Second Reading Speech
Mr Brough (Minister for Families, Community Services and Indigenous Affairs and Minister Assisting the Prime Minister for Indigenous Affairs)I move:
That this bill be now read a second time.
This bill delivers the legislation for the remaining two stages of the government's major overhaul of the Child Support Scheme, flowing from the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Patrick Parkinson. These reforms are to ensure the scheme works in the best interests of children, while balancing the interests of parents and reflecting community expectations.
This comprehensive legislation follows the first stage of the reforms enacted earlier this year, and builds on the complementary reform of the family law system aimed at encouraging shared parenting and reducing conflict, with a commitment of nearly $400 million over four years to establish a network of family relationship centres and related services in the community.
The task force found that the Child Support Scheme needed to be updated in light of substantial change in Australian society, and the circumstances of many Australian families, since the scheme was established in 1988. There has been considerable community concern about how children and their parents have fared following marriage and relationship breakdown, and a growing recognition of how important it is for both parents to remain actively involved in their children's lives after separation.
The new scheme will be fairer for both parents, and more focused on the needs and costs of children. It will also be better integrated with the family law and income support systems. These improvements should reduce conflict between parents about parenting arrangements and encourage shared parental responsibility.
The centrepiece of the reforms is the new child support formula, based on new Australian research on the costs of caring for children and reflecting community values on shared parenting. The task force identified several problems with the current formula for assessing the child support payable by one parent to the other.
Firstly, the current formula uses fixed percentages of income, assuming people spend the same proportion of their income on children regardless of their level of income, whereas we now know that, while people with higher incomes spend more on their children than people with lower incomes, they spend less as a percentage of their income. Nor does the current formula distinguish between the ages of the children, so the significantly higher expense that comes with teenagers goes unrecognised. The current formula treats the income of resident parents more generously than it does the income of non-resident parents, and does not take account of contact by the non-resident parent with the children for up to 29 per cent of the time. Second families are also unfairly and inconsistently taken into account under the current formula.
The new formula, on the other hand, will explicitly be based on the costs of children, as drawn from Australian research showing the real costs of children for the level of the parents' income and the children's ages. An 'income shares' approach will be used so both parents will have the same amount deducted as self-support, both parents' incomes will be taken into account in establishing the costs of the children, and the resulting costs will be apportioned between the parents according to their share of the combined income. In the new formula, parents who care for their children for 14 per cent or more of the time will be recognised as contributing to the costs of the children through their care. This will encourage non-resident parents to stay involved with their children. And there will be equal treatment between first and second families by using the actual costs of the children from the second family, rather than a flat amount, in working out child support payable for the first family. Resident parents will keep all of their family tax benefit if a non-resident parent has care of their child for less than 35 per cent of nights in a year.
The new formula will be rolled out from 1 July 2008, with notification well in advance to involved parents, and following the establishment of comprehensive systems to allow the Child Support Agency and Centrelink to help parents adjust to their new child support arrangements.
In a further major reform initiative, this time from 1 January 2007, the role of the Social Security Appeals Tribunal will be expanded to include independent review of child support decisions. Until now, there has been no mechanism for external administrative review of child support decisions except through the courts, which is expensive and time consuming for parents. The new arrangements will improve the consistency and transparency of child support decisions and will provide a review mechanism that is inexpensive, fair, informal and, most importantly, quick.
Also from 1 January 2007, the bill will make amendments to simplify the relationship between the courts and the new Child Support Scheme. Parents will have better access to court enforcement of child support debts if desired. The courts, when hearing cases on enforcement of child support liabilities, will have their powers to seek information and evidence increased to the level currently held by the Child Support Registrar. The courts will also have increased powers to make interim arrangements for their child support cases.
July 2008 will also see the implementation of some important remaining initiatives to improve the overall effectiveness and fairness of the scheme.
Family tax benefit has many points of interaction with the Child Support Scheme and the two are to be more closely aligned, to support parents in working out their parenting arrangements. In particular, there will be changes to the maintenance arrangements for family tax benefit part A so that reduction under the maintenance income test that applies to payment above the base level will be limited to those children in the family for whom child support is paid. More flexible arrangements, with better legal protection, will be made for parents who want to make agreements between themselves about the payment of child support and for how lump sum payments are treated.
Also, the income definitions used to calculate child support and family tax benefit will be aligned. The respective income definitions currently lead to different treatment for certain tax-free amounts, foreign income and fringe benefits. The child support income definition will be broadened to include certain tax-free pensions and benefits that already apply for family tax benefit. The foreign income definitions for child support and family tax benefit will be broadened and aligned. The gross value of reportable fringe benefits, rather than the net value, will apply for family tax benefit, as it already does for child support. The changes to income for family tax benefit will also apply for childcare benefit.
The minimum payment rules will be made fairer. Non-resident parents who pay child support in more than one case will have to pay the minimum payment of about $6.15 per week per case, up to a maximum of three cases. Those parents who deliberately minimise their income to avoid paying child support will have to pay $20 per child per week, up to a maximum of three children, unless they can prove their incomes are in fact very low.
During the first three years after separation, parents who are using income from second jobs and overtime to help re-establish themselves will be able to apply to have their child support calculated taking into account their re-establishment costs.
The current scheme is overly complex for parents who reconcile and then separate again and may serve as an obstacle to parents wanting to try a reconciliation. Under the new scheme, a simplified process will allow parents to suspend child support payments for a period of six months when they get back together. If they break up again, the resident parent will be able to reinstate the child support assessment without applying again, reducing any further conflict between the parents.
Parents who have financial responsibility for stepchildren will now be able to apply to have the stepchild treated as a dependant under the child support formula for the parent's first family.
The current 'change of assessment' processes and rules for parents are confusing and are not widely understood. This bill will make these rules simpler and clearer for parents.
The reforms in this bill are the most significant and most comprehensive in the 18-year history of the Child Support Scheme and I am sure will deliver a system that is truly in the best interests of children.
Debate (on motion by Mr Griffin) adjourned.