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Child Support Legislation Amendment Bill 1994



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House: Representatives

Portfolio: Treasury

Commencement : Part 2 [amendments to the Child Support (Assessment) Act 1989 and consequential amendments to the Social Security Act 1991] commence on 1 January 1995. Division 3 of Part 3 [amendments relating to elections for non-enforcement of maintenance liabilities under the Child Support (Registration and Collection) Act 1988] commences on 1 January 1995. The remaining provisions commence on Royal Assent.

Purpose

To amend the Child Support (Assessment) Act 1989, the Child Support (Registration and Collection) Act 1988 and the Social Security Act 1991.

In brief, these amendments expand presumptions of parentage; require social security clients wishing to enter into private maintenance agreements to have those agreements assessed for adequacy under the reasonable action for maintenance provisions of the Social Security Act 1991; enable the Child Support Registrar not to enforce court-ordered support in some circumstances; and extend the circumstances in which social security clients can opt to make arrangements for private collection of child support payments.

Background

In its 1986 discussion paper on child support, the Cabinet Sub-Committee on Maintenance identified the impetus behind reform of child maintenance laws:

The Government sees a need to strike a fairer balance between public and private forms of support to alleviate the poverty of sole parent families and to achieve some constraint on government outlays on sole parent payments. 1

A number of deficiencies had been identified with court-ordered child maintenance then existing in Australia. First, in order to enforce child maintenance obligations or vary child maintenance payments, a court order was necessary - an expensive and time-consuming process. 2 Second, the majority of non-custodial parents did not pay maintenance for their children. Of those who did pay, many paid intermittently not regularly. It was estimated in 1986 that less than 30 per cent of custodial parents received regular cash payments from the non-custodial parent. 3 Third, where the court ordered maintenance payments, the amounts ordered were generally low. 4 Fourth, there had been an escalation in the divorce rate with a corresponding increase in the number of children affected by separation and divorce. 5 Fifth, there had been an escalation in the number of single parents receiving pensions and benefits. 6 Many children and their custodial parents lived in poverty and, in the absence of support from the non-custodial parent, the taxpayer was providing this support.

In 1987, the Child Support Consultative Group was established to advise the government about the introduction of a legislative formula for and administrative assessment of, child support. Reform sought to address the levels of maintenance orders and the enforcement process.

The Child Support Scheme was introduced in two stages:

* in Stage 1, the Child Support Act 1988 7 was passed to establish the Child Support Registrar and the Child Support Agency, to provide for registration by parents with court orders, consent orders or court registered maintenance agreements, and to enable the Agency to collect and distribute child maintenance payments the subject of a court order or a maintenance agreement. The Agency was also given enforcement powers;

* in Stage 2, a new scheme for child support was established by the Child Support (Assessment) Act 1989 for children whose parents had separated on or after 1 October 1989 or who were born on or after 1 October 1989. The Child Support (Assessment) Act 1989 sets out a statutory formula for determining the annual rate of child support to be paid by a non-custodial parent to a custodial parent. 8

The Child Support Agency is part of the Australian Taxation Office; the Child Support Registrar is the Commissioner of Taxation.

The introduction of child support legislation means that there are basically two schemes for child support/maintenance in Australia. In the case of marital separations or childbirths which occurred before 1 October 1989, there is a discretionary judicial scheme under the Family Law Act 1975. In the case of marital separations or childbirth occurring on or after 1 October 1989, an administrative assessment is made using a statutory formula under the Child Support (Assessment) Act 1989. In either case, payees have access to collection through the Child Support Agency.

The Child Support Scheme is currently the subject of a reference to the Joint Select Committee on Certain Family Law Issues. The Committee's terms of reference include the operation and effectiveness of the Child Support Scheme and the Auditor-General's report on the management of the Child Support Agency.

At 30 June 1994, the number of sole parent pensioners was 313,743 with outlays for payments standing at $2.5 billion. 9 In terms of total Department of Social Security clientele, at any one time the Department is responsible for social security entitlements for about 5 million people. Total outlays on payments to clients and operating costs amounted to $34.36 billion in 1993-94. 10

Main Provisions

Presumptions about parentage

Clause 4 amends section 29 of the Child Support (Assessment) Act 1989 in two ways. First, it enables the mother of a child to execute an instrument acknowledging parentage of the child. The execution of such an instrument may be used to satisfy the Child Support Registrar that a person is the child's parent. Subject to certain other sections of the Child Support (Assessment) Act 1989, the Registrar may then accept an application for administrative assessment of child support.

The present provision in the Child Support (Assessment) Act 1989 [subsection 29(2)] provides that a presumption of parentage will arise if a man executes an instrument acknowledging paternity.

At common law, there was no presumption of maternity only of paternity - reflecting the Latin maxim mater semper certa, pater incertus est. However, there are a number of reasons why questions of maternity may arise. These include concerns that a mother may have been given the wrong baby at birth. In addition, the situation does arise where the mother of a child does not have a copy of the birth certificate. Increasingly, statutory presumptions of maternity have been included in State and Territory equality of status legislation.

Second, clause 4 amends the Child Support (Assessment) Act 1989 to create additional presumptions of parentage to bring the Child Support Act more into line with the statutory presumptions in sections 66P, 66Q, 66R, 66S and 66T of the Family Law Act 1975. The Bill contains a modified version of section 66Q of the Family Law Act 1975. According to the Explanatory Memorandum, section 66Q has 'an unintended consequence in that the period of cohabitation does not necessarily cover the period when conception is most likely to have occurred. If included in the Child Support (Assessment) Act 1989, a person could be presumed to be the father when in fact this is clearly not the case.' 11

These amendments are designed to assist clients lodging child support applications to nominate the putative father and thus have their applications proceeded with.

Child Support Agreements

As stated earlier, arrangements for child support can be made in a number of ways:

* administrative assessment by the Child Support Agency in the case of separation or divorce which occurred on or after 1 October 1989, or in the case of a child born on or after that date;

* court ordered maintenance in the case of separation or divorce occurring before 1 October 1989 or in the case of a child born before 1 October 1989;

In addition, the Child Support (Assessment) Act 1989 enables parents to reach their own agreements on child support. Child support agreements may be registered with the court, they may be lodged with the Child Support Agency or the parties may elect not to register or to lodge the agreement. Agreements lodged with the Child Support Agency are enforceable by the Agency.

Statutory provision for child support agreements under the Child Support (Assessment) Act 1989 is in keeping with the philosophy of the Family Law Act 1975 that parents should be encouraged to co-operate on happens after they separate. The Family Law Act 1975 itself provides for consent orders and court-registered agreements.

Child support agreements also acknowledge that parents know their own situation better than outsiders and that an agreement reflects acceptance of joint responsibility for a child's support. 12 Parents may prefer to enter into a child support agreement to maintain privacy, avoid involvement with a government bureaucracy or because they do not want the non-custodial parent's employer involved in or aware of their child support arrangements. 13

Sections 252 and 777A of the Social Security Act 1991 provide that before a custodial parent can be granted a pension, allowance or benefit, he or she must take reasonable action to obtain child maintenance from the non-custodial parent. 14 However, at present the Child Support Registrar has no discretion to consider whether the amount of support contained in a child support agreement is adequate - even if the custodial parent is a social security pensioner or beneficiary. The Child Support Registrar is obliged to accept a child support agreement.

The rationale for the amendments relating to child support agreements is that these agreements have been used to reduce child support payments made by non-custodial parents and to transfer the burden of financial support to the taxpayer. The Bill seeks to remedy this situation.

Clause 8 amends section 89 of the Child Support (Assessment) Act 1989. It provides that the Registrar may require a party lodging an agreement for acceptance to state whether he or she is in receipt of certain social security pensions or benefits.

Clause 9 inserts new section 91A into the Child Support (Assessment) Act 1989. New section 91A will require the Registrar to send a copy of an application for acceptance of an agreement submitted by an 'eligible person' to the Secretary of the Department of Social Security. An 'eligible person' is defined as a person who is a recipient of or a claimant for a pension or payment.

New subsection 91A(3) provides that the Secretary of the Department of Social Security must decide whether the applicant would no longer be eligible for social security payments because he or she had not taken reasonable action to obtain maintenance, if the Registrar were to accept the agreement. Should the Secretary make such a decision [termed an 'adverse decision' in new subsection 91A(3)], then the Registrar cannot accept the agreement [new subsection 92(3)].

The Registrar must also refuse to accept the child support agreement if:

* a person is in receipt of, or is a claimant for, a social security pension or payment; and

* no administrative assessment is in force in relation to the child [new subsection 92(4)].

Consequential amendments to the Social Security Act 1991 are contained in Schedule 1. These amendments will:

* allow non-custodial parents to appeal against a decision by the Secretary of the Department of Social Security that reasonable action has not been taken to obtain maintenance. At present, non-custodial parents do not have appeal rights as they are not Department of Social Security clients;

* require notice of a review decision to be provided to both parties to a child support agreement [new subsection 1243(3)].

Child Support (Registration and Collection) Act 1988

Periods of non-enforcement

At present, the Child Support Registrar can amend administrative assessments for child support if the payer's circumstances change. In the case of a registrable court order or a court registered agreement, a party may have the Child Support Agency collect the maintenance payable. However, in such cases, the Registrar cannot elect not to enforce; a party must seek to have the order amended by the court - a time-consuming and expensive exercise.

The Bill enables the Child Support Registrar to elect not to enforce court-ordered support in two situations.

First, clause 15 provides that the Registrar may elect not to enforce in certain circumstances, if the payer is in receipt of, or is a claimant for, a social security pension or benefit and his or her income has fallen below a threshold level [new section 37B]. This is called a low-income non-enforcement period. In this case, the Registrar makes an election on the application of the payer.

Second, clause 18 provides that the Registrar may elect not to enforce if the child is no longer in the ongoing care of the payee and the parties agree that this change has occurred [new section 39B]. In this case, the consent of both the payee and the payer must be obtained. In specified circumstances, either the payer or the payee may elect to reverse the non-enforcement election [new subsection 39B(5)].

Clause 14 provides that decisions of the Child Support Registrar under new sections 37B and 39B are 'appealable refusal decisions'.

The Explanatory Memorandum notes that 'The court order is not changed as a result of [the] amendment. It will always remain open to either party to have the order varied or for the payee to enforce the amount in his or her own right for the period. The amendment simply gives the Registrar the ability not to enforce a registered liability for the period involved.' 15

Extension of private payment arrangements

Clause 22 amends section 38 of the Child Support (Registration and Collection) Act 1988 and will allow the recipient of a social security pension, allowance or benefit to elect to have a maintenance liability paid privately [ie directly by the payer] rather than have it collected by the Child Support Agency.

At present, social security clients cannot make an election to collect payments privately once they are registered with the Child Support Agency.

Clause 23 inserts new section 39A into the Child Support (Registration and Collection) Act 1988. New section 39A will allow a payee to reverse an election made under section 38. If arrears accumulate, the payee may apply to the Child Support Registrar to enforce the arrears. If the period of arrears does not exceed three months, the Registrar must grant the payee's application [new subsection 39A(5)]. If the period of arrears exceeds three months and the Registrar is satisfied that there are exceptional circumstances, then the Registrar must grant the payee's application. If the Registrar is not satisfied that there are exceptional circumstances, then he or she must refuse the application [new subsection 39A(6)].

Comments

A question may arise whether the provisions of the Bill which allow the Registrar to elect not to enforce court-ordered maintenance involve an exercise of judicial power. It is likely that the election not to enforce is merely an exercise of executive discretion by the Registrar.

Endnotes

1 Cabinet Sub-Committee on Maintenance, Child Support. A Discussion Paper on Child Maintenance, AGPS, Canberra, 1986, p 14.

The extent to which the two aims identified by the Cabinet Sub-Committee are consistent is questionable [see Graycar, R 'Family law and social security in Australia. The child support connection', Australian Journal of Family Law, 3(1) January 1989, pp 70-92]. The extent to which these aims have been met is not clear. For example, while there has been an increase in the number of sole parent pensioners receiving maintenance, the percentage still stands at less than 50 per cent. The Department of Social Security's 1993-94 Annual Report, states that 41.4 per cent of sole parent pensioners receive maintenance.

2 Dickey, A Family Law, 2nd ed, Law Book Company, Sydney, 1990.

3 Ingleby, R Family Law and Society, Butterworths, Sydney, 1993.

4 Orders were in the region of $15-$20 per week [Fogarty, J 'The Child Support Scheme Stage Two: Origins, Purposes and Strategies', quoted in CCH Australian Family Law and Practice Reporter, vol. 1, p 22, 568].

The reason for the low amounts ordered has been explained in this way: '. . . because of the lack of clear statement of principles and the compounding problem of maintenance enforcement, a "take what you can get attitude" appears to have developed. Frequently, the court will set a low level of maintenance on the basis that the non-custodial parent will be more willing to pay it.' Cabinet Sub-Committee on Maintenance, op.cit; p 12.

5 Fogarty, op.cit.

6 Ibid.

7 Now renamed the Child Support (Registration and Collection) Act 1988.

8 Stage 1 parents are parents who separated prior to 1 October 1989 or where the child was born before this date. In order to have child maintenance collected by the Child Support Agency, they must have a court order, a consent order or a court-registered agreement under the Family Law Act 1975. A Stage 2 parent is a parent who separated on or after 1 October 1989 or who has a child born on or after that date.

9 Department of Social Security, Annual Report 1993-94.

10 Ibid.

11 Explanatory Memorandum, Child Support Legislation Amendment Bill 1994, p 10.

12 Bowen, J Child Support. A Practitioner's Guide, Law Book Company, Sydney, 1994.

13 Ibid.

14 In certain circumstances, a social security client may request an exemption from taking maintenance action if they fear violence from the non-custodial parent or if taking action would amount to an unreasonable or harmful imposition (Ibid).

15 Ibid.

Jennifer Norberry (06) 277 2476

Bills Digest Service

Parliamentary Research Service

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Commonwealth of Australia 1994

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Published by the Department of the Parliamentary Library, 1994.