Thursday, 14 May 1998 REPRESENTATIVES P3257 (Hansard)

CHILD SUPPORT LEGISLATION AMENDMENT BILL 1998

Second Reading

Debate resumed from 13 May, on motion by Mr Miles: That the bill be now read a second time.

Mr MILES (Braddon—Parliamentary Secretary [Cabinet] to the Prime Minister) (1.26 p.m.)—in reply—In summing up, I would like to thank the participants in this debate. For a long time all of us in this parliament have recognised that this is a very complex area for the parliament to come to grips with. It is something which involves a lot of emotion, and I think all of us are concerned to try to move the legislation forward.

In reply, I would like to stress a few things. The measures contained in this bill are good, sound changes. They will provide real benefits to parents by introducing flexibility into the child support scheme and will improve timeliness, accuracy and responsiveness in the administration. I commend the government�s continuing commitment to reform the child support scheme to under-score the fundamental principle that parents are primarily responsible for the financial support of their children and that government will not unnecessarily intrude into people�s lives.

The Australian Labor Party has not properly addressed the child support issues and has ignored the recommendations of the inquiry by the Joint Select Committee on Certain Family Law Issues into the operation and effectiveness of the child support scheme. The measures in this bill were announced in a joint media release on 30 September 1997 by the Minister for Social Security, Senator Jocelyn Newman, and the Assistant Treasurer, Senator Rod Kemp. The bill improves the scheme�s flexibility and provides greater equity for parents. It enables parents to take greater responsibility for support of their children. At the same time, the government will provide a safety net to ensure that children of separated parents are adequately supported and that the general community is not asked to carry an undue burden.

The changes in this bill are, firstly, changes to child support payable. They increase paying parents� exempt income by 10 per cent; include an amount for shared care of a child in the exempt income amount; reduce the amount of the payee�s disregarded income amount and remove the automatic inclusion of child care in the payee�s disregarded income; allow high child-care costs to be a ground for a departure from the assessment; reduce the effect of the payee�s disregarded income; introduce a minimum payment of $260 per year and make child support payable for secondary students until the end of the school year in which they turn 18; include rental property losses and foreign exempt income to calculate child support; base child support assessments on the most up-to-date income of parents; use an uplift factor only where the parent has not lodged the most recent tax return; and no longer backdate child support liability.

Changes in the bill also include changes for second families, and these include the following points. They allow credit for child support paid in determining entitlements to family payments for payers� subsequent families. Changes to the administration are several, and I will quickly go through them. They will introduce a formal process to enable parents to object to the CSA�s decision; no longer include the names and birth dates of relevant dependent children on the assessment notice; allow parents to agree to collect and pay child support privately at any time; and require parents to pay and collect child support privately where there is a good payment record.

There will be a better alignment of family court and child support legislation relating to the care of children. The changes will allow parents to end a child support assessment where their safety is at risk and provide support and assistance to parents to collect child support where safety is no longer of concern; improve notification and disbursement processes to reduce incidences of overpayments; allow child support debts to be offset between parents; allow the registrar to initiate the process to depart from the administrative assessment and to streamline the departure process; allow estimates of income to be rejected where they do not reflect the actual income; and allow liable parents to apply for a child support assessment.

As the member for Richmond (Mr Anthony) foreshadowed in his speech in the Main Committee, I will be moving an amendment to the bill and I am pleased to advise the House that this amendment was announced in the budget on Tuesday night. The amendment will allow payers to make non-agency payments without requiring the payees� agreement.

I would also like to make some comments about the role of the House of Representatives task force and their initiatives at this point. The task force of government members was formed to consider and report to the government on a number of matters related to child support. The government appreciates the work that the task force has done in such a short period and supports the following recommendations that the task force made. I will just quickly go through those areas of recommendations for people�s information, firstly in regard to persons evading child support by travelling overseas. The majority of people with child support liability pay the amount when it is due and pay the correct amount. However, there are some payers who have a child support debt and go overseas before the debt is cleared. The government will amend the child support legislation with effect from 1 January 1999 to give the Child Support Registrar the power to stop a parent who has persistently failed to meet his or her child support liability from leaving Australia through a departure prohibition order process. The DPO will not be time limited and will remain in force until revoked by the Child Support Registrar when the debt has been paid or when satisfactory arrangements have been made. The process will come into effect from 1 January 1999. This is consistent with the taxation commissioner�s powers which include a right of repeal to the Federal Court or Supreme Court. The remedy goes further than the joint JSC recommendation 115.

The second area is consideration of diverse forms of income received and taken into account for determining child support. Child support is calculated using a parent�s taxable income. There are a number of ways in which parents can reduce their taxable income and consequently pay less child support. Many of these ways of reducing taxable income such as salary sacrifice are legitimate under the taxation laws. The government has recognised that parents are able to reduce their taxable income for taxation purposes but this is not appropriate for child support purposes.

The bill before parliament will add back to taxable income rental property losses and exempt employment income. Parents with second jobs and those that work overtime now have this extra income included in the income base for the calculation of child support. The government will establish an inter-departmental committee to examine the diverse manner in which all forms of income are received and taken into account for the purposes of child support assessments and will take account of the scope of tax reforms. The IDC would be chaired by DSS and comprise representatives from Attorney-General�s, the Child Support Agency, Prime Minister and Cabinet, Finance and Administration, and Treasury. Other departments could be coopted as necessary.

In regard to transparency and independence of process to depart from the formula assessment I make the following comments: child support assessments are based on a formula. Parents who believe that the assessment is not appropriate can seek a departure from that assessment. Only about six per cent of parents seek a departure. The current process is perceived as not providing sufficient transparency or accountability. The registrar will review the process and will focus the concerns with a view to providing substantial improvements to current processes. The existing process to depart from formula assessment will be examined to develop a range of options which will improve its transparency and accountability to enable changes to be considered in the 1999-2000 budget process. A review of the training qualifications and remuneration of officers contracted to determine applications to depart from formula assessment will report to the Assistant Treasurer by 30 June 1998. The examination of the departure process will include legislation, procedures, information needed by clients, physical location and accountability of officers, notification of decisions and appeal mechanisms including an evaluation of the proposed legislative amendment which introduces objection provisions for departure decisions. Reviews are preferred to jumping prematurely to a judicial or quasi-judicial process which will be costly to administer and will run the risk of returning to a system which was largely out of reach of most parents.

As to payer concerns about contact or access with children, currently the only recourse for parents denied contact with children is to lodge repetitive applications for enforcement with the court. These applications involve a delay varying between a few weeks and over six months and a range of penalties that are difficult to impose in the context of the best interests of the children. These processes are a significant cost to government and frequently to legal aid funding. The pilots will provide practical demonstration of alternative community based support for parents experiencing difficulties with contact. Pilots to help ensure compliance with Family Court child contact orders will be established within community based agencies, contracted under the family relationships services program. Pilots will be contracted at four locations— Parramatta, Brisbane, Townsville and Hobart—and will be three-pronged: firstly, information education sessions when the order is made; secondly, immediate assistance for parents to resolve conflict over contact; thirdly, a compulsory diversionary program for parents in breach of a contact order.

The Attorney-General will also consider the establishment of a parliamentary committee to examine all aspects of family law contact and compliance once the Family Law Council has delivered its report in June 1998. Providing assistance to parents to resolve issues without court intervention is in line with recent changes in family law that encourage people to resolve family disputes outside the judicial system. A compulsory diversionary program provided by community based agencies for parents convicted of breaches would be a credible alternative to the current scope of penalties which range from recognisance to imprisonment.

I thank those people who have participated in this debate and, as I said, I foreshadow that we will be moving amendments in the detail stages.

Question resolved in the affirmative. Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Consideration in Detail Bill—by leave—taken as a whole

Mr PRICE (Chifley) (1.39 p.m.)—I did have circulated in the House an amendment in my name. I advise that I no longer wish to pursue that amendment in that form, but this affords me the opportunity to point out to the Parliamentary Secretary (Cabinet) to the Prime Minister (Mr Miles) in particular and to all those government members who have so effusively welcomed these amendments that in reality there will be more money collected by the Treasurer (Mr Costello) as a result of these changes. There will be more money going into consolidated revenue. I would hope that those government members in the Main Committee who attacked me and took exception to that view might read their own explanatory memorandum and the financial implications of the bill, because in child support there are always three people involved where money is concerned, although principally it is supposed to be directed to the welfare of children, and that is of course the two parents and the government.

For example, the increase of a mere 10 per cent in the self-support component—and it is a pity that the parliamentary secretary could not share with us the reason why it is 10 per cent and not 20 per cent; what led the government to pick that particular figure—is going to cost $10 million. That will cost $10 million, but do you know how much Peter Costello is going to be better off by these measures? This is not my estimate or guess or the estimate of the member for Wills (Mr Kelvin Thomson). It is in the papers that the cost will be between $47 million and $26 million. When you take all the measures that are in this bill allegedly for the benefit of the children that are affected by child support and the financial impacts on the parents, who is the biggest winner? Not the children, not the parents, but Peter Costello and John Fahey—and they parade into this House as though this is some great bit of reform legislation.

The parliamentary secretary says it is a difficult area. Well of course it is a difficult area but that does not mean there should be an absence of courage in wanting to tackle the problem and do some decent things. I would be grateful to the parliamentary secretary if he would respond to the financial implications of the bill. Does he agree with the explanatory memorandum that Peter Costello and John Fahey through this child support amendment bill will in fact be between $26.2 million and $47.297 million better off. Is this what the Coalition government considers to be real reform in the child support area. He might share with the House through his generosity of spirit why they have actually made some of the decisions.

I am not saying that what was recommended in the report is somehow set in concrete, is the best that there is. Far from it. It was the minimum that we recommended should be done to restore equity and fairness—the minimum. And that is well over 3½ years ago.

Why did he pick 10 per cent, not 20? Why has he picked some new figure of average weekly earnings rather than the pension cut-off point. I would like to get into debate with him but if you do not share your arguments with us but more importantly the people of Australia, how is it possible to have a debate. Or does the parliamentary secretary want to do what he normally does and that is to gag measures through the House.

I want to advise the people of the House that the better and more correct title of this bill is really a consolidated revenue measures bill rather than a child support amendment bill. I am not pursuing the amendment but I do want to say that is the real impact. The big winners are not the children, are not the parents, but consolidated revenue presided over by the Treasurer and the Minister for Finance. (Time expired)

Mr TONY SMITH (Dickson) (1.44 p.m.)—by leave—I move: Go to proposed Tribunal Amendments

The purpose of my amendments is to abolish the review process and introduce an external review process through the magistrates courts. It involves the setting up of a child support tribunal, drawing on the successful experience of the small claims tribunals and the small debts courts around the country. These bodies operate all around the country and are part and parcel of the magistrates court system and the courts of petty sessions in the various states and territories.

An applicant could seek a departure order, varying child support upwards or downwards. The procedure would be inexpensive and efficient. The tribunal would be constituted by a magistrate who would hear and determine applications for departure orders based on the principle of the needs of the child and the capacity to pay of both parents. To establish needs and capacity to pay, evidence would need to be called on oath. No lawyers would be allowed, unless in exceptional circumstances such as literacy problems or proven incapacity. No experts would be permitted to give evidence. There would be no appeal on fact.

The magistrate would not be bound by the administrative assessment in exercising a discretion to make a departure order. The magistrate could take into account, by clause 98G of the proposed amendments, whether the applicant has been permitted and able to exercise contact to a child. In other words, where there has been deliberate withholding of contact, the magistrate may make an order reducing the child support payment in those circumstances.

This unique provision is needed because of the powers of this tribunal and the stringent powers of the Child Support Agency generally. The tribunal would have power to orally examine a non-payer on oath and have power to summons the person to appear before it to be orally examined. In these proceedings, leave would be granted for lawyers to represent that person on the application of the Child Support Agency.

The Child Support Agency could, if it finds a liable parent to have deliberately, wilfully and without lawful excuse failed to pay a sum of child support, be found guilty of contempt. It is not unique in this sense, since at common law and under the criminal codes of the states and territories parents are under a duty to provide the necessities of life to their children. A breach of that duty is a criminal offence with serious punishments following. I see no difference between that situation and a situation where a person deliberately withholds child support and, accordingly, significant penalties follow.

What is the background to this? During the second reading debate it was said time and time again that, prior to the Child Support Act being introduced, fewer than 30 per cent of parents were paying or receiving child support. I do not know what the basis for that assertion is. I have been avidly trying to discover the basis, but I have not been able to by myself or through my researchers. One leaps from one paper to the next, always seeking, but never finding, a reliable primary source.

However, I did just get passed to me a moment ago a document called Child Support—Social Justice Project 1986, which talks about a figure of 37 per cent of persons who were on the widow�s pension or supporting parent�s pension. Is that where the figure comes from? I do not know. I am still waiting to find out. It is important, because we should not keep repeating falsities until we discover the source of these sorts of statements. The argument suits the bureaucrats and the Child Support Agency, but it is not the full account. I suspect that the more accurate figure is greater than 50 per cent in fact.

But let us face it: the agency is in the business of perpetuating itself. That is not to say that the agency cannot perform a role, but it ought not to perform the role of judge, jury and executioner; that is why we have courts. They are the checks, balances and safeguards which make society tolerable. Presently, the people subject to this system find it intolerable. No-one has worked harder on this issue in the House since I have been here. I have spoken about this more times than any other person, and I have devised what is a very good scheme to make it fairer. What people on both sides of the House do not seem to recognise—and, I regret to say, what people in the executive of this parliament fail to recognise—is that this system is unfair. (Time expired)

Mr BRADFORD (McPherson) (1.49 p.m.)—What the member for Dickson (Mr Tony Smith) has done today is a fairly brave move, because he has actually put before the parliament a very good idea. That probably is giving it the kiss of death; nevertheless, what he has said has considerable merit. What I am confused about, though, and what he did not make clear, is whether the government is supporting his amendments or whether he, in fact, is doing this of his own initiative without the support of the government. I suppose in time we will see whether in fact the government supports him. His being a member of the government, and it being a good idea, I would hope that it is supported by the government. As the member for Dickson has said, he as much as, and perhaps more than, anyone in this place has, as a lawyer, dealt with a lot of family law matters. He obviously understands better than most members the problems that exist within the existing regime of the Family Court and the Child Support Agency.

I think he put quite eloquently his case for the formation of this particular tribunal and so I will not go into great detail other than to say that it does have merit and ought to be supported or taken seriously as a suggestion, but it remains to be seen whether in fact that occurs at some point in the future.

The member for Chifley (Mr Price) spoke in this debate, and to his credit—and I think it is credit that is due widely in this place—he chaired the Joint Select Committee on Certain Family Law Issues, which reported in November 1994. That committee made 163 recommendations, most of which I suggest— and the member for Chifley might correct me— have not yet been seriously addressed by this parliament. Yet from my reading of that report and from following its deliberations—it went for a very long time and was a very good committee that made a lot of recommendations which ought to have been accepted—the legislation that we are now dealing with in detail again is just a picking through some of those recommendations and, indeed, putting more bandaids on what is quite patently a totally ineffective system of dealing with the very difficult problems that are created when marriages break up. The member for Chifley, of all people, I think, can speak with some authority and some credibility on these particular issues.

I do not pretend that I have the solutions to the problems that the Child Support Agency represents but, having an understanding of what is involved, I do not believe the sorts of changes we are dealing with here today go anywhere near solving the problems.

I know from my former life, which was not so long ago, that members of the government parties are very concerned about it. They said publicly, and I can say to people who are listening that they certainly were very vocal privately, that the Child Support Agency was responsible for more complaints in their electorate offices than any other individual matter with which they were confronted as members. I think that is still the case. It is simply the case because the government continues to fiddle. Instead of actually fixing it up, doing something with it, and getting back to basics, it continues to put bandaids on the existing problem. The member for Dickson has come in here with a radical solution to the problem, radical because it is a major departure from the paradigms within which people seem to think about this problem. We are yet to see whether there is any support from the government, or indeed from the Labor Party, for that particular suggestion.

I have at the moment got a couple with whom I am dealing who are just typical of the many problems when a relationship has broken down. The number one priority it seems to me that this legislation fails to address, and which has been repeatedly overlooked, is the inability to take account of the former spouse�s situation in a relationship. In other words, people are often aggrieved when a spouse, whether it be a husband or a wife, leaves and then goes into a situation where they are very well off.

(Time expired)

Mr ANTHONY (Richmond) (1.54 p.m.)—I certainly rise to speak on this subject—

Mr Melham—Do you need child support from your dad?

Mr ANTHONY—Well, I do not live with my mum. But certainly I am sure you have a very nice mother, as I have a nice father. Nevertheless, this issue has been discussed and obviously there is a lot further to go with child support. In any situation where you have a marriage break-up or a couple breaking up where children are involved, a lot of trauma and stress is brought upon those parents and particularly upon the children. A task force has been established in the last six weeks by the Prime Minister (Mr Howard) to look at some specific areas where we could go further in the legislation that is currently before the House, the Child Support Legislation Amendment Bill 1998, looking at improving that as well as looking at the Child Support Agency. Whilst I do have a lot of sympathy with the proposal being put forward, I believe that it is important that we look at some of the mechanisms within the Child Support Agency before we walk down that path.

Obviously we need to be looking at the transparency and accountability of the Child Support Agency. Many of the concerns of perhaps non-custodial parents arise when they seek a departure order from the Child Support Agency. I might add that only six per cent of parents actually seek a departure order and 50 per cent of those are actually approved, so that three per cent is where a lot of the grief comes from. Following our discovery we have requested that a review be held of the training qualifications and remunerations of the review officers within the Child Support Agency. Certainly, from some of the evidence that we had, there is a long way to go to ensure that those people who are the actual review officers are not only properly qualified but also properly remunerated. Their remuneration is actually based on the success of the case, which tends to focus on quantity rather than quality.

There are a number of areas which have come to light for me and certainly other members of the task force. Let us go back and have a look at perhaps reforming the Child Support Agency as much as we can. If that is not successful, then obviously other proposals may have to be looked at. Some pilot programs, while not legislation, will automatically be established to look at access or contact, which also causes an enormous amount of grief for both custodial and particularly non-custodial parents, where they comply with the child support formula. Indeed, they do the right thing. They then obviously come to pick up their children, but they are denied access. Obviously the issue at heart, and I think this is the issue that is being discussed here, is how you actually enforce an order if it is continuing to be breached. What we are suggesting is let us run some pilot programs now, which will be community based, and perhaps also look at something within a family court or judicial area, so we can compare apples with apples and see which type of system is more effective.

Certainly before the Child Support Agency was established by the previous government in 1988, the actual level of payments being made was substantially lower. There was a high default rate, and there was a quasi judicial process in place which was not effective. What we have now is a number of recommendations. I might add that the parliamentary secretary has also today talked about increasing non-agency payments up to a level of 25 per cent, and we believe that this will be an opportunity, particularly for non-custodial parents if they wish to pay for their child�s schooling fees, for them to pay for essential medical or dental fees. It could be in the area of paying for utilities, such as rates or mortgages or indeed for motor vehicles, which can now be assessed within the child support formula. I might add as well that one of the other issues is access to travel. Many custodial and non-custodial parents are obviously in a situation where they have to either fly or travel to their children, or their children have to come to them, and you can apply for a departure order, as long as it is above five per cent. You can utilise that travel cost.

The other area that is particularly important, and I think this is where some of the geneses of these amendments are, involves assessing the various types of income, whether it be salary sacrifice or second jobs or overtime. Certainly there will be an interdepartmental committee now which will investigate some of these issues. (Time expired)

Mr SPEAKER—Order! It being 2.00 p.m., the debate is interrupted in accordance with standing order 101A. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.

Continue to further debate and votes. Part 2