Men's Rights Agency - Child Support
Cabinet approved changes to CSA
Under the heading "Fair for Payees"
A1. Introduce a minimum child support liability of $260 a year
Implementation: 1 July 1998
The minimum child support liability for all payers (including those receiving income support) will be $5 a week ($260 a year).
For those who are on social security pension or benefit recipients, the Commonwealth Services Delivery Agency will arrange collection of this amount and transfer it to the Child Support Agency on a fortnightly basis.
Other payers will make payments either through the Child Support Agency or privately.
Payees will not lose any Family Payment as child support payments up to $18 a week are within the free area (which is $951.60 pa at September, 1997).
Background:
Currently, Section 66 of the Child Support (Assessment) Act 1989 provides that parents whose child support liability is assessed under the formula at less than $260 a year ($5 a week) are not required to pay child support. This practice has operated since the commencement of the Scheme.
This proposal is in line with the JSC recommendation to introduce a minimum child support payment of $260 a year.
It will help reinforce the objective of the Child Support Scheme that parents share in the cost of supporting their children and will also reinforce the principle that the parents of a child have the primary duty to maintain their children.
It is not proposed that this minimum amount be indexed or that there be any exemptions except where a parent has no income at all - for example , a full time dependent student living at home.
A2. Broaden the Income base
Implementation: 1 July 1999
Calculation of child support assessment will be amended to include net rental property losses and exempt foreign income into taxable income for child support purposes.
Adjustments to taxable income will be automatic, based on information contained in the parents' income tax return, and will not impose an administrative burden on parents.
Payees will benefit as child support assessments will more accurately reflect the payer's capacity to support their child. Perceptions of fairness will improve as both payers and payees will have less opportunity to minimise their taxable income for the purposes of child support.
Background:
Taxable income is currently used as the basis for the child support assessment. This has created concern amongst clients because of the potential some parents have for manipulating their taxable income.
The inclusion of net rental property losses and exempt foreign income will begin to address this issue and is consistent with the inclusion of these items in the DSS income test for eligibility for Family Payment.
This change partially addresses recommendations of the JSC.
A3. Consistency in treatment of family violence cases:
Implementation: 1 January 1998 - introduce reviews and targeted case management. 1 July 1998 - legislative amendments.
The Child Support Agency will introduce case management to assist parents at risk of family violence to commence or continue child support collection wherever possible.
The Child Support Agency will also amend their legislation to protect parents and their children from violence by enabling the Child Support Registrar to end the assessment and collection of child support while the customer is considered at risk.
Family violence cases will be reviewed by CSDA Social Workers to ensure that customers no longer at risk of family violence have the opportunity to obtain child support.
Background:
The Department of Social Security requires all recipients of the higher rate of Family Payment to take action to obtain child support.
Currently there is provision for some customers to be exempted from this requirement where they have left a violent or abusive relationship and are at risk of further violence.
However, the exemption provisions do not apply to customers who are already registered with the Child Support Agency for collection of child support.
In addition there is no formal process for those customers who have been exempted to be reviewed at a later stage to determine whether they are still at risk or whether they could reasonably be expected to take maintenance action.
The CSA currently has no special provisions for dealing with customers at risk of family violence.
The following section has been previously listed as being "Fair for Payees", but the heading has been omitted!
B1. Increase the exempt income of child support payers:
Implementation: 1 July 1998
The payer 'exempt income' amount (which, for self-support purposes, is set aside from child support formula calculations) will be increased by 10%. In 1997-98 the new amount would be $9,907 for single payers and $16,525 (plus additional amounts for each child) for payers with natural or adopted children in their care.
Payees will receive less child support. However this will lead to an increased rate of Family Payment in a significant number of cases.
Background:
Currently the exempted income amount for the majority of payers is $9.006, a figure which is 'pegged' to the single pension rate at 1 January each year.
Payers with a dependent child have an 'exempt income' equal to twice the married rate of pension (currently $15,023 pa) plus additional amounts for each dependent child.
This proposal goes some way to addressing the JSC concern that the current 'exempt income' does not recognise the costs of employment faced by payers, nor the fringe benefits available to pensioners but not to most payers.
B2. Lower the payees basic disregarded income level and allow for high child care costs:
Implementation: 1 July 1998
The amount of a payee's income which is disregarded in the child support formula will be reduced by using a different Average Weekly Earnings figure as the basis for setting the payee's disregarded income amount.
The new figure will be based on 'all employees average total weekly earnings'. For 1997-98, this would give a basic disregarded income amount of $29,598 compared with $37,424 under current legislation.
It will now take less payee income to reduce a payer's child support liability.
Child care costs will no longer be an automatic component of the child support formula but payees may seek reassessment if they incur high child care costs (exceeding 5% of their income).
To ensure these changes are not unfair for payees and payers, the rate at which child support is reduced by payee income above this new disregarded level will be halved.
Background:
The disregarded income amount for payees is currently pegged to 'full time adult average weekly earnings' ($37,424 for 1997-98) plus additional amounts for child care costs ($4,304 for the first child under 6, $936 for each other child under 6, and $1,871 for each child 6 - 11). The additional amounts for child care costs are allowed regardless of whether these costs are in fact incurred.
The child support formula currently reduces the amount of income which is used to calculate a payer's child support liability by $1 for every $1 by which the payee's income exceeds the relevant disregarded income amount. The main reason behind the formula having such a mechanism to take account of payee income is to avoid the situation where a low income payer must pay a significant proportion of income in child support to a high income payee.
Together with the better targeting of child care costs, this initiative represents a significant reduction in the disregarded level, thus going some way to addressing the concern of JSC, while recognising that payees already share their income with the children in their household.
B3 Change to family payment income test for payers with second families
Implementation: 1 July 1998
Payers with second families will now be able to claim 50% of any child support paid as a deduction from the household income used for determining the family's entitlement to Family Payment and Childcare Assistance.
This initiative will address a current inequity in the Family Payment system, and reduce the financial stress suffered by low income families paying child support.
It will ensure that income assessed for Family Payment and Childcare Assistance purposes more closely reflects the income actually available to a family.
Background:
Where a payer forms a new family and there are dependent children of either of the adults in the household the family may be entitled to Family Payment. However, any child support paid out is not taken into account when determining their entitlement to Family Payment. Childcare assistance is also calculated using income test limits similar to Family Payment.
Any child support received by a payee in receipt of the higher rate of family payment is counted under the Family Payment maintenance income test and may reduce their family payment.
This proposal does some way to meet the JSC recommendation that child support paid be deducted from family income when calculating entitlement to family payment.
The following section has been previously listed as being "Fair for All", but the heading has been omitted!
C1. Revise objectives for the Child Support Scheme
Implementation: 1 July 1998
The objectives of the Child Support Scheme will be revised to recognise that both parents are responsible for the support of their children.
Background:
The aims and objectives of the Child Support Scheme have remained unchanged since its establishment and have been criticised by the JSC and parent lobby groups because they are seen to be biased against payers.
To address these concerns, the Government agreed that the following principles should underpin changes to the Scheme:
The revised Child Support Scheme objectives will reflect these guiding principles.
C2. Increase the exempt income for parents sharing care of a child
Implementation: 1 July 1998
The exempt income amount for each parent with shared care of a child will be increased by adding additional amounts in the child support formula for each shared care child.
For example, parents with shared care of two children under 13, who currently have an exempt income of $9,006, would each have an exempt income of $12,782.
Background:
The shared care formula operates when two parents both have between 40 and 60 per cent responsibility for the care of one or more children.
Under the current formula, the exempt income amount allocated to parents with shared care children is the same as that allocated to parents without children in their care (currently $9,006).
Once the liabilities of both parents have been calculated, the parent with the higher liability has to pay the difference between the liabilities to the other parent. This will not change.
This initiative goes some way to addressing the JSC concern that a parent sharing care of a child needs a higher level of exempt income before being required to pay child support to the other parent.
C3. Income test child support arrears payments:
Implementation: 1 July 1998
The Family Payment maintenance income test will be applied to child support arrears received with the first payment of regular child support (other arrears payments are already income tested).
Background:
Under current policy, any child support arrears included with the first child support payment collected by the Child Support Agency are disregarded for maintenance income test purposes.
Originally this was to ensure that no social security recipient was disadvantaged by the substantial delays which occurred as a result of the early child support registration, collection and disbursement processes. The Government was especially conscious of ensuring that a customer's payment was not adversely affected by events beyond their control.
Changes and improvements to the Child Support Scheme since its implementation have vastly improved the timeliness and rate of collection for the majority of cases. Most recently, new registration procedures developed and implemented jointly by the CSA and DSS in late 1996 have led to significant improvements in the time taken to register and assess claims for child support.
These improvements are likely to continue as initiatives for better administration are implemented, and there is no longer a sound reason to compensate payees for delayed payments.
C4. Income test child support payments made direct to payees in special circumstances
Implementation: 1 July 1998
The Family Payment maintenance income test will be applied to 'unexpected needs' payments (commonly referred to as non-Agency payments) that have been made directly to payees by liable parents who normally pay through the Child Support Agency.
Background:
Initially, non-Agency payments were seen as meeting emergency situations only. DSS did not envisage that occurrences would be high and no mechanism was put in place to have these payments taken into account under the Family Payment maintenance income test.
While they have become an important means for parties to deal with situations where immediate, direct payment is needed by the payee, for example, to meet unexpected medical costs, or household repair bills, there are also opportunities for avoidance of normal child support payments.
The Child Support Agency credits these payments against a liable parent's debt on agreement by both parties that the payment was intended to reduce the child support liability.
The proposal will result in payees in receipt of non-Agency payments being treated in the same way as other payees who collect all their child support payments privately.
C5. Transfer of existing clients to private collection
Implementation: 1 July 1998
Parents will, by agreement, be free to undertake private collection of child support at any time.
When the CSA is satisfied that regular child support payment will continue, parents will be required to pay and collect future child support privately. This will not alter the amount of child support payable but will result in less Government intrusion in parents' lives as more separated parents take on the responsibility for supporting their children.
Where private collection is not successful, the CSA will operate as a safety net and recommence collection.
CSA will be required to accept parents' agreement of their children's care arrangements when assessing child support payments. Child support recipients will also benefit by eliminating many retrospective changes to assessments. This will virtually eliminate overpayments of child support.
Background:
Over 40% of CSA's clients already successfully pay and collect privately. Where CSA collects, 81% of liabilities accrued to date have been collected. Much of this money comes directly and voluntarily from payers.
CSA will still provide parents with a service to determine the amount of child support payable and to register parents' agreements and court orders.
C6 Assessment based on current taxable income
Implementation: 1 July 1999
Calculation of child support assessment will be amended so that the most current taxable income available will be used in the child support assessment. As a result, an indexation factor will no longer be required except where parents fail to lodge a tax return.
The child support assessment will be updated immediately a more current income becomes available. That is, with the issue of a new taxation assessment. As a result, child support assessments will continue to be issued approximately annually but the timing will no longer be based on the financial year.
Payers and payees will both benefit from this proposal as it will allow a more accurate and timely assessment of a parent's capacity to pay child support. It will also alleviate the administrative burden of the current assessment process.
Background:
The child support assessment is currently determined using the parents' taxable income for a previous financial year, which is between 12 and 24 months old. An indexation factor, based on Average Weekly Earnings, is applied to this income to bring it more into line with the assessment year.
The JSC was concerned with the accuracy of this assessment process and, in particular, the accuracy of the indexation factor and whether more appropriate indices might be available. These changes go some way to addressing concerns of accuracy and timeliness.
C7. Reduce Duplication CSA/CSDA:
Implementation: A - 1 July 1998, B - 1 January 1999
A. Amend Start Date of Liability
A child support liability will commence from the date of lodgement of the application. Payers will benefit from a reduction in their child support payments up to 28 days. Payees will also benefit from improved compliance of payers who no longer commence their child support obligations with large start-up arrears.
B. Improved Registration Processes
The registration process will be improved by enabling a single application for clients applying for child support at the same time applying for the higher rate of Family Payment.
CSDA staff will key the client information required for both the CSA and CSDA services from a single application, and electronically forward the data relevant to the CSA on a daily basis. This will streamline the application process for mutual clients of CSDA and the CSA as well as eliminate the double handling and keying of forms that currently occurs between the two agencies and introduces a 'whole of government' service approach for clients.
Combined with the CSA Key Performance Indicator that 80% of all applications will be processed within 21 days of the date of lodgement to collection and disbursement of child support this initiative will result in customers receiving their first payment sooner.
Background:
A. Amend Start Date of Liability - Currently, the start date of liability may be backdated up to 28 days from the date of application.
B. Improved Registration Processes - Approximately 90% of client who apply for child support lodge their application with the CSDA.
This is generally because clients applying for the higher rate of family payments are required by legislation to take action to seek child support. These clients will now be able to apply for both services at the same time through a single application form.
This proposal, which builds on previous reforms reducing the registration cycle, addresses JSC concerns regarding administrative delays in the registration process.
C8 Improve the disbursement process for child support payments
Implementation:1 January 1999
Child Support Agency customers will be given a wider range of options for receiving their payments in the future, including electronic transfer of funds.
Payments collected by the Child Support Agency will be transferred direct to payees which will allow for payments to be made sooner. The more flexible payment arrangements will benefit all payers and payees who use the Child support Agency.
Background:
Child Support payments received by the Child Support Agency are transferred through a Trust Account to the Department of Social Security for disbursement.
The DSS system only processes child support payments on two paydays a month, resulting in time delays and inflexible payment arrangements.
This proposal is in line with JSC recommendations for the Child Support Agency to develop it own payment system and give payees a range of options for receiving their child support.
C9 Objection and Appeal Rights
Implementation: 1 July 1998
The Child Support (Assessment) Act 1989 will be amended so that a range of decisions which are now only reviewable by the Family court will be subject to an internal review mechanism. A limited objection provision will also be introduced for decisions made by the Child Support Review Office.
Where a parent is not satisfied with the internal review outcome they will still be able to apply to the Family Court for a decision.
The introduction of an internal review mechanism will improve perceptions of fairness, equity and accountability of CSA.
Background:
Currently, child support clients formally object to some decisions made by the CSA relating to the collection of child support. Similar provisions are not available in relation to the amount of child support payable.
This change address the JSC recommendation that there be a process for internal review of decisions but does not provide an additional external review process, which would be costly to establish and administer.
C10. Variations to Assessments
Implementation: 1 July 1998
The operation of the Child Support Review Office will be enhanced through various changes, including:
Payers and parents will both benefit from this proposal as it will enable child support assessments to more accurately reflect a parent's capacity to support their child.
Background:
These changes are in line with JSC recommendations that the Child Support Registrar be given the power to make a determination to vary an assessment.
C11. Simplification of Legislation
Implementation: Commencing 1 January 1998
The Child Support (Assessment) Act 1989 and the Child Support (Registration and Collection) Act 1988 will be amended so they are integrated, consistent, provide for appropriate flexibility and able to be more easily understood by clients, the legal profession, administrators and clients. It will make the underlying principles of the Scheme more transparent and the legislation easier to use.
A simplified legislative framework, together with improved supporting education and communication products, is expected to reduce both compliance costs and administration costs.
Background:
The JSC recommended that the Child Support (Assessment) Act 1989 and the Child Support (Registration and Collection) Act 1988 be redrafted in a more simplified and understandable form and that they be combined into one piece of legislation.
Changes will involve:
a. the use of plain English;
b. developing a more logical structure; and
c. making use of diagrams to explain the child support legislation and define its relationship with family law and social security legislation.
C12. Better and Fairer Administration
(a) New CSA Services
Implementation: Progressively until 30 June 1998
A number of new services will be introduced to assist parents to better understand and manage arrangements for the support of their children. They are Mediation, Self-Help Package, Education and Payer Support programmes.
Mediation will be undertaken by existing community based mediation service providers and, as part of a pilot, will be offered to parents who apply for CSA collection services. It is expected that mediation will provide a successful and cost effective method of enabling parents to agree on effective and stable arrangements for child support so that they have no or minimal contact with CSA.
Self-Help Packages will be released during the course of 1997/98 which will enable parents to make informed decisions about child support, including the amount of support; use of cash and other options; reliable payment arrangements; and building in provisions to revisit decisions if circumstances change. It is expected these packages will give clients greater control over their child support arrangements.
Education services will be available about the financial, emotional and social issues surrounding separation and the continuing roles of both parents following separation. In addition information about access to programs and organisations that support parents and children to deal with these issues will be available.
Payers Support Programme is being developed for parents paying child support. The programme will advise payers about appropriate services and expertise in the community and will assist payers to access those services.
(b) More Equitable Administration
Implementation: 1 July 1998
The child support legislation will be amended in a number of areas to reduce the administrative complexity fo the Scheme.
All parents will benefit as their contact with the Agency will be less onerous and government intervention will be minimised. Payers' privacy will also be protected to a greater degree.
Background:
These changes address concerns about the administrative complexity of the Child Support Scheme. They are consistent with the objective of minmising government intrusion.
(c) Flexibility for Differing Client Circumstances
Implementation: 1 July 1998
There will be numerous changes to improve the flexibility of the Scheme in dealing with individual client circumstances.
All parents will benefit from the increased flexibility of the Scheme but there will be no impact upon the actual levels of child support paid.
Background:
These changes are consistent with JSC recommendations and promote the objective of allowing both parents maximum input into decisions affecting child support while minimsing government intervention.
(d) Treatment of Step-Children and Secondary Students
Implementation: 1 July 1998
Two changes will be made to the Child Support (Assessment) Act 1989 to provide more equity for parents in determining the amount of child support payable.
Firstly, a step-child will be deemed to be a relevent dependent child where the court has mnade an order under Section 66M of the Family Law Act 1975.
Secondly, assesments will continue until the end of the school year in which a child who is undergoing full time secondary education turns 18.
Background:
A parent may have a legal duty, determined by the court, to maintain a step child. The legislation currently does not provide for this to be taken into account in the formula to determine child support liability. In these circumstances a parent is reuqired to apply for a review of assessment for this legal duty to be acknowledged. The change will eliminate this need to seek a review.
Extending an assessment beyond the child's 18th birthday is consistent with JSC recommendation but is not as extensive as it restricts the circumstances to where the child is undergoing full time secondary education. For other circumstances decisions will rest with the Family Court.