Williams Andrew: Child Support Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Williams Andrew: Child Support Amendment Bill — First Reading 
[Sitting date: 08 May 2012. Volume:679;Page:2028. Text is incorporated into the Bound Volume.] 
ANDREW WILLIAMS (NZ First) 
: 
 I rise on behalf of New Zealand First to speak to the Child Support Amendment Bill. New Zealand First will support this bill going to the Social Services Committee. We support many aspects of this bill. However we do have reservations about other aspects of it.  
The existing New Zealand child support scheme helps to provide financial support for over 210000 children as we have heard from other speakers. That scheme was established in 1992. As we all know the scheme is needed when parents cannot mutually agree on the relative financial contributions to support their children. It is essential that the child support scheme operates as effectively as possible in the best interests of the children involved. It is stated that the Child Support Amendment Bill is introduced with the intention of improving child support and making it fairer and more efficient. We certainly hope that that is the case. The bill in itself will revise the child support calculation formula to include greater recognition of shared care and the income of both parents. The bill will also update the scheme to take account of other key factors such as new estimates of expenditure for raising children today. The bill will improve the rules for payment penalties and debt.  
Much has changed in New Zealand society since 1992. These days far more parents are both working childcare arrangements are more extensive and varied and a working week can be on any one of the 7 days of the week. It is perhaps considerably changed from the days of 1992 when this legislation was first introduced. However we in New Zealand First do have some concerns and these will need to be addressed at the select committee and during further readings in this House. 
For instance the current levels of shared care of a 40:60 percent split may vary as much as a 28:72 percent split. This appears to be an opportunistic lowering of these levels to decrease the financial input of the non-custodial parent. How has the 28 percent level been arrived at? We would like to know from the Minister of Revenue and from the officials as to how that particular figure was determined. It is not even a one- third to two-thirds split of the payments. In terms of the total income of both parents if one parent earns more and is the custodial parent does that directly affect the non-custodial parent’s financial responsibility to these children? If a non-custodial parent chooses to enter another relationship and have further children does this lessen financial responsibility to their first family? Does this clause not disadvantage the custodial parent?  
We are also concerned that various analysts have looked at this bill—for instance I draw your attention to a recent article dated 7 May which was published by a tax specialist Mr Terry Baucher. I apologise to Mr Baucher if I have mispronounced his name. He states: “Child support payments are collected and distributed by the IRD usually on a monthly basis. The problem is that the penalties for late payment of child support are very onerous an initial 10% and then a further 2% per month on the outstanding amount (including penalties). According to the New Zealand Institute of Chartered Accountants the effective annual rate of late payment penalties is an eye-watering 36.8% in the first year of non-payment. It’s therefore quite easy to quickly run up large arrears through non-payment …” as seems to have happened with many many cases in this scheme. 
Mr Baucher goes on to include a graph showing the top 10 largest debtors owing money to the child support scheme. Looking at this graph all of these top 10 largest debtors started off with debts in the order of $25000 to $50000 - odd. Their debts with the penalties and all the other fees that have been charged to them have gone up to between $550000 and $1.050 million—over a million dollars—on an original debt in the order of $25000 to $50000. Mr Baucher comments: “As can be seen the actual amount of child support owed by the ten largest debtors is maybe not even five per cent of the total owed. The rest is in penalties.” He further says: “at 30 June 2009 total child support outstanding was $1.56 billion including over a billion dollars of unpaid penalties.”—over a billion dollars of unpaid penalties. “The IRD has so little confidence that it will collect these outstanding penalties that its bad debt provisions in respect of penalties were more than 99%.” So this Government is allowing the IRD to continue with over a billion dollars of debts against these child support schemes with the prospect of 99 percent of them not being recoverable.  
This therefore does cast a doubt over aspects of this scheme. It means that perhaps the figures do need to be recalculated. Perhaps the percentages are not necessarily correct and true as to what they should be in the end. Perhaps the debt levels and the penalties are too great and are too great a disincentive to try to get the funds back. Perhaps this scheme is a little bit like the student loan scheme where basically so much is being racked up and so much is unrecoverable by this Government that perhaps it is living on a false promise and a false hope of recovering much of this money. Perhaps it has to get back to the basics and we have to make it fair and equitable for people to be able to pay off what is owed on these debts rather than having fictitious amounts sitting there on the books which the New Zealand Government has no opportunity to recover. 
This situation also has had in the past the effect of driving people offshore to run away from their debts. In particular they go to Australia and other places and further afield to get away from their child maintenance debts. Again a little bit like the student loan scheme we seem to be very good in this country at sending people offshore exporting our people who basically cannot afford to maintain their payments. Perhaps we have to be a bit more creative. Perhaps when this bill goes to the select committee this has to be investigated further. Perhaps there has to be more consideration given to a real solution to this problem and to coming up with some solutions to make it more affordable and more easily obtainable for those who owe these moneys to get on top of the situation they are in.  
It was very sad that in recent weeks as I understand from the news media one individual in Australia took his own life as a result of being hounded in Australia for child payment debts he owed in New Zealand. He simply could not face the situation. It is very sad when it gets to that situation. Certainly I hope the Social Services Committee will look at this bill closely because we do want a fair and equitable scheme for all.  
New Zealand First will support this bill going through to the Social Services Committee but we will be certainly asking many questions in respect of it.