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Missing the point on child support payments

What would another review of child support achieve when we know the problems and how to fix them?

Mar 27, 2017, updated Mar 27, 2017
There are high rates of non-payment, partial payment and late payment of child support. shutterstock

There are high rates of non-payment, partial payment and late payment of child support. shutterstock

Any reforms must move beyond a focus on administrative processes to acknowledge the lived experiences of child support which can be disguised by formal policy.

The Australian National Audit Office recently listed child support program arrangements between the Australian Taxation Office (ATO) and the Department of Human Services as a priority issue. This comes as the One Nation party calls for a review of child support.

While the ATO changes were flagged in the 2015 parliamentary inquiry into the child support program, the two announcements have been linked. But this does not recognise that Australia’s child support program has been an ongoing policy challenge.

Since 2003, it has been the subject of two parliamentary inquiries, a ministerial taskforce and major reforms. The program is consistently among the top-five Australian government agencies about which the Commonwealth Ombudsman receives complaints. So what are the key child support challenges in Australia?

Child support is typically calculated using a standardised formula. This includes each parent’s reported income, the number of nights children spend at each parent’s house, and age- and income-referenced costs of children.

Despite changes in 2008 that reduced the average payments and capped liabilities, payers (mostly fathers) continue to claim they pay too much. Recipients (mostly mothers) continue to argue they receive too little.

Responses are complicated by debates over how to calculate the costs of children. And on a practical level, parents’ incomes cannot stretch as far when one household becomes two. This applies particularly to child support program clients, who are on average worse-off financially than the general population.

About one-third of child support program cases involve payments of less than $500 per year. This amount cannot meaningfully contribute to the costs of children.

Past research shows Australians are broadly in agreement with the proposition that child support should always be paid. But this hasn’t translated to practice.

There are high rates of non-payment, partial payment and late payment of child support. Data from 2012 show only around 40% of recipient mothers report child support paid in full and on time. Less than three-quarters of payer fathers – the group most likely to present payment patterns in a positive light – report making payments in full and on time.

Thus, low amounts of child support are exacerbated by its unreliability.

When people receive child support over a certain amount, Family Tax Benefit A will be reduced by 50 cents for every dollar of child support assessment.

But when there is a discrepancy between amounts on the books and amounts paid (or not paid), Centrelink recipients can lose both the expected amount of child support and a proportion of their Family Tax Benefit A and Rent Assistance.

If back-payments are received, these can further reduce Centrelink payments because they count as higher amounts of child support. Recipients can avoid these penalties if they show they did not receive the assessed amount of child support, but this provision is not widely known. Recipients can thus lose out twice.

This is the Australian National Audit Office’s (ANAO) proposed focus.

Child support assessments are linked to income. PAYG taxpayers can avoid or delay lodging tax returns and can, by reducing their taxable income limit, reduce child support assessments.

The non-lodgement of tax returns is a particular concern, because the current solution imputes the payer’s income from their last known tax return indexed for growth in real wages. This cannot capture wage advancement or business growth. Recipients bear the financial cost through lower child support assessments.

The original scheme’s introduction was expected to neutralise the emotional tenor of child support payments. However, child support is not just a financial matter: it is what sociologist Viviana Zelizer calls “special money”.

People use child support to express and manage relationships with former partners and children. In difficult post-separation situations, refusing to pay child support can impose power over a former partner, or express resentment that financial contributions are not valued.

Conversely, paying child support or using it for child-specific costs can be an expression of love and of being a “good” mother or father.

Tweaking the formula or strengthening enforcement may alter flows of money between parents, but this won’t necessarily defuse the sense of unfairness or frustration that reflects the link between child support and what it means and how it feels to be a parent after separation.

The proposed ANAO audit and other recommendations can only partially tackle the challenges of child support. And implementing changes is likely to bring political heat – particularly if the changes limit the financial autonomy of payers, whose interests have dominated public and political claims about child support.

Any reforms must move beyond a focus on administrative processes to acknowledge the lived experiences of child support, which can be disguised by formal policy, and, most fundamentally, the social and economic wellbeing of children and their caregivers.

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