Clark David: Child Support Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Clark David: Child Support Amendment Bill — In Committee 
[Sitting date: 27 February 2013. Volume:687;Page:8292. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Part 2 of the Child Support Amendment Bill is around the nature of the formula and the departures from that formula. Part 1 sorry covered the formula in detail so we actually debated the merits of the more complex formula that has been introduced and the disadvantages of transparency and so forth around that and the way in which children are not put at the heart of the legislation. Part 2 focuses more nearly on exemptions on departures from the formula and how they should be treated. One of the things that particularly concerned me in the select committee process was around the automatic deduction provisions that were introduced quite late in the piece in the select committee process whereby employers could be asked by the Inland Revenue Department to deduct from wages money owed in child support payments. I should say from the outset that the Labour Party absolutely supports collecting the debts that are rightly owed. We believe that liable parents have a responsibility to care for the children whom they are responsible for. So we support in principle the strengthening of a regime for collection. 
However in this case what we see or what we saw at least in the Social Services Committee was that the department had not yet worked through quite how this would work. It had not thought through the natural justice processes in terms of notifying the person who was likely to have their salary deducted. Nor had it thought through perhaps some of the cultural implications where perhaps for whatever reason best known to those who had their child support debt those parents had chosen not to tell their employer that they had a debt probably for fear of discrimination of one kind or another or perhaps they had not even told their employer that they had children for whom they were responsible possibly for fear of discrimination of one kind or another. 
We felt that although the State has an obligation to collect that debt there ought to at least be a process of warning the person that that was going to be put in place that there should be a means for letting them know that the State was about to take this action and should they wish to cough up that they could at that point do it or make arrangements or contact the Commissioner of Inland Revenue and ask for some other kind of arrangement. I have every faith after some of the discussions with those officials that they will attempt to address these natural justice concerns. We were very fortunate I have to say to have some excellent officials briefing the committee who listened well and who came back with suggestions around our concerns and I believe that we were very well served as a committee. 
What I do not think is that the Government itself and the Minister in charge the Minister of Revenue had thought that matter through fully. So we felt on the Labour Party side that it was very important to keep a close eye on how this is implemented. We are very hopeful that the Minister will take this on board in terms of the practical arrangements for pursuing this debt. But it is one of the areas where one can end up if these things are not taken special care around with some unintended consequences. 
Another potential unintended consequence of this which it became clear that the Government had not considered was in terms of the additional compliance costs on business. This is something of a pattern we have seen with this Government whereby additional costs are heaped upon business which is not a big deal if you are a large-business owner and you have got automated systems but for many small-business owners there is additional compliance—we think back to the paper boy tax and the cleaners who now are required to report their earnings through the system and the extra overheads on schools and others who manage these people in part-time work and we see a pattern where the National Government does not consult business. It talks about business a lot; that is true. It talks about business a lot but it always seems to favour big business. There is nothing wrong with big business in my view but little business in the National Government is often ignored and trampled upon without concern about the additional overheads that a piece of legislation like this could have. 
 We know that when an employer collects this extra money off their employee they suddenly become responsible for some personal information which if a grievance suddenly takes place in the workplace they may be accused of having used improperly. We have a whole lot of complexities introduced to the workplace that were not there before. These things are things that businesses were not consulted on. So there are again some natural justice issues here on top of the additional overheads that have been put on business and the additional compliance costs for business that are introduced in this legislation. So these are some of the potential unintended consequences. I was surprised that measures could be introduced so late in the piece without having been through the proper consultation process that I would expect for a piece of legislation that had been proposed for several years. The bill seemed to be not a priority for the Government but suddenly it has become a priority for the Government. We see a somewhat unfluid—unfluid—production of the legislation. 
The other thing that I think is important to comment on at this stage of my second call—and if I get further calls I will have some more that I want to say—is around the penalties for late payment of debts. I think that the Government is taking a sensible step here in making the obligations more likely to be met. We have a trade-off here because in one sense what is going on is that liable fathers will now be liable for a whole lot less. So there is a question about personal responsibility. That National Government is effectively saying that those who have many children have now less liability and less personal responsibility for the children whom they have produced. That is an interesting position for the National Government to take yet in some ways I think it is right. If this provision leads to us collecting more of the debt and to the debt not spiralling out of control then surely that is a good thing. There is $2 billion—$2 billion—outstanding in child support payments. That is something that this Government has needed to address. For some reason it has not been a priority for the last 4 years that there is $2 billion worth of child support debt outstanding but it is good that it appears that will be addressed in some way in this legislation. Again it will be very interesting to keep a close eye on the way that is implemented and that is around the discretion of the Commissioner of Inland Revenue and so on. 
The other issue in this legislation that comes out of these additional compliance costs that National is putting on business and that comes out of the natural justice concerns is the additional cost of administering the formula and with it the exemptions. We know that this formula will cost more to administer. Inland Revenue Department officials have told us that the child support legislation is already the most expensive piece of legislation that they have to administer on a per case basis. So we know that this is a cost on Government. Because it relates to people in difficult circumstances of course we think it reasonable that there should be a cost but we are concerned about the additional costs introduced by a complex formula and coming out of it one can imagine some more additionally complex exemptions. The commissioner’s discretion will in some ways I am sure deal with some of those things but on a day-to-day basis there are going to be more staff involved in working out how the formula is applied and also when it is not applied. The staff time taken to implement the formula is expected to be more. That is what the officials said. It is reasonable to expect that working out when it does not apply and how you work around the new formula is also going to take more time. So there is more overhead involved for the Government and effectively that means increased bureaucracy. So there is increased bureaucracy that comes from having a more complex formula and also from the exemptions that fall from that formula. 
I will end my contribution to this particular part right at the moment because I am sure other members are very keen to speak. However I hope to take some more calls on this part of the legislation because there are a couple more separate areas that I wish to speak to. Thank you.