Child support ideals sunk by bureaucracy

West Australian - Saturday, 14th May 2005, by Margot Lang

The Child Support Agency, which began 15 years ago with high ideals, has turned into a costly bureaucratic nightmare which has failed to achieve any of its objectives.

Every dollar the CSA collects for child support costs $5.58, according to an analysis by the respected independent agency, PIR Independent Research.

PIR has calculated that the scheme costs taxpayers $5 billion a year in administration, increased welfare and lost taxation revenue.

The agony and frustration felt by many of the families who deal with the agency is reflected in the hundreds of letters which have poured into The West Australian in the past few weeks. It is the biggest response to any subject since the attack on New York's twin towers on September 11, 2001.

Politicians report that up to 30 per cent of their electoral time can be spent sorting out constituents' problems with the CSA. It is also the source of many complaints to the Commonwealth Ombudsman's office.

The CSA bureaucracy employs 3,000 staff and costs $240 million a year. It deals with 1.28 million parents a year, affecting 1.1 million children, with more than $1.9 billion a year being transferred from non-custodial parents.

Two key objectives of the child support scheme are to reduce heavy social welfare payments by ensuring that both parents share in the cost of supporting their children and to ensure that incentives for both parents to participate in the workforce are not impaired.

But paying parents, 91 per cent of them fathers, are opting out of the workforce rather than lose up to 62 per cent of their after-tax wage on child support. And 80 per cent of payees are receiving government benefits.

The percentage of unemployed payers in the child support scheme in November 2003 was almost three times that in the general population: 15.8 per cent compared with 5.6 per cent. About 40 per cent of payers have incomes of $20,000 or less and are paying the minimum child support of $5 a week.

PIR has calculated that more than 70 per cent of all unemployed males in Australia over the age of 20 are child support payers.

A House of Representatives committee which investigated the child support scheme in 2003 reported that it was deeply concerned by the level of community dissatisfaction and distress associated with the scheme.

Among findings of the committee, chaired by Nationals MHR Kay Hull (Riverina, NSW):
• The scheme has serious flaws and produces inequities for a high number of payers and payees.
• It often creates hardship for second families, making them feel that these children are less important than those in the first family.
• A number of paying parents resort to leaving their jobs and going on to unemployment benefits to escape the demands of the CSA.
• The CSA is not keeping on top of the accumulating debt in the scheme. By the end of June 2003, the debt owed by payers was up to $844.1 million.

In its report in December 2003, the committee strongly recommended that a taskforce should overhaul the child support scheme as soon as possible, reporting no later than June 30, 2004.

It was not until August 2004 that Federal children's minister Larry Anthony announced the establishment of the taskforce, which has been asked to advise on the committee's recommendations and evaluate the workings of the child support scheme. Mr Anthony lost his seat at the last Federal election. The taskforce, headed by law professor Patrick Parkinson of Sydney University, is due to report this month.

As a short-term measure the parliamentary committee strongly urged the Government in December 2003 to implement a series of urgent changes.

These included doubling the minimum amount of child support from $5 to $10 a week, easing the payment formula, halving the amount payable on overtime earnings and second jobs, eliminating any direct link between the amount of child support and the time children spend with each parent, and giving extra enforcement powers to the CSA to toughen its collection powers.

More than a year later, not one of these proposals has been implemented. The beleaguered child support scheme continues unchanged and the complaints continue to mount.

Urgent action needed to reform Child Support Agency

Radical change is needed to the Child Support Agency which is failing in its job as a maintenance collection body and causing unnecessary suffering to parents.

The agency was set up in 1989, following then prime minister Bob Hawke's rash claim that no Australian child would live in poverty by 1990.

It would be hard to quarrel with the purpose of the child support scheme: to ensure that both parents contribute towards the cost of raising their children and by doing so reduce the drain of taxpayers' money on social welfare payments.

Yet the CSA has attracted an extraordinary level of criticism and controversy over its 15 years of operation. A Federal joint select committee which studied its operation in 1994 attracted 6197 submissions - the most ever received by a parliamentary committee.

The continuing depth of feeling about the child support scheme is shown by the hundreds of letters received in recent weeks by The West Australian from embittered clients of the agency - the most received on any subject since September 2001.

Though the CSA employs 3,000 staff across the country its critics complain that it is hard to contact and unresponsive to complaints, causes acrimony and long-standing disputes between separated couples, treats second families like second-class citizens and drives paying parents on to the dole.

Custodial parents - 91 per cent of them mothers - complain that payments are consistently late or non-existent. Eighteen months ago the amount owed by recalcitrant parents was up to $844.1 million.

Even when the money is paid on time the amount is often pitiably small: $5 or less for about 40 per cent of payers and $40 or less for nearly 60 per cent. These token payments do little to relieve the poverty of many custodial parents and 80 per cent of them are on welfare.

Many of the paying parents are also struggling, with half earning $20,000 or less. Low income payers are often worse off than payees on social security.

The rigid formula used to calculate the amount of child support payable is a constant source of complaint.

After an exempt allowance of $13,462, 18 per cent of the non-custodial parent's before tax income is payable for one child, 27 per cent for two, 32 per cent for three, 34 per cent for four, or 36 per cent for five or more children.

There are endless permutations to the formula - when the paying parent has children from a new family to support, for instance.

Frustrated parents complain that they get little help from the CSA and can rarely get to speak to a person in authority.

When a system remains so universally unpopular after 15 years it is time to question whether it should be scrapped altogether or at least radically reformed.

An analysis by PIR Independent Research concludes that direct and indirect costs amount to $5.58 for every dollar the CSA collects for child support. If this is true, it would be cheaper and less damaging to all concerned to accept that one low-income earner can never support two or more families and that inevitably the taxpayer must pick up the pieces.

The Government must take urgent action when the latest inquiry into the child support scheme reports in the next few weeks.