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Monday, 23 November 1998
Page: 361

Senator MARGETTS (12:56 PM) —In a joint media release by the Minister for Family and Community Services and the Assistant Treasurer it was stated that the changes embodied in the Child Support Legislation Amendment Bill 1998 underscore the principles that children are the financial responsibility of their parents and that the government should not seek to intrude unnecessarily into people's lives. To distil these principles means that the government is out to ensure that parents pay their fair share so that no-one is getting anything for free and that the Child Support Agency should improve its efficiency by having only a bare minimum role.

There is no argument that these roles are legitimate in principle. Quite clearly, these goals do have a place in the debate around child support. The Greens (WA) believe, however, that these two principles are not the most important underlying principles of child support—indeed, they distract from the crux of child support. The Greens (WA) believe that the phrase `child support' suggests that the true underlying principle should be to ensure that children are adequately supported as they go through their formative years. It makes sense, then, that the emphasis of child support should be on support payments and that the whole emphasis of the Child Support Scheme should be on the child and the child's welfare.

It makes sense that the principles driving legislative change should be what is in the best interests of the child and how we can best reduce and avoid child poverty. It makes sense that child support welfare should be the final touchstone by which to judge the scheme, not issues of compliance or administrative efficiency. The Greens (WA) analysis of this bill puts the child's welfare at the forefront of the debate rather than as some kind of second order issue that somehow will magically be taken care of.

On a broader social level, the Child Support Legislation Amendment Bill essentially exacerbates the gap between the rich and the poor. Like so many of the government's initiatives, this bill does little to directly address the overwhelming social issue that largely stands behind the phenomena of single parents, and that is poverty. Issues like poverty are left to that magical trickle-down effect of their economic policies that we still are waiting to see.

Let us look at the formula. The Greens have major concerns with the changes to the child support assessment formula. The changes fail to address the real issue around child support: the poverty of many children living in sole parent homes.

A study published by Birrell and Rapson in October 1998—I note the gender use here; instead of non-custodial or custodial they talk about the differences between women and men—revealed on page 46 that 75 per cent of female sole parents have to make do with less than $500 per week, whereas only 20 per cent of partnered women must live on that income; that is, well over 257,000 sole parent families are trying to live on around $25,000 a year. ABS statistics outline that the median income for female sole parents is $349 per week and for male sole parents is $469 per week. Clearly, this is a meagre amount to try to bring up a family on, especially when society is heading down the user-pays path in education and in many other things.

The Social Policy Research Centre at the University of New South Wales—and this was commissioned by the minister for social security—outlined that a modest but reasonable budget for a sole parent with two children, privately renting, would be $692.92 per week. Even with a reduction for public housing, most single parents and their children are living significantly below this level. Furthermore, the latest figures for the Brotherhood of St Laurence show that in December 1997 a sole parent pensioner with two children was living $39 per week below the poverty line. It is clear that many children and single parents are living well below the poverty line. It is also clear how difficult it must be for these children to search for the hero inside themselves, as the government would have them do.

Single mothers and children living in poverty generally receive very little assistance from the fathers. Birrell and Rapson have reported that 78 per cent of custodial parents actually receive less than $4,000 per annum from the non-custodial parents and almost half—that is 47 per cent—of all custodial parents receive absolutely no contribution. It is difficult to know exactly the reasons for this lack of contribution, but it is likely that it is a combination of the fact that over 46 per cent of men who had little education were on incomes of less than $16,000 and another 30 per cent were receiving between $16,000 and $32,000. There is also a prevalence of income minimisation techniques.

What is the government's answer to this stark issue of poverty? First of all, they have required that all non-custodial parents make a minimum contribution of $260 per year—I will come back to that later. They have increased the non-custodial parent's excluded income by 10 per cent to 110 per cent of the single pension rate, they have drastically decreased the amount of exempted income for the custodial parent from $37,424 to $29,598 and they have cut out automatic child-care costs as an addition to exempted income.

Essentially, the effect of these changes is that low income non-custodial parents—who are overwhelmingly women; around 87 per cent on the 1990 ABS statistics—living on the poverty line will sink further into poverty. It will leave some custodial parents and their children with less child support payments, which may or may not be made up by increased social security payments. As Birrell and Rapson notes, it will lessen the payment of liabilities of non-custodial parents on high incomes—I wonder who this is playing to?—yet have little positive effect on the situation of most of the female sole parent pensioner payees because their former partners are overwhelmingly amongst lower income men. This a familiar set of outcomes: the poor get poorer and the rich get richer.

Birrell and Rapson unequivocally found exactly what many Australians would think is commonsense: poverty, unemployment and low education are directly correlated with a whole host of other social problems, including sole parenting. Yet this bill represents another of the government's economic and social programs that constantly increase the gap between the rich and poor. The blinkered and ridiculous reliance on the trickle down effect defies commonsense and also defies the evidence.

The narrow focus on growth related economic indicators disguises the real trauma that is present in our society due to the unequal distribution of wealth. These comments that I am making foreshadow the second reading amendment that I am planning to move. This amendment will postpone any further consideration of the Child Support Legislation Amendment Bill 1998 until after the passage of the government's tax bills. I tend to avoid using the words `tax reform bills' because the definition in my dictionary says `a reform is a change for the better'.

The Institute of Social and Economic Research at Melbourne University has already identified that the tax package is likely to have a regressive effect on sole parents and children, whereas those without children, including non-custodial parents, will see an improvement in their circumstances.

In addition, this bill creates poverty traps for low income people as they move off social security, which obviously creates disincentives to work. Sole parent incomes are dropping with a decline in work force participation rates of sole parents from 49 per cent in 1995-96 to 41 per cent in 1996-97. Polette's study in 1995, quoted in Fincher's 1998 book Poverty Then and Now, identified sole parent pensioner families as having the highest proportion of all family types of individuals with effective marginal tax rates above 60 per cent. This issue of poverty traps is something the government claimed it wanted to address in its tax package. Despite Senator Newman's unsympathetic comments quoted in the Sydney Morning Herald on 20 May 1998 that single mothers' lives do not enable them to have high incomes—

Senator Newman —What?

Senator MARGETTS —That was the quote. Professor Birrell estimates that poverty traps or reduction in payments will affect around 50,000 working women who currently earn between $26,000 and $41,000.

The tax package is highly likely to change substantively by the time it goes through the Senate. It is unequivocal that current Senate players will not agree to the package as it stands, so it is highly likely to change and it is likely that a reasonable Senate inquiry will go ahead. It is crucial to know the effect of the tax package on sole parents and children so that the impact of these changes to child support can be more accurately assessed. We have to know what we are dealing with.

Let us return to the issue of the minimum payment of $260 per year, or $5 a week. To emphasise the principle of parental responsibility the government have introduced a heartless, hypocritical and purely ideological change. This proposal is to introduce a minimum payment of $260 per year, regardless of the amount of income the non-custodial parent is receiving. This change has serious assumptions at the heart of it, the same assumptions that have been at the heart of many social security changes including Work for the Dole and the Gestapo-like crackdown on the so-called welfare cheats. It assumes that people on social security payments are trying to avoid responsibility and to bludge off all the hardworking tax paying Aussies—and so we should make them pay something at least. It assumes that $5 per week is a drop in the ocean, which I am sure it is for many members of the coalition. But it is not for someone on unemployment benefits who receives only $160.75.

It reminds me of comments by the Minister for Communications, Information Technology and the Arts when responding to a question I asked about the proposed full sale of Telstra. He scoffed at my suggestion that the further sale of Telstra would not benefit many more mum and dad shareholders and blithely said, `If you don't have a spare three or four dollars I suppose you can't afford to buy a share in Telstra.' It is this kind of silver spoon mentality that is behind this change. It displays a heartless disregard for the shoestring budget that unemployed people live on. Not only is it heartless but it is completely hypocritical. This change is quite clearly ideologically based as it is in direct contrast to other aspects of the bill.

The government has responded to concerns that the self-support component of the payer's income is not enough to live on. This rate is set at the single pension rate each year, which was $9,006 in 1997-98 or $173.20 per week. So what was this government's response? It was to increase the self-supporting component by 10 per cent, regardless of how high the income of the paying parent was. This contrast is beyond belief.

On the one hand the government is recognising that for a person with employment and actually earning above the rate of the pension, the pension is not enough to live on, but that for a person on a pension or unemployment benefits the social security benefits are $5 per week more than enough to live on. This is highly questionable logic, to say the least. More importantly, it will impact on some of the poorest people in our society—those who can ill afford to be hit again.

I want to talk about child support minimisation. The Greens (WA) certainly recognise some positives in changes to the formula. The attempts to stem minimisation of taxable income are certainly a step in the right direction. However, these changes do not go far enough. The Greens (WA) would like to see the government follow the 1992 Child Support Evaluation Advisory Group's recommendation that a much wider variety of loopholes be addressed for the purposes of calculating income for child support assessment purposes. In fact, the Greens are keen to see the government investigating issues of tax minimisation and evasion on a much broader and more thorough basis.

On top of the formula changes, there are a raft of administrative changes. Some of these are positive, in particular the proposed mediation, education and self-help programs. However, the Greens (WA) have some major concerns: first, about the moves to make private collection of child support compulsory and, second, about the ability of the non-custodial parent to make 25 per cent of their child support payments in kind.

Currently the carer or liable parent can look to the CSA to assess and collect their child support. Under the bill the private collection will become compulsory if there has been a period of at least six months where the payer has made regular and timely payments to the CSA. The primary focus of this measure is clearly to reduce the administrative costs to the government rather than to ensure the child's well-being is given top priority. Ensuring child support is collected effectively and that conflict between parents is minimised would be in the best interests of the child. This is exactly what the CSA does at the moment. This system has a degree of flexibility, allowing movement to and from the CSA for collection of payments, allowing child support agreements to be entered into and providing a financial safety net for children.

One of the major reasons for setting up a Child Support Scheme in the first place was the low compliance rate. Apart from the potential to increase conflict between parents and thus stress for the child there are a raft of other issues, including problems with enforcement of child support arrears. The carer parent will need legal assistance to enforce arrears, as does the CSA when it commences enforcement proceedings. Many carer parents will look for assistance to legal aid or community legal centres, neither of which is funded to take more work of this kind. This may well result in carers being unable to access legal assistance, and the children will miss out. Child support arrears may just not be collected due to the inconvenience and stress associated with debt recovery. This means children will miss out again. Increased pressure on the courts and all court users will be a result. Possibly there will be an increase in child contact difficulties when payment and contact are done at the same time.

Let me get to the 25 per cent payment in kind. The Greens (WA) also have major concerns about manipulation, uncertainty and cashflow problems with the ability of the non-custodial parent to unilaterally pay 25 per cent of their liability in non-cash forms. If this proposal is accepted I would like to see more certainty and regularity in the non-cash payments so that, at minimum, the custodial parent is informed in advance which bill or expense is being paid.

My contribution shows just what the issues are and why we are left with a great dilemma as to the actual outcomes for single parents and, in particular, for children. I would like to move a second reading amendment which I think is reasonable and fair and, for the best outcome for the children, is the only course we should be taking. I move:

Omit all words after "That", substitute: "further consideration of the bill be postponed till after the passage of the bills implementing the Government's proposed taxation reforms".