Child Support Legislation Amendment Bill (No. 2) 2000

Second Reading Speech

Senator Ian Campbell (Western Australia - Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts)

I move:

That the bill be now read a second time.

This Government values families and children and has worked to improve the circumstances of all Australian families. The major benefits of the family assistance package and the $240 million Stronger Families and Communities Strategy are prime examples of the Government's commitment to families and children.

This bill builds upon these initiatives by addressing key issues for the wellbeing of Australian families following separation. It provides for a fairer Child Support Scheme that addresses the needs of parents and children alike, and that encourages parents to continue to be involved in the lives of their children.

A package of child support measures was announced in the Budget to address key concerns of separated parents. The measures in this bill will improve the Child Support Scheme in a balanced way, resulting in a fairer scheme.

The first suite of amendments will modify the administrative formula to introduce a specific and transparent allowance for the costs of contact of between 10% and 30%. This provides a modest acknowledgment of the costs to non-resident parents of ongoing contact. It also distinguishes between those parents who have little or no contact and those who have regular contact with their children. Non-resident parents typically face fixed costs, such as providing a separate bedroom, household items and clothing, as well as the recurring costs of food, health care and entertainment. By recognising that parents incur costs during contact, the measure will improve the ability of non-resident parents to maintain contact with their children. Contact with both parents is important for the emotional needs and development of children. If parents have ongoing contact with their children, they are also more likely to meet their child support obligations.

The measure used to set the upper limit (or "cap") on payer taxable income that can be subject to child support formula assessment will be aligned with that used in relation to the payee's income. The result will be a lower cap of around $79,000. The current level of the cap means that some high-income payers are paying more in child support than the costs of their children. The new level of the cap will address this. The new cap will still see resident parents of these children receiving child support of over $12,000 a year for one child, $18,000 for two children and higher amounts for three or more children.

Parents who take on additional work to support their new family will be able to apply to the Child Support Agency to have the additional income excluded from the assessment of child support. Parents will have the income disregarded only if they can demonstrate that the income was earned for the sole purpose of providing support to the children in their new family. To qualify, the additional income cannot be earned as part of the normal earning pattern of the parent prior to establishing the new family. The amount of income that can be excluded will be limited to a maximum of 30% of the parent's total income. This measure will assist parents in their efforts to improve the position of their new family, without unduly affecting their first family.

The fairness of the means testing arrangements for Government provided family assistance will be improved by allowing a full deduction for all child support paid. Currently, if a payer forms a new family, only half of the child support they pay is deducted from their household's income when their entitlement to family assistance is calculated. A full deduction will mean that child support payers with children in new families will have their family tax benefit and child care benefit assessed on income that reflects the actual income available to their new family.

Among the non-Budget measures in the bill are changes that reflect the relocation in late 1998 of the Child Support Agency from the Australian Taxation Office to the Department of Family and Community Services. These changes will mean that the Commissioner of Taxation is no longer the Child Support Registrar. Instead, the Registrar will be the General Manager of the Child Support Agency. The changes are designed to ensure a seamless transition to the new arrangements and will ensure the CSA continues to operate effectively by preserving the existing arrangements for exchange of information between the ATO and the CSA.

Amendments made by the bill will also enable the Registrar to issue a departure prohibition order to prevent a payer who has persistently failed to meet his or her child support obligations from leaving the country. In practice, the CSA will use this power if the payer is able to pay the outstanding debt but has consistently refused to do so and other attempts to collect this debt have been unsuccessful. If the payer makes satisfactory arrangements to pay the debt, the CSA will be able to revoke the order and will also be able to authorise a specific departure if appropriate. The provisions are consistent with the existing departure prohibition order scheme in place in relation to taxation debtors.

The requirement is being removed, in the CSA's change of assessment process, for the CSA to provide each party with a copy of all documents provided by the other in support of his or her application - instead, the CSA will provide only the application without the supporting documents. This change is intended to protect the privacy of both parents in that process.

The bill will set up a regulation making power to allow certain amounts to be excluded from income so that the current $260 annual minimum child support liability will not apply.

Other amendments will overcome problems that have arisen when a child has (effectively) run away from his or her parents to live with a third party against the parents' wishes, and the third party carer applies for child support from the parents. This change relates to situations in which the child is living with someone other than his or her parents. The carer in this situation will not generally be an eligible carer if the parents have not consented to the child living with that person. However, if it would be unreasonable for the child to live with the parents (because there has been extreme family breakdown or the child's safety would be at risk), the person can be an eligible carer.

A range of technical amendments are also being made to overcome drafting errors or omissions, and unintended consequences of previous changes to the legislation.

Debate (on motion by Senator O'Brien) adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.