Senator MARGETTS (5:22 PM) —by leave—I move:

(1) Schedule 1, item 1, page 5 (lines 6 to 12), omit the item, substitute:

1 Section 5

Insert:

FEAWE amount , in relation to a child support year, means the estimate of the full-time employees average weekly total earnings for females in Australia for the latest period for which such an estimate was published by the Australian Statistician before 1 January immediately before the child support year.

(2) Schedule 1, item 5, page 5 (line 23), omit "EAWE", substitute "FEAWE".

(3) Schedule 1, item 12, page 10 (lines 14 to 17), omit the item, substitute:

12 Section 154

After "Australia", insert ", or of the full-time employees average weekly total earnings for females in Australia,".

Note: The heading to section 154 is altered by inserting "or FEAWE ", after "AWE ".

(4) Schedule 1, item 13, page 10 (line 19), omit "EAWE", substitute "FEAWE".

Amendments Nos 1 to 4 relate to schedule 1. The amendments peg the level of income earned by the custodial parent to be disregarded in the calculation of child support at the full-time employees' average total weekly earning rate for females, which is $33,961.

Why? This will, we believe, decrease the impact of the huge change. At the moment, there will be too much of a jump down in the government's proposed changes to disregarded income. The change is from AWOTE full- time adult average weekly total earnings, which was $37,422—I will have to check whether that is 22 or 24, I am sorry—in 1997-98, to average total weekly earnings for all employees, which was $29,598 in 1997-98. This change, along with a raft of other changes, including the non-automatic inclusion of child-care payments in exempted income and an increase in the exempt income for custodial parents, means that a number of custodial parents and children will be worse off. These impacts are significant.

Lowering the threshold alone will affect approximately 55,000 lone parent women with children aged 0 to 15 who earn between $500 and $799 per week. Modelling shows that, as a result of this formula change, carer parents will be from $5 to $40 less well off than they are under the present formula. Average weekly total earnings for full-time female employees for August 1998 was $34,658, that is, $666.50 a week. This amendment will mean that the drop is not so drastic, thus decreasing the impact on custodial parents, many of whom are closer to the $30,000 mark than they are to the $40,000 mark.

We believe that the poverty trap becomes a disincentive to work. This drastic increase in the threshold level has the capacity to create poverty traps. I would think that is exactly the opposite to what the government is purporting to want to do. ACOSS has identified that, with the 50 cents in the dollar taper, families earning $30,000 per year will have less disposable income than those earning $20,000 per year.

As I mentioned in my speech at the second reading stage, Polette's study, which was quoted in Fincher's 1998 book Poverty Then and Now, identified sole parent pension families as having the highest proportion of effective marginal tax rates above 60 per cent of all family types of individuals. Rather than supporting their return to the work force so that their children can enjoy a better standard of living, this bill will create poverty traps and disincentives to work.

Drastic changes to the child support formula have impacts on private arrangements which have been agreed to based on the child support formula. Parents who may have sought independent legal advice and come up with a workable compromise based on the old child support formula will be disrupted and affected by the drastic changes. We want it to be based on something closer to reality. We would like to see changes which leave fewer people cut off or marginalised. I seek the support of the committee for these changes.