RESEARCH - COMMUNITY ISSUES AUGUST 2002

COST OF CHILD SUPPORT

261,000 (45% of total) - Payers with Child Support liabilities less than $1,000 p.a.

Based on the above statistics, we have updated our estimate of the cost of Child Support and include some figures that support our underlying assumptions

- adjusted for welfare claw back and allowing for 10% CSA unemployment rate

Co-operation from the Child Support Agency in regard to this report was non-existent and the Agency proved most uncooperative. Enquiries relating to non-lodges of tax returns with the Australian Taxation Office were given the run-a-round for several months with no benchmarking statistics provided. Requests to Centrelink also proved most difficult and the unqualified information eventually supplied was meaningless. As a result of this lack of co-operation, PIR was forced to lodge a formal complaint to the Australian National Audit Office in December 2000, who subsequently conducted an audit of the CSA. The cost of Child Support/Agency is expected to be addressed. in the Auditor General's report to  Parliament in September 2002.

In the course of this research project, provided by PIR in the community/taxpayer interest, PIR interviewed many individuals and organisations, and provides an independent summary of what has been stated as the key reasons why the Child Support Scheme is not working and so horrifically costly in it's present form:

" Agreement on the level of appropriate Child Support between parties is virtually non-existent.

Less than 5% of all CSA cases have signed long-term Child Support Agreements.

" "The Child Support Scheme was primarily introduced by women's groups and passed through parliament without any broad community support from fathers, or even many thousands of women whom have since partnered these fathers into second families. It is therefore, not seen by most men as providing necessary support for children, but more as never ending vindictive action by women against former partners".

" "Single men in particular, have no choice at all as to whether children should or should not be born, but women have the sole choice. Thousands of cases exist where single women have borne children to several different fathers. To add insult to injury the men have no choice as to the level of ever increasing mandatory child support (and continuous scrutiny into their financial affairs) provided to the other party, who has no accountability for both money or access".

" "Child support payments are not linked to custody, which is granted to 91% of women, nor access rights, which can be denied without reason or without any financial penalty to the payee (custodial parent) if in default".

" "The act provides for no privacy or any rights for payers, including mandatory disclosure of financial affairs, garnishees, seizure from bank accounts, child support debts that endure bankruptcy, even restricted travel rights are just a few undemocratic examples of the frequently used powers of the CSA".

" "The review process is primarily utilised by payees (who often train their own children to look for signs of any improved financial circumstances on access visits), it is mandatory and judgemental, it is free to payees and based on 'one' public servant's subject evaluation of income earning capacity and assumed ownership of assets. The appeal process via Family Court (who are seen as biased against men) is expensive and beyond the resources of most payers who can only resort to unemployment as a defensive mechanism".

" "Most men see Child Support as a woman's revenge tax that effectively tracks them down for life and taxes income at high premiums up to 84.7% for payers with three children on the highest marginal tax rate; whilst on the other side goes totally tax free to the other party regardless of changed marital status, employment or as previously stated regardless of access to their children".

" "It is common knowledge right across the nation (even Parliamentarians and The Ombudsman, where the CSA is the major source of complaint) that many thousands of men have been forced to resort to unemployment as their only defence against the excessive demands of the CSA. Yet the CSA adamantly denies the problem exists and at the same time refuses point blank to obtain independent research or commission surveys to support their case".

" "Through the Family Court, most male divorcees have already parted with most assets including the family home, only to then find through the CSS they are left with barely living expenses after payment of ever increasing child support linked to their future earnings capacity".

It is PIR's independent view that the only real solution in this democratic equal opportunity nation, is that both parents should jointly share the basic cost of child maintenance. This should be levied at a flat rate for all non custodial parents based on a child index similar to that produced by the Institute of Family Studies and regardless of any financial circumstances, other than excluding liability in times of genuine unemployment or hardship and on the other side custodial parents in full-time care for children under five years of age. Any formulae based on taxable income will be treated as excessive discriminatory taxation and by human nature either resisted or totally avoided accordingly.

Prepared August 2002

RICHARD A CRUICKSHANK

Managing Director

*NOTE Figures and estimates may not directly correlate with the main source of reference used in this report, namely Child Support Scheme - Facts and Figures 2000/2001. Many statistics stated therein relate to 'cases' and have been adjusted on a pro-rata basis to apply to 'individual' payer calculations.

Under Corporations Law, Property Investment Research Pty Ltd ("PIR") ACN 006 425 083 is a licensed 'Investment Adviser' and holder of License No. 12151, dated 3/12/94. Established in 1989, PIR is Australia's leading 'independent' research group on property related investments. PIR is the major supplier of independent research to Investment Managers and Financial Advisers. Under the law, all Financial Advisers are required to properly research the financial products they recommend. PIR's independent research plays a vital compliance role for ASIC licensed Investment Advisers and Securities Dealers in that it (I) assists in ensuring investment recommendation are appropriate for the client (II) provides adequate knowledge of investment promoters, their track record, the investment market and the risks involved (III) ensures, where specialised in-house research is not available, reliable research is obtained that is impartial and accurate.

DISCLAIMER

Although great care has been taken to ensure the accuracy of this report, Property Investment Research Pty Ltd gives no warranties in relation to the statements and information contained herein and disclaims all liability arising from any persons acting on the information and statements in this report.

© Property Investment Research Pty Ltd, 2002. Reproduction in whole or in part is not permitted without the permission of PIR.

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Email: richard.cruickshank@pir.com.au