Cunliffe David: Child Support Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Cunliffe David: Child Support Amendment Bill — In Committee 
[Sitting date: 27 February 2013. Volume:687;Page:8295. Text is incorporated into the Bound Volume.] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Part 2 relates to a number of important provisions in this bill the Child Support Amendment Bill most notably the ability of the Commissioner of Inland Revenue to depart from formula assessment collection penalties and relief. It takes us through automatic deductions and it sets out the grounds for penalties. It does as our colleagues have just noted reduce the maximum rate of penalties after a period of time in an effort to prevent people becoming locked out of the system and it provides more discretionary relief from penalties. What I wish to do is to firstly take the Committee through some of those penalty provisions and to then turn to several of the more operational matters that follow from that and go to the heart of the Inland Revenue Department’s capacity to deliver on this bill such as it is. 
The bill does allow the commissioner the ability to write off penalties. That is important because during my last call I noted that the accumulation of child support debt has now grown to a colossal $2.3 billion. About $1.6 billion of that is accumulated penalties. The tragedy is that the penalty regime really really has needed an overhaul for some time. In practical terms what happens is that liable parents—usually dads who are estranged from the family—can get behind particularly if they are on a low income or unemployed. They then incur penalties which makes the problem worse. They get to the point where they cannot afford to catch up but there has been no provision in the law for the department to write those penalties off or down in order to bring parents back into the system. I know of constituency cases where those parents have fled the country because they have seen themselves and have been seen as outlaws because they have been unable to get square with the ledger of their child support arrears and the penalties have mounted up too fast. 
So although the Labour Opposition votes against this bill—we do not support the bill as it has got some fatal flaws it does not put the children first and it is a missed opportunity—we do agree with these provisions that provide more flexibility in the penalties such as clause 36 which allows the commissioner to write off incurred incremental penalties when a payment agreement has been completed. So there is a positive incentive to bring people together to reach a voluntary agreement on catch up and it gives the commissioner the ability to support that by a reduction of historic penalties. 
Secondly the penalties incurred by receiving carers or the charging of penalties due to overpayment of child support—i.e. irregular payments. You might pay too early or too late. Somebody might pay a double amount one month but then they incur a penalty because they are late the next month. This bill gives the commissioner the ability to smooth that through and avoid an unintended consequence. 
It also provides an ability to include the provision for the commissioner to write off some or all child support payable to the Crown where the receiving carer is a social security beneficiary or where recovery would place the liable parent or the children in serious hardship or would represent an inefficient use of the department’s resources. I will come back to that matter in a second. 
In general much as we do not agree with the bill as a whole we do agree that these penalty provisions make sense and will go some way to providing positive incentives for people to get together and act in the interests of the children. That has been the core theme of our opposition to the bill the whole way through. 
Now here are a couple of things buried within that part that we do not think are constructive. The first is the reversal of the onus of proof on automatic deductions. Currently somebody has to opt in to say that they want a direct deduction or an automatic payment of their child support liabilities. This bill changes that. It says that they have to opt out and that throws up some very serious privacy and natural justice issues. 
As my colleague Dr Clark has said just suppose somebody does not want their employer to know their family circumstances. Perhaps jobs are under threat and they do not want their employer to know that their family is split and that their partner has moved away because that might make their employment situation more vulnerable. Maybe it is more complicated than that. People lead complicated lives sometimes and they are entitled to make judgments about what is in the best interests of themselves their families and their children including whether they disclose those circumstances to their employer. To be fair there is an opt-out provision but we believe that the reversal of this burden of proof is flying in the face of natural justice processes and creates a whole swag of additional red tape. 
That then raises the next issue which is the cost of administration. The Inland Revenue Department reports I understand that it is expecting a 15 percent increase in the workload associated with administering what is already “Inland Revenue’s most expensive product to administer on a per person basis.” because necessarily it is bespoke. It is fairly customised. The complexity of the formula and the ability for more variation in the payment systems—which I have just said we think is a reasonable thing—will inevitably increase the cost burden on the department. 
And here is the kicker: it will put more burden on the adequacy of the department’s computer systems. For those who are perhaps like the Attorney-General who is getting a little bit of after-dinner shut-eye they may not have noticed—Minister—that the department’s computer system is creaking. It is good to see that the Attorney-General after a hard day watching the Supreme Court is now leaping to his feet in defence of the department because it may be that his department Crown Law will be called upon to adjudicate matters that arise— 
Hon Christopher Finlayson 
: We won. 
Hon DAVID CUNLIFFE 
: Oh “we” won did we Minister? “We” won? Well what about New Zealand winning? Because I am afraid Minister that if you flog off our energy system— 
The CHAIRPERSON (Eric Roy) 
: Order! 
Peseta Sam Lotu-Iiga 
: Point of order. 
The CHAIRPERSON (Eric Roy) 
: I think I can anticipate the point of order. [ 
Interruption 
] No I am on my feet. Let me just say that I know that the member responded to an interjection and we all need to be above that. Let us come back to the bill. 
Hon DAVID CUNLIFFE 
: Mr Chairperson you provide an excellent example and I shall earnestly try to follow it. 
The department recommends that it needs a rebuild of its computer system and that the price tag thereof would be about $1.2 billion—in fact as much as half the accumulated child support debt which is a lot of money. I do not know how any person or entity could actually spend $1.2 billion on a computer system because that sounds like an awful lot of money to a MP from west Auckland. But what I do know is that if you have a computer system that is—[ 
Interruption 
] I thought that would get the itinerant member for Mt Albert—she wishes. The casualty of “The Maestro” in Mt Albert—this is getting her excited. A price tag of $1.2 billion for a computer system makes one wonder how long the Inland Revenue Department’s mainframe is going to stand up at all and whether it can cope with the additional burden of more customised child support. 
So just wrapping that bit up let us first concur that the increased flexibility on penalty payments is a good thing. The additional customisation costs the additional work around automatic deductions the reversal of the onus of proof the increased costs of administration and the grave danger that it will not in any case be able to be implemented by the department’s creaking computer systems all adds weight to the Labour Opposition’s conclusion that we cannot support the passage of this bill in its current form. 
Concluding my remarks one must come back to the point that this really is a missed opportunity. It has been common ground across the House for a number of years now that the child support regime needed a fix. The Labour Opposition supported this bill’s referral to the Social Services Committee. We were ready for the debate and for the calling of submissions. We worked earnestly with the Government to try to find a way through this. We regret that we are unable to support the bill at this stage but the issues of transparency of accountability of cost of the burden of proof and of the lack of the primacy of the interests of the child have all driven us to that conclusion.