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Tuesday, 13 June 2006
Page: 109

Senator CHRIS EVANS (Leader of the Opposition in the Senate) (5:31 PM) —I was speaking on this legislation before I was so rudely interrupted by question time—a sign of the mistaken priorities of the government! I was indicating the concern Labor has for the lack of compliance with regard to the current child support arrangements and said that we were offering the government support in looking to improve compliance and in supporting a range of compliance measures. It is a key to ensuring fairness and ongoing community support for the child support arrangements. People have to believe that the system works and that they get justice from the system. Compliance is a very important aspect of improving the system. I am hopeful that the increased payment of liabilities will diminish some of the negative effects of the new formula for low-income resident parents.

I note that this year’s budget measures allocate $146.6 million to improve service standards and carry out organisational change in the Child Support Agency. Concerns in the community about the administration of the Child Support Scheme by the CSA are just as profound as those about the payments formula and compliance. To recognise this is not to attack the CSA staff; they work in a very difficult environment. All senators and members would recognise the hard work of agency staff and the pressures they are under. Nonetheless concerns exist, and I hope that the budget allocation and related action results in some more positive outcomes for both clients and staff. I think that some of the measures to do with case management, et cetera will improve outcomes for clients but also allow the CSA staff a better working environment.

I was concerned to hear recently that an internal CSA audit found that there have been 405 privacy breaches in the last nine months—of which 69 saw sensitive information being given to ex-spouses—and that at least two families have had to be relocated for their own safety as a result of such breaches. Labor notes, from the report in the Australian newspaper, that the Minister for Human Services is satisfied that the agency was taking action in this regard. We encourage the government to ensure that its reforms within the agency do as much as they can to prevent a repeat of these breaches.

The ministerial task force has examined the scheme, using sound principles, and its report was generally well received. Labor believes that it does provide a strong and constructive basis for reform. As I have indicated, our principal concern is in regard to the effect that the new assessment formula will have on low-income resident parents with children aged 12 years and under. They are the losers in this change. The government has supported the report and has picked up most of its recommendations, which it now seeks to implement.

Labor has taken a constructive approach to the reforms. We do not believe that any side of politics should seek to politicise this issue. Our aim has been to support positive reform of the scheme. In this we have endeavoured to work with the government, and there has been constructive engagement between my office and Minister Brough’s office. The changes that the government is seeking to implement cut across a range of areas, and the government plans to introduce them in three stages between July this year and July 2008.

We recognise that the package as a whole is carefully crafted by an expert committee, which has endeavoured to provide a balance based on the results of its research. In designing a new payments formula, the task force has based its calculations on research into the actual costs of raising children. It recognises the fact that the costs of care for older children are greater than those for younger children. It notes also that regular contact between children and non-resident parents increases the costs of care considerably, due to the duplication of infrastructure in two households, and that the costs of children change in accord with the parents’ income level.

At the heart of the formula is the attempt to divide these costs fairly between both parents in a way which recognises the level of care each provides. The current formula, by contrast, is not based on research into the actual costs of raising children and therefore lacks some of the intellectual rigour and underlying fairness of the new formula. The resulting package presents a trade-off in costs between resident and non-resident parents. This is in effect a zero-sum game. The new arrangements, as the Parkinson report noted, do not alter the amount of resources available for the children’s upbringing, but they do alter their allocation between households.

The task force argues that the new formula is grounded in evidence about the costs of raising children and the most defensible principles for allocating those costs. It notes the presence of anomalies in the current system and that the correction of these means that obligations must go up or down. It states:

... its recommendations can best be assessed by reference not to a comparison between the outcomes of the current and proposed formula, but by reference to the principles and evidence upon which these recommendations are based.

The package developed by the task force is a result of expert examination and analysis and seeks to balance competing factors in a sound manner. This is reflected in a balanced package of measures: a new payments formula balanced by increased compliance measures and attempts to make it harder for parties to hide their income in order to reduce their liabilities. The House of Representatives standing committee noted that ‘the CSS has a number of complex and interrelated components’ and that changing one aspect impacts on other aspects of the scheme. I believe that the same applies for the reform package. Therefore, attempting to unpick the package by amending certain measures would undermine its integrity as a whole and could create further inequities. After some consideration, the government has picked up the package largely in its entirety and Labor is prepared to support the government’s legislation as a whole.

However, Labor have indicated that our support for the package as a whole is contingent upon there being a satisfactory outcome and government action to put in place sufficient protection against income reductions for low-income resident families. We have very serious concerns about the impact of certain parts of the package of reforms. Our principal concern regards the impact the new formula will have on low-income single parents of children up to the age of 12. These households are generally headed by women. The House of Representatives report Every picture tells a story noted that 91 per cent of child support payees were female and nine per cent were male. Many single-parent families are among Australia’s poorest and most likely to fall into poverty.

While Labor accept that the new formula is based on a fair estimation and division of costs, we do not believe that the parliament can be blind to the practical consequences for the families affected. The aim of the reforms is to share the costs fairly between parents recognising the level of care they provide. The redistribution of those costs imposes minimal financial burden on the Commonwealth. While that reallocation of costs between parents is based on fair principle, Labor argue that there is a broader responsibility on the part of the Commonwealth and the parliament to ensure protection against loss of income for low-income resident parents. We do not want to see these families with less money to raise their kids.

The reforms attempt to encourage contact between children and non-resident parents by reducing that parent’s support liability in line with their level of care. At present, the non-resident parent’s liability is the same whether they have no contact or care for 29 per cent of nights each year. The task force recommends that, where the non-resident parent has care of the child for between 14 and 34 per cent of nights per year, their liability should be reduced by 24 per cent. I know this attempts to recognise the cost of providing domestic infrastructure such as a second bedroom but, clearly, the cost of renting a two-bedroom unit rather than a one-bedroom unit does not change depending on how many nights the parent has care of the child.

Recognition of the ongoing costs for non-resident parents and the encouragement this can provide for ongoing contact is a sound principle and should be supported. However, we must recognise the fact that the fixed infrastructure costs faced by the resident parent such as rent do not decrease at a rate commensurate with the other parent’s level of care. Yet, under the proposed changes, she or he faces a 24 per cent cut in their child support payments. Fairness has to work both ways. Just as we must be fair to the non-resident parent and recognise the fixed costs they face, we must also apply that same fairness to the resident parent. This is the area in which real concern exists. This is the measure which most starkly challenges the fairness of the package.

We should also acknowledge the reality that many of the people who face cuts in their child support payments will also be hit by the government’s Welfare to Work changes. I am not seeking to politicise this debate on child support. Labor’s vehement opposition to the welfare changes is well known, particularly those aspects which result in reduction of support for single parents. However, we have to acknowledge the fact that some of the poorest families in the country face the prospect of increased work obligations, reduced welfare payments, more punitive taper rates and, now, a reduction in child support payments. If we are to observe the principle of putting the interests of children first and respect the original intent of the Child Support Scheme to reduce child poverty, then we cannot ignore the impacts that these changes will have on these families.

While Labor are signalling broad support for the package, I am also indicating that we are seriously concerned about the impact on low-income families. We argue there is a clear responsibility for government to ameliorate the negative effects the changes may have on children in these families. We urge the government to look closely at this issue and examine ways of ensuring that carer families are not unfairly penalised and whether greater protection can be offered to them. It is a small issue in many ways compared to the totality of the package, but it is a very big issue for those families—it is a very big issue for those single-parent families who are potentially getting whacked by three or four separate measures.

These legislative reforms in this first tranche include the following principal measures: changing the capacity-to-earn provisions, increasing the minimum payment and its indexation to the CPI, increasing the amount of the child support payment that the non-resident parent can direct to specific purposes, dealing with a constitutional issue regarding application of the Child Support Scheme to ex-nuptial children in Western Australia and reducing the cap on the income of non-resident parents which is assessable for child support purposes from just under $140,000 to just under $105,000. This final measure means a reduction in payments by non-resident parents on incomes over $104,702 of up to $180 a week and a commensurate loss of income for the resident parents. This is another measure which causes me some concern. While I understand the logic behind it, the effect is that some families—some carer parents—will lose up to $180 per week from 1 July. Bang! No phase-in. Some of them I think may even still be unaware of the impact.

I think the new cap is defensible. I have certainly had a lot of encouragement to think that by some people whom I know personally. But I do think that there is an issue here in terms of phase-in. It does not matter how much income one has coming in—and if they are anything like me they are spending five per cent more than what is coming in—to say to a family, ‘As of 1 July, you suddenly have a reduction of $180 per week,’ when people have committed to school fees, mortgages, car payments et cetera, I think is harsh. While I accept the overall argument, I think the government should look again at that issue as to whether they cannot ameliorate the sudden impact of that provision on single parents caring for children. I do not pretend that the impact here is nearly as serious as it is on low-income parents who have a lot less to assist them in raising those children, but it has a very serious effect on some families. I got a very eloquent letter from a particular parent about that and I think there is an argument for them to say that there should be some sort of phase-in.

That is the main area of concern we have with the first tranche of reforms. In an effort to try and build bipartisan support and positive support for the changes, I am not looking to move amendments. Labor will not be moving amendments, but I make those two points to the government. I urge them to take them on as serious issues that ought to be addressed. I know the first stage is fairly minimal in terms of the broader package, but we urge the government before they proceed with the later stages of the package to take very seriously our concerns about low-income parents and the impact this will have on them.

There is a set of losers that even the Parkinson report identified who will be substantially hurt by these measures. Many of them will be women raising kids who will also be affected by the government’s welfare reforms or so-called welfare reforms, which also seek to cut their income. So they get a cut in income from the movement onto Newstart and they get a cut in income when the child support reforms come in. I do not think in all conscience that this parliament should be seeking to impose these two burdens, these two whacks, on them and their capacity to provide for their children.

Labor will be supporting the bill. We will be supporting the whole package in broad terms and we will be seeking to build community support for the child support system and the reforms contained herein. But there are issues on which we want the government to respond, in particular the issue about the impact on low-income sole parents. There is time before the second tranche for the government to address those concerns. At a time of large budget surpluses and the ability for the government to throw quite large amounts of money at those who perhaps do not need it as much, we could do better in how we treat low-income parents. Labor will be supporting the bill and not be seeking to move amendments to this particular piece of the legislative package.