of the overall child support scheme.
Other issues
Unpaid care
Labor and Greens Senators acknowledge
the ongoing concern of single mothers' groups that the proposed new child
support formula does not adequately recognise the costs of unpaid child care
which is typically borne by single mothers.[11]
Labor and the Greens note in
particular the view of the NCSMC that unpaid care is accounted for, at least in
part, by the different self support component for resident and non-resident
parents under the existing child support formula.[12]
In evidence to the Inquiry, Professor Parkinson noted that
the sliding scale effect of the new formula meant that if the resident parent has a very low income,
then typically the non-resident parent will pay more child support. As the
income of the resident parent rises, child support from the non-resident parent
reduces. [13]
However, Labor and the Greens consider that Professor Parkinson's comments on this
issue were in a sense contradictory. Elsewhere he argued that the primary concern of the formula
was financial and that it was difficult, if not impossible, to effectively
account for the value of unpaid care. It is unclear how the value unpaid care
or forgone income was in fact incorporated into the formula.
The argument put forward by Professor Parkinson
when further questioned on this issue was that the main way in which financial
provision was made for unpaid care was in the way that the Family Court
assigned assets on separation, effectively implying that this dealt with the
issue and hence it was of lesser or no concern to child support calculation. However,
this provision in effect only applies where there are significant assets to
divide – meaning that this only benefits divided families who had significant
assets prior to separation, thus impacting more unfairly on those on a low
income who have few or no assets.
Labor and Greens Senators note that
measuring the monetary value of unpaid care has always been problematic for
policy makers. For this reason, Labor and the Greens commend the work
undertaken in this important area by AIFS, which was briefly outlined in
evidence to the Inquiry.[14]
Strengthened compliance regime and
new minimum payments
Labor and the Greens welcome the
long overdue enhancement of the Child Support Agency's compliance capabilities,
which will better enable the agency to pursue non-resident parents who fail to
provide any support for their children. The fact that only half of all
non-resident parents meet their child support obligations in full and on time
is a problem that has needed to be addressed for some time.
Labor and Greens Senators also
welcome the introduction of a minimum payment for parents who deliberately
minimise their income to avoid paying child support. However,
Labor and the Greens recognise the concerns of Professor Parkinson that these
provisions of the Bill may need to be strengthened to remove doubt.[15]
Concluding
comments
Labor
and Greens Senators support the Committee's recommendation that the Bill be passed, subject to
amendments that address issues raised, and our concern that low income single
parents are not worse off as a result of the Bill.
Labor
and Greens Senators reiterate their serious reservations about the Government's
decision to proceed with the Bill
without proper provision to protect low income families who may lose income as
a result of the changes, and the failure of the Government to quantify the
impact of the Bill on existing child
support recipients.
Labor
and the Greens also believe that some significant issues are raised in the
Committee's report and consider that these need to be addressed through
amendments to the Bill.
|
Senator Claire Moore
Deputy
Chair
Labor
Senator for Queensland
|
Senator Rachel Siewert
Australian Greens Senator
for Western Australia
|
|
Senator Carol Brown
Labor
Senator for Tasmania
|
Senator Helen Polley
Labor Senator for Tasmania
|
Navigation: Previous Page | Contents | Next Page