Dunne Peter: Child Support Amendment Bill (No 4) — First Reading 
Dunne Peter: Child Support Amendment Bill (No 4) — First Reading 
[Volume:628;Page:503] 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Child Support Amendment Bill (No 4) be now read a first time. 
 I shall be recommending later that the bill be referred to the Social Services Committee for consideration. The fundamental principle behind the child support scheme is and remains that parents are financially responsible for their children. The main purpose of this bill is to increase the compliance of parents who for whatever reason are presently failing to meet that responsibility by not paying child support because it is only by bringing non-payers back into the system that their children will receive the support they are entitled to. Having said that any changes to the child support scheme must also take careful account of individual parents’ ability to meet their obligations without wringing them out financially and at levels they cannot afford to pay. For that reason this bill proposes a number of balanced solutions rather than a short-term punitive approach to getting lapsed payers back into the system. 
The first one of these solutions addresses one of the major obstacles to liable parents re-entering the child support system. I am referring to the penalties that quickly escalate as soon as a parent defaults on child support payments. Under the current child support penalty rules a liable parent’s underlying child support arrears increase by 36.8 percent in the first year and by 28.8 percent in subsequent years. That means that within just 3 years the penalties owed exceed the child support payable. As at 30 September this year the total child debt payable by liable parents was $427 million in child support arrears but $584 million in penalties on those arrears. Total penalties have actually exceeded child support arrears since September 2001. This bill will provide limited relief to encourage lapsed parents to re-enter the system without punitive action being taken against them. 
It proposes writing off debt penalties—not arrears—as an incentive for non-paying parents to reactivate their payments. But that arrangement will be subject to a number of conditions. When non-payers enter into an agreement with the Inland Revenue Department to make payments on their current liability and their arrears the incremental penalties they have previously accrued will be written off at 6-monthly review points but only if they keep to the agreement. That write-off will be based on a pro rata percentage of their core child support arrears including the 10 percent penalties that have been paid. For liable parents who default on their payment agreement there will be no write-off at the next review point. Instead they will have to negotiate a new agreement with the department and comply with that before they again qualify for a write-off. 
Because liable parents will not be able to have all their penalties written off they will still be better off if they pay on time and do not incur penalties at all. Liable parents who are already complying with the payment arrangement for paying off arrears or who make regular deductions for their arrears will also be eligible for the write-offs for payments they make from when the legislation comes into effect. For liable parents who owe penalty debt only the department will have the discretion to take a case by case approach on whether a write-off should be allowed. 
The incentives I have just mentioned are intended to encourage liable parents who have lapsed in their child support payments to reassume financial responsibility for their children’s welfare. The bill also introduces a complementary measure to counter the practice of those parents who deliberately structure their financial affairs to minimise the child support they should be paying. That measure will allow the department to initiate an investigation of liable parents’ financial affairs when it suspects they are paying less child support than they should be. If that investigation establishes that the liability for child support does not accurately reflect a parent’s ability to provide financial support the department will be able to initiate an administrative review. At present only the custodial parent can initiate such a review. 
A further measure—the introduction of a new appeal right—will provide greater fairness between applicants and respondents following an administrative review. Under the current provisions unsuccessful applicants can have their case reconsidered by the Family Court but respondents who are dissatisfied with the results of an administrative review have recourse only through judicial review in the High Court. The new appeal right will allow respondents to also have their case reconsidered in the Family Court. These measures form the principle focus of this bill but in addition it introduces two exemptions from liability for child support. 
Under the current provisions exemptions from paying child support are available to long-term hospital patients and prisoners. This bill will extend that recognition by providing a temporary exemption to young parents under the age of 16 and providing a permanent exemption to the victims of sex offences. The purpose of offering young people of compulsory school age temporary exemption from child support payments is simply to allow them to concentrate on furthering their own education for their long-term benefit and for that of their child. As such it is a practical recognition of the consequences for young people who become liable for child support at an age when their attendance at school is compulsory. If however they undertake part-time or casual employment they will be required to make a contribution towards the support of their child. 
As I have said the bill also introduces a permanent exemption from child support payments for the victims of sexual offences and there are two likely scenarios for the application of this exemption. The first is where a male fathers a child as a result of sexual abuse by an older female. The second is where a female who as a result of sexual abuse gives birth to a child who is placed in foster care. Under current law a mother in this latter situation would become liable for child support. Victims should not be further victimised by being required to pay child support for a child born as a result of a sexual crime. That is the thinking behind the new provision which will permanently exempt these people from any child support obligations upon conviction of the offenders. 
Finally the bill introduces a number of minor remedial amendments of a pragmatic nature. They include a proposal to allow Inland Revenue to accept documentation such as birth certificates from other countries as proof of parentage for the purposes of establishing child support liability. When arrears of child support are collected priority will be given to payments of child support owed to custodians for periods when they were not receiving a social security benefit over a payment owed to the Crown. The purpose of this change is again driven by the need to protect the welfare of children adversely affected by their parents’ financial actions. 
These are the main features of the bill. They will work in tandem with new administrative measures designed to tighten the collection system such as increased border enforcement. Taken together the administrative changes and the proposals outlined in the bill make up a balanced package of incentives and controls to ensure that liable parents meet their obligations to their children. Quite simply for those who do want to comply we will ensure that they are able to. For those who will not meet their obligations Inland Revenue will use its full powers for collecting outstanding child support under the existing legislation. The choice is clear and this strategy together with the specific measures contained in the bill will make the child support scheme work better for all who are involved in it. I commend the Child Support Amendment Bill (No 4) to the House.