House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon. Ralph Willis MP.)

CHILD SUPPORT LEGISLATION AMENDMENT BILL 1994 - Statement of Policy and Purpose

General Outline and Financial Impact

The Child Support Legislation Amendment Bill 1994 will amend the Child Support (Assessment) Act 1989 , the Child Support (Registration and Collection) Act 1988 and the Social Security Act 1991 . The amendments introduce two new policy initiatives to the child support scheme and extend the application of two other existing policies to provide greater convenience and flexibility for clients of the Child Support Agency.

There is inflexibility in certain provisions of the child support legislation and it is the intention of this Bill to remove some of that inflexibility.

Presumption of Parentage

The Child Support (Assessment) Act 1989 allows the Registrar to be satisfied that a person is a parent of a child when:

the child was born during a marriage to which that person was a party;

that person is named on a birth certificate as a parent of the child;

a court has found that person to be a parent of the child;

that person has acknowledged, in writing, that they are a parent of the child; or

the child was adopted by the person.

The Family Law Act 1975 includes other provisions that establish the presumption of parentage in the first instance. It is proposed to align more closely the child support legislation with the provisions of the Family Law Act 1975 by allowing the Registrar to be satisfied that a man is a parent of a child when:

a child is born to a woman within 10 months after a purported marriage has been annulled, and that man was a party to the marriage

a child is born to a woman who was married to that man and they separated, resumed cohabitation on one occasion for a period of not more than 3 months and separated again, and that child is born within 10 months after the cohabitation and after the dissolution of the marriage

a child is born to a woman who cohabited with that man for a period of at least 6 months and this period included the time 10 months before the birth of the child

The outcome will be to assist clients in these particular circumstances to lodge an application nominating the putative father consistent with the Family Law Act 1975 provisions and this will speed the processing of their applications.

One other minor extension of an existing facility to acknowledge parentage is also proposed in this Bill.

Child Support Agreements and Department of Social Security clients

The first new initiative is to require Department of Social Security clients who enter into a child support agreement to have that agreement examined for its adequacy under the reasonable action for maintenance provisions of the Social Security Act 1991 . This is being done to ensure children receive adequate parental support under an agreement. There is emerging evidence that child support agreements are being drawn up for amounts which are substantially less than would be payable under formula assessment. Currently, the Registrar must accept these agreements and this acceptance is at the expense of the taxpayer and the welfare of the children. The outcome of this change will ensure that both parents contribute to the support of their children according to their capacity to pay while minimising social security outlays.

Periods of Non Enforcement

A new initiative establishes periods when child support liabilities ordered by the court made under the Family Law Act 1975 and registered under Stage 1 of the child support scheme may not be enforced by the Child Support Agency. If a liable parent receives income support from the Department of Social Security and their total income from all sources, including pension or benefit, does not exceed the current single rate of pension, the Agency will not enforce the liability for that period. Information on the income of these persons will be provided by DSS under the present exchange of information arrangements. It will not involve the client providing the income information to the Agency. Nor will it require the Agency to undertake separate calculations.

In practical terms the change is targeting payers who are unemployed and have reduced or no capacity to pay child support. At present, liabilities continue to accrue to the Commonwealth on behalf of the payee during these periods. The liable parent must apply to court to have vary the amount payable varied. This often does not occur because of the cost involved in returning to court.

A similar arrangement will be available if a child leaves the care of a person named in a court order made under the Family Law Act 1975 and registered under Stage 1 of the child support scheme. At present, the maintenance liability continues to accrue to the Commonwealth on behalf of the payee until the order is changed by the court. This amendment will allow the Agency to not enforce a liability for any period where the parties agree the child is not in the care of the person named to receive the maintenance. Should either party wish to end that agreement, it will be open to either to inform the Registrar that they wish to end the former agreement and have the liability enforced again.

The outcome will be an ability for clients and the Agency to respond to these two relatively common changes in circumstances as they arise without the need for expensive court action by clients.

Extension of Private Payment Arrangements

Amendments made to the Child Support (Assessment) Act 1989 effective in 1992 and again in 1993 allowed clients who are receiving certain income tested payments from the Department of Social Security to choose when applying for registration with the Agency, to collect child support privately. Large numbers make that election and the Agency only becomes involved with these people when the private payment arrangements fail. Once registered for collection with the Agency, no custodial parent can elect at a later date to receive payments privately.

Custodial parents who have been in receipt of an income tested pension, benefit or allowance since before the 1992/93 amendments were required to register for collection with the Child Support Agency and remain unable to elect to collect privately.

This proposal will enable any custodial parent in receipt of an income tested pension, benefit or allowance to exercise a choice for private collection at any time after registration, provided certain criteria are met. The outcome will be greater flexibility in the choice for private collection.