Bringing home benefits for distant dads
By Bettina Arndt
http://www.theage.com.au/news/20000518/A1802-2000May17.html
The Age (Melbourne) Thursday 18 May 2000
and
http://www.smh.com.au/news/0005/18/features/features3.html
Sydney Morning Herald Thursday 18 May 2000
How absurd was media speculation that changes to child-support arrangements introduced in the federal budget were due to last-minute lobbying by angry dads.
The truth is very different. Many of the changes stem from the 1994 report from the Joint Select Committee into Child Support. Since then a growing body of evidence has revealed the dire financial circumstances of many non-resident parents, which contributes to the difficulties they have maintaining contact with their children after divorce. Given the known benefits to children of regular contact with both parents - now enshrined in family law legislation - the government has decided to foot the bill to help these dads stay connected with their children.
The major change is a shift in the financial arrangements associated with different levels of contact. It is well recognised that the present situation, whereby mum loses substantial child support if the child spends more than 30 per cent of its nights a year with dad, creates a "cliff" effect in which fathers are confined to fortnightly access lest the mother loses income.
Under budget proposals, this cliff effect will be smoothed out by gradually reducing levels of child support, even for men who have their children only 10 per cent of nights. But most mothers won't lose out - the government is largely to subsidise their lost child support, paying out $47.5 million over the next four years.
This change will affect large numbers of divorced parents - a sad testimony to how little contact most divorced men now have with their children. At present, only 11per cent of divorced men spend more than 30per cent of nights a year with their children. Twenty-two per cent of men who pay child support through the Child Support Agency never see their children, and almost a third have them for fewer than 36 nights a year.
Now the 135,000 men who have contact with their children between 10 and 30 per cent of the year will pay slightly less child support - an average drop of $5 a week.
Most lone parents will have this loss in child support offset by an increase in their family tax benefit - which accounts for the $47.5million cost to the government. In addition, lone parents stand to gain around $25 a week from extra social security assistance introduced in the budget.
So here we have a very significant decision by the government to add to its welfare bill by giving up some of the claw-back it has traditionally received from child-support payments. It does so in recognition of the social costs being imposed by previous policies - whereby low-income fathers were prohibited from seeing their children due to the high costs of contact, particularly in situations where children live long distances away.
With divorce more common in low-income groups, it's hardly surprising to find many non-resident fathers struggling to support themselves - 46.2 per cent of men registered with the CSA report incomes of less than $16,000. While some of these men may be involved in income minimisation, many face very difficult financial circumstances. Their financial plight was confirmed in research by Trevor Sutton, now assistant general manager of the CSA in Canberra, which showed men earning less than $15,000 a year pay about half their discretionary income in child support.
There's also powerful evidence of the appalling legacy of the green light given by the Family Court to lone mothers who decide to move children away from their fathers. Further research by Sutton reveals that most Australian men have to travel to see their children - the average distance between a divorced father and his children is an astonishing 141 kilometres.
Last year, research conducted by Murray Woods and Associates for the Department of Family and Community Services concluded that distance was one of the major constraints on contact, adding to the substantial costs of providing things such as accommodation and food for children on contact visits.
It remains to be seen whether offering dads slight financial relief and reducing financial obstacles to mothers allowing more contact will really mean children see more of their fathers. But should the measure have the desired effect, it could result in a windfall for the government. Sutton's research provides strong evidence that increasing men's access to their children dramatically increases their willingness to pay child support.
Currently the CSA has a 14 per cent shortfall in the collection of child support. By Sutton's calculations, an increase in father-child contact from the present average of 63 nights to 100 nights would result in a 5 per cent increase in compliance, bringing in an additional $30million in child-support payments.
Among the other important budget changes is the decision to cut back on the "wife support" component in the calculation of high-earning men's child-support payments. In February, the government published Canberra University research on costs of children, showing that men earning more than $50,000 a year are required to pay well in excess of the money spent on children even in affluent homes.
The original child-support formula was based on the premise that high-earning men should pay more to ensure their children aren't forced into a drastically reduced lifestyle. This inevitably meant maintaining an ex-wife somewhere near the manner to which she was accustomed. But the stark gap between costs of children and child-support payments, particularly for men earning more than $75,000, has convinced the government to lower the upper limit or "cap" on payer income used to assess child support.
Then there's the fact that men earning more than $50,000 are doubly disadvantaged by paying maximum child-support rates plus being in the highest tax bracket. A non-resident dad in this income bracket with two children was left with less than 20 cents in every dollar earned over $50,000, after paying tax, child support and employee superannuation of 3 per cent.
When the promised tax breaks for this income group were scrapped by Labor and the Democrats, lowering the cap was the only way of relieving the work disincentives facing this tiny group - who constitute less than 1 per cent of all CSA payers.
As for the other changes, they are mainly designed to ease the burden on poorer non-resident dads, particularly those supporting second families. They are all moves in the right direction, with children as the major beneficiaries.
Bettina Arndt is a staff writer.