Other submissions

Child Support Amendment Bill

Officials' report to the Social Services and Community Committee on submissions received on the Bill

February 2001

OTHER SUBMISSIONS

Other issues raised by submitters

OTHER ISSUES RAISED BY SUBMITTERS

Issue: Pass-on of child support to sole parent beneficiaries

Submissions

(Anonymous B, CCS Disability Action, John Clarkson, Kathleen Lauderdale, National Beneficiary Advisory Consultation Group, National Council of Women of New Zealand, Office of the Children’s Commissioner, Tamika McCallum)

It is unjust that one of two people can be held financially responsible for the other when the other is on a sole parent benefit. (Anonymous B)

Child support should be passed on to sole parent beneficiaries at least for disability related costs associated with the care of children. (CCS Disability Action)

That child support is not used to cover the benefits bill. This should be paid from the normal tax take. Working parents should not be forced to pay for those that choose to sit on their backsides because they know the other parent will be made to pay for them. This is spousal support, not child support. (John Clarkson)

Mothers are not told that the legal right to child support will be taken away from them if they accept a benefit under any circumstances (which I propose breaches their Human Rights and right to access Justice). (Kathleen Lauderdale)

We are disappointed the Government did not take account of the Welfare Expert Advisory Group (WEAG) report and its recommendations relating to child support, notably passing on child support payments from liable parents to parents who are on the sole parent benefit. In particular, the WEAG recommended “passing on” child support received by Inland Revenue to the adults actually caring for dependent children, including those receiving Unsupported Child Benefit. We believe this recommendation must be acted upon and implemented as a matter of priority, such as via a supplementary order paper attached to this Bill. (National Beneficiary Advisory Consultation Group)

The Bill should include a pass-on provision for sole parents on a benefit. (National Council of Women of New Zealand)

We are disappointed by the omission of the WEAG recommendation specific to the Bill. WEAG recommendation 27 states Pass on all child support collected to receiving carers, including for recipients of Unsupported Child’s Benefit. (Office of the Children’s Commissioner)

It should not be used to offset Government assistance and it should not be used to place individuals into a lower standard of living. (Tamika McCallum)

Comment

The matter raised in these submissions is outside the scope of the proposals in the Bill.

One of the objectives of the Child Support Act 1991 is to “ensure that the costs to the State of providing an adequate level of financial support for children and their carers is offset by the collection of a fair contribution from liable parents”. Therefore, a proposal to pass on child support payments to sole-parent beneficiaries would be a fundamental change to the Child Support Act 1991.

Recommendation

That the submissions be declined.

Issue: Data

Submission

(Kathleen Lauderdale, Peter Read)

I would like to see the median and average amounts paid per child to (usually) mothers. This analysis needs to be investigated thoroughly and published. Causal and contributing factors to involvement of other agencies needs assessing. How much resource was provided to mothers and children in Oranga Tamariki care for example by fathers. How much was provided by fathers to children suffering child abuse? How much child support was provided to youth made homeless or suffering mental health issues? How much time and resource did mothers have available to them to support themselves and then their children? An analysis covering matters such as this and what proportion of housing a child was covered by child support (collected and passed on) per child for example will give insight into the crisis this mis- or non-application of this Act has caused. (Kathleen Lauderdale)

The Select Committee should request the following information from Inland Revenue:

the number of default assessments issued each year
the amount of overpayments generated
the value written off each year, and
details of audit processes in place to ensure section 152 is being correctly administered. (Peter Read)

Comment

The matter raised in these submissions is outside the scope of the proposals in the Bill. Data used to inform the proposals in the Bill can be found in the regulatory impact assessment.[10]

Additional statistical information about child support amounts collected can be found on Inland Revenue’s website[11] and its annual reports.[12] Some of the other information referred to in the submissions is not collected by Inland Revenue, such as figures on amounts provided by children suffering from child abuse.

Recommendation

That the submission be declined.

Section 152

Issue: Write-offs

Submission

(Peter Read)

Overpayments of child support are usually written off under section 152 of the Child Support Act 1991 (relief in cases of serious hardship) as this is easier than addressing the many causes of them occurring such as retrospective changes in circumstances. Further, the other causes of overpayments should be analysed. Take the opportunity of this Bill to have Inland Revenue review the problem and cost of overpayments.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

A change in the details on which child support is assessed can cause child support to be reassessed. This can result in the child support amount changing. If the liable parent’s liability is reduced, and they have paid the original amount, they will have a credit and the receiving carer will have a corresponding debt relating to the overpaid amount.

Inland Revenue is unable to identify a retrospective change in circumstance before it happens because it is based on information which it did not know at the time. However, the way that the rules for notifying of changes of circumstances work ensure that if the information is not provided to Inland Revenue in a timely manner, the change will only be applied retrospectively if it would not impact on the other parent by reducing their entitlement or increasing their liability.

Two amendments in the Bill relate to receiving carer overpayments by improving certainty that child support will not be reassessed after a significant period of time.

The first is the proposed 28-day timeframe to advise of circumstances when child support is first assessed. Currently, there is no time limit on when an assessment can be reassessed due to circumstances which existed at the start of the assessment. In these situations, the assessment is considered incorrect and should be corrected from the start of the child support assessment. This can cause overpayments to carers. The proposed amendment would ensure consistency with the rules governing changes of circumstances, encourage parents to notify circumstances in a timely manner and improve certainty.

The second is the proposed time bar for reassessing child support. This would restrict reassessment of a child support year to four years from the end of a relevant child support year (subject to specific legislative exceptions). By providing a limited time period for reassessments, the time bar will improve certainty for parents and carers.

Recommendation

That the submission be declined.

Issue: Compliance

Submission

(Kevin Tutauha)

Australia child support and New Zealand child support need to work closer. I should not have to try and track down the mother who lives in Australia. When information is provided on a parent, it should be followed up on, not left for six years. After all, she is a citizen of that country and has an equivalent of an IRD number one would assume?

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

There is a child support reciprocal agreement with Australia which allows for the enforcement of payments when a liable parent moves to Australia or a parent liable under the Australian child support scheme moves to New Zealand. The agreement outlines which agency has the responsibility to assess the child support obligation and collect the child support payments. Generally, this is dependent on the child’s country of residence.

Recommendation

That the submission be declined.

Issue: Integrity of the child support system

Submission

(Anonymous D)

Due to the current inability for a liable parent to automatically recover amounts of overpaid child support, even when a receiving carer has actively misled Inland Revenue as to the care arrangements, Inland Revenue needs to do more to ensure the integrity of the child support system. Any undue delay by a receiving carer which results in that parent’s unjust enrichment should be penalised to no lesser degree than a liable parent is penalised for late payments and the liable parent should be immediately be refunded any previous overpaid amounts.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

When a liable parent overpays child support, Inland Revenue can refund the overpayment to the liable parent. Inland Revenue will not refund the overpayment if the liable parent has arrears; the money has either not been paid to the receiving carer, or if it has been paid, then the liable parent has no future liability; or there are no missing income details that could impact on the child support assessment. These rules are in place to avoid causing unnecessary debts to receiving carers due to overpayments.

If the overpayment is refunded, but had already been paid to the receiving carer, this will be fully refunded to the liable parent and become a debt to the receiving carer.

Reassessments can occur for a number of reasons. To avoid overpayments or underpayments occurring both receiving carers and liable parents should advise Inland Revenue of changes in circumstances in a timely manner. Many of these changes are not otherwise visible to Inland Revenue.

When a liable parent overpays child support, Inland Revenue automatically refunds the overpayment to the liable parent and the receiving carer then owes the amount to Inland Revenue.

Recommendation

That the submission be declined.

Issue: Non-disclosure of income and assets

Submissions

(Estella Carmichael, Kathleen Lauderdale, Liz Boyd)

It has been really hard to get child support enforced by Inland Revenue, and we have provided them with the details of the business we believe she is contracting to and income information is followed up. (Estella Carmichael)

Non-disclosure of all resources available and superficial analysis of budgets have preferred (usually) a non-custodial father. Failure to check income, assets and support available to them or even require disclosure has been a failure effecting 100,000s of children consequently living in poverty in New Zealand. (Kathleen Lauderdale)

In my personal case, the alienator left a high paying job to work for himself and is able to structure his income. Thus, his income is minor officially, but much more unofficially. (Liz Boyd)

Comment

The matter raised in these submissions is outside the scope of the proposals in the Bill.

If a person believes that the child support assessment does not take into account the income, earnings capacity, property and financial resources of either parent or the child (or children), they are able to apply for an administrative review of their child support assessment.

Recommendation

That the submissions be declined.

Issue: Comments on sole parent support

Submissions

(Chantall Sumner, John Clarkson, National Council of Women of New Zealand)

In some cases, grandparents have taken the full responsibility of caring for and raising their grandchildren. This is because the children’s parents are not able to care for their children. The grandparents struggle along as they want to do the best for their grandchildren. The parents may be in receipt of a single parent benefit. (Chantall Sumner)

The term “primary carer” should be is abolished and both parents should be able to claim for childcare subsidies and other benefits, which are related to the child. (John Clarkson)

The Council wishes to see in this section, or elsewhere appropriate in the Bill, an account taken of the impact of receiving child support payments on a parent who is receiving the “Supported Living Payment – Care of the Sick and Infirm” from Work and Income. This payment is for parents who cannot work due to the caring responsibilities of their disabled child. It is income-tested, and child support payments are treated as income by Work and Income. In such a case, there can be ineligibility or an indenting of the benefit payment to the parent based on the amount of child support funding the parent receives. (National Council of Women of New Zealand)

Comment

The matter raised in these submissions is outside the scope of the Child Support Act 1991 and the proposals in the Bill and is not a matter within the scope of Inland Revenue’s functions.

Recommendation

That the submissions be declined.

Issue: Information

(Kathleen Lauderdale)

Mothers are not given the information they require at any time that they are entitled to child support.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

Inland Revenue does not hold the information to proactively identify people who would qualify for child support.

Inland Revenue produces guidance documents on general and specific child support topics,[13] including Helping you to understand child support.[14]

Recommendation

That the submission be declined.

Issue: Cross-reference error

Submission

(Matter raised by officials)

The cross-reference in clause 15(2) of schedule 2 to the Bill refers to section 5(2) of the Bill amending section 5(3) of the Child Support Act 1991. However, the reference should be to section 5(4) of the Child Support Act 1991.

Officials recommend that the cross-reference be corrected.

Recommendation

That the submission be accepted.

Issue: Child support spent on the children

Submission

(Anonymous A)

The money paid should be spent on the children not used as a source of extra income which does not benefit the children.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

One of the objectives of the Child Support Act 1991 is to “affirm the right of the child to be maintained by their parents”. The amount payable is intended to approximate the average amount spent on a child according to their parents’ incomes.

How child support received is used by the receiving carer is outside the scope of the Child Support Act 1991. If the Act were to prescribe how the payments should be spent, the compliance costs and administration costs of the scheme would increase. This would also limit parents’ choices in determining the best use of the child support received.

Recommendation

That the submission be declined.

Issue: The child support scheme should be repealed

Submission

(Jim Boyd)

Get rid of child support altogether and let parents decide how to cater for the needs of their children. If they cannot reach agreement, let them go to mediation.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

The child support scheme is a mechanism for determining the amount of child support payable when parents are unable to come to an agreement between themselves. The Child Support Act 1991 provides a formula to determine the amount of child support payable or receivable.

When a relationship has ended it can be difficult for parents to agree how to support their children financially. A formula assessment provides an objective method to determine the amount.

Inland Revenue does provide other options which allow customers, who are not sole parent beneficiaries, to elect the child support arrangement most suitable for their circumstances. If parents want to negotiate the amount of child support payable but would still like Inland Revenue to administer payments, they can opt for a voluntary agreement.

Alternatively, if parents would like to arrange child support entirely between themselves, they are able to make their own private arrangement which does not involve Inland Revenue.

Recommendation

That the submission be declined.

Issue: Applications for past periods

Submission

(Tremayne Thompson)

I recommend that a provision should be amended to this Bill making it easier for parents to be able to make a claim for the 17 years (or however long in other people’s cases) that a parent has not made child support payments. A back-payment system, if you like.

Comment

The matter raised in this submission is outside the scope of the proposals in the Bill.

There is a variety of reasons why a person might not have applied for child support, for example, the parents may have negotiated a private arrangement between themselves. Private arrangements can be agreed at any time and are outside the Child Support Act 1991. If a parent were able to apply for child support for past periods, officials consider that it would be necessary for reasons of fairness to allow for any child support paid under a private arrangement during that period to be taken into account. This could create a substantial compliance and administrative burden in verifying what was paid under a private arrangement. This problem could be intensified if a substantial period of time had elapsed.

There is nothing in the Child Support Act 1991 preventing most people (except for those who are required to apply for a formula assessment such as beneficiaries) from entering into a private arrangement at any time, including in the circumstances outlined by the submitter.

Recommendation

That the submission be declined.

Issue: Liable parent payment schedule

Submission

(Greig Giblin)

I am a wage earner who works on a four on four off schedule, so there is quite a difference between one fortnight and the next. Paying child support monthly is unrealistic. There should be more flexibility for the liable parent’s payment schedule.

Comment

Child support is an annual assessment that is divided up into monthly instalments. A liable parent must ensure the full payment is made by the relevant due date. However, there is flexibility in that a liable parent can make full or partial payments towards this.

Recommendation

That the submission be declined.

Issue: Children should be considered financially independent at a set income threshold

Submission

(Anonymous G)

Once a child is earning $150 per week child support should not be paid. It is impossible to find out the information to know if a child should be considered financially independent, such as whether they work 30 hours a week.

Comment

The submission is outside the scope of the proposals in the Bill.

Financial independence is currently based on a number of hours worked test.

Secrecy provisions prevent Inland Revenue from disclosing information about a child’s work hours or earnings to parents. However, a parent could provide information they hold to Inland Revenue who could follow up to ensure that the information Inland Revenue holds is correct.

Recommendation

That the submission be declined.