Reform of the National Child Support Scheme

	Jodylee Bartal Solicitor		Sophie Williams Solicitor
	Tel:+61 3 9609 1585 jbartal@rk.com.au		Tel:+61 3 9609 1611 swilliams@rk.com.au

Introduction

Prior to the commencement of the National Child Support Scheme (CSS), child support was paid by parents pursuant to an “informal agreement” or in accordance with a Court Order.  There was no Government regulation and enforcement was often difficult and expensive.  Social security benefits more often than not became the “crutch” used by parents with the care and control of children.

In 1998, the CSS was introduced.  The scheme aims to ensure parents support their children to the best of their capacity and aims to alleviate parental dependence on the public purse.  The CSS is administered by the Child Support Agency (CSA), which collects and distributes child support payments.  Child Support legislation (the Child Support (Assessment) Act 1989), provides an administrative formula to assess how much a parent is to pay. 

The formula takes into account each parent’s income, the number of children and their living/care arrangements.

Recommendations for Reform

Responding to the recommendations contained within the Governmental Report,  “Every Picture Tells a Story” in August 2004 the Government set up a Ministerial Taskforce to look into the CSS.  

In June 2005, the Ministerial Taskforce published their report called “In the Best Interests of Children – Reforming the Child Support Scheme”.  The report made a number of recommendations addressing current social issues such as shared parental responsibility and participation of women in the workforce. These recommendations form the foundation of the three stage approach to reform adopted by the Government, to be implemented over the next three years.

Stages of Reform

Stage 1 – Changes to the CSS from 1 July 2006

• Increase in minimum weekly payments, from $5 per week to $6 per week;
   

• Parents on income support benefits who have the care of their children for at least one night per week (14% of care time) will receive an additional $16.50 in benefits (Newstart, Newstart Mature Age, Sickness Allowance, Youth Allowance).  Previously, to receive this additional “with child” benefit, parents had to have their children for 30% of care time;
   

• The maximum level of earnings, above which a payer's income is excluded from the child support calculation, has been reduced from the $139,347 to $104,702;
   

• Payer parents are now able to direct 30% (previously 25%) of their child support payments to specific items essential for children, such as school fees to better ensure child support payments are applied to meet the children’s needs;
   

• The CSA is increasing it’s efforts to enforce child support payments by way of targeting “serious avoiders”, increasing use of Court action, investigating parents who do not lodge tax returns or deliberately understate their income;
   

• New services are available for recently separated families to obtain advice regarding their rights/responsibilities according to Child Support legislation.  For example, via Family Relationship Centres or the Family Relationship Advice Line;
   

• The CSA will continue internal reform, endeavouring to make the Agency more client-focused and increasing it’s capacity to effect concentrated case management.

Stage 2 – Changes to the CSS from 1 January 2007

• The role of the Social Security Appeals Tribunal will be expanded to include review of Child Support Agency decisions;
   

• Parents will be able to pursue Court action for child support debts, while the CSA collects for current and continuing payments;
   

• Courts hearing Applications for the Enforcement of Child Support will be vested with the same powers of the CSA to obtain information about the parents;
   

• Courts will have increased powers to make temporary arrangements regarding child support, thereby reducing any increase in debt/penalties which may occur while the matter is issued, awaiting hearing;
   

• After separating, the time that a ‘Payee’ parent (with whom the child lives) may take to obtain child support payments from their former partner, before their Family Tax Benefits are effected, will increase from 28 days to 13 weeks (91 days).

 Stage 3 – Changes to the CSS from 1 July 2007

• A new formula for calculating child support will be introduced;
   

• Payers of child support to 2 or more families will have to pay at least the minimum $6 weekly payment to both families (as opposed to splitting the $6 payment between the two families);
   

• Income from 2^nd jobs and overtime will be excluded from child support assessments for the first 3 years following separation, to assist parents to re-establish themselves;
   

• The Change of Assessment Rules (the grounds under which a parent may apply for a re-assessment of their child support liability/entitlement) are being reviewed with a view to simplifying these Rules;
   

• Financial responsibility for step-children (because no one else can provide for them) will be taken into consideration when child support is assessed;
   

• Processes by which private child support agreements between parents may be made, will be improved and supported;
   

• If parents reconcile, they will be able to ‘suspend’ child support payments for a period of 6 months from when the resume their relationship.  If reconciliation ultimately fails, the parents will not have to make a new Application but can simply reinstate that made previously.

Reform of the CSS and You

Matters involving child support assessment and payments necessarily turn on their own set of distinct circumstances.  By this newsletter, we aim to provide a broad understanding of the changes to the CSS occurring over the next year or so.

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Copyright 2006 © Russell Kennedy. The information contained in this publication is intended as general commentary and should not be regarded as legal advice. Should you require specific advice on any of the topics or areas discussed, please contact the author directly.