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Tuesday, 8 May 2018
Page: 2516

Senator SIEWERT (Western AustraliaAustralian Greens Whip) (13:13): I rise to make a contribution to the debate on the Family Assistance and Child Support Legislation Amendment (Protecting Children) Bill 2018. I'll point out that, as has just been discussed, there are two main components of this bill. One's about No Jab, No Pay, and the other, of course, is about child support. I'll be addressing my comments to the child support component of this bill, and Senator Di Natale will be addressing the issues around No Jab, No Pay.

Child support, I'll acknowledge straightaway, is a very complex area to address, and it's often very controversial. But it is an absolutely essential component of our families policy and our approach to supporting children in the community as they grow and making sure that they are adequately supported. So we do think there is a need to address some of the issues around child support.

The Greens, however, do have concerns regarding the measures that are contained in this bill. The proposed child support changes are primarily based on the recommendations from the House of Representatives Standing Committee on Social Policy and Legal Affairs report of 2015, From conflict to cooperation: inquiry into the Child Support Program. Given how complex and detailed the child support system is, and given that changes to child support are often controversial, the Australian Greens are deeply concerned that there has not been an opportunity for stakeholders to provide feedback through the normal committee inquiry process. Any proposed changes to the child support program should be the subject of comprehensive modelling prior to implementation, with particular regard to the potential impact on people affected by family violence and issues around child safety.

The House of Representatives committee made 25 recommendations in their report. The government tabled its response to the inquiry into the child support program in August 2016. At that time, in their response, the only recommendation the government committed to legislatively was recommendation 22, which relates to debts and the collection of overpayments from carers or payees—the parent with the higher percentage of care. A number of the 25 recommendations related to how to improve the child support system. Unfortunately, the government has only chosen to implement three or four of those recommendations. They have moved beyond just recommendation 22. In their response, they committed to a legislative commitment on recommendation 22. They did support some others in principle, which is why, I presume, some of these have been included in this particular piece of legislation. Unfortunately, some of the recommendations the government has chosen to implement in this bill are harsher measures that relate to debt recovery processes from single parents rather than addressing the systemic issues. I understand there will be further legislation introduced by the government at some later stage relating to some of those other recommendations. I'm also aware of the family law reform review process that is currently underway. However, I do have concerns that these are the recommendations that have been brought in the absence of that overview.

The amendments are in four parts in schedule 1. Part 1 relates to the interim care determination periods. Part 2 is around the amended tax assessments—and I'll come back to some of these. Part 3 relates to child support agreements and part 4 relates to child support overpayments. We have concerns that the debt recovery changes will be seen by single parents as a more punitive approach that will make their lives more difficult. Because we didn't have a committee inquiry into these proposed amendments, we've gone out separately to talk to stakeholders to see whether they have any concerns relating to this bill. We are particularly concerned about the impact on single parents, of whom a majority by far are single mothers. Of the child support recipients whose gender is known, 86 per cent were identified as female and 14 per cent were identified as male. So some of these changes are disproportionately going to impact on single mothers.

The most concerning measure in the bill is that it aligns the debt recovery methods available to the registrar for overpayments to child support payees—in other words, the main caregiver—with the current methods available for recovering debts from payers. This bill allows for overpayments resulting from backdated reductions to an assessment or other maintenance liability to be recovered by the registrar, in most cases, and amends the back-paying provisions for retrospectively creating overpayments or arrears. This change mean that a payee—and that's usually the mother—will have harsher debt recovery methods used against them if they are overpaid, which is often due to an administrative error. In most cases, this overpayment occurs through no fault of their own. They are not rorting the system. They are not claiming fraudulently. They are receiving a payment that was calculated by a third party, through a court order or an agreement. The calculation of child support payment is quite complex and is reliant on a number of factors. A child support payee would trust that the authorities and the appropriate decision makers who have made the calculation have done it correctly and lawfully. The payee in most cases is taking their payment in good faith, on the provision of a court order, as I said, or a private agreement. It is not up to them to work out how much they are being paid.

This measure has the potential to unnecessarily and unfairly punish single parents if they have been mistakenly overpaid or their payments miscalculated. The child carer could be treated in a much more punitive manner, potentially in the same way as someone who is not paying their child support and has a child support debt. Methods for debt recovery include through employer withholding of wages; withholding of social security, family assistance or veterans payments; offsetting other debt payments against the carer debt; court orders to prevent certain transactions from taking place; the proceeds of certain transactions being used to pay a carer debt; and the use of departure prohibitions to prevent overseas travel in certain circumstances. Wilfully avoiding support for one's children by refusing to help pay for their upbringing—and taking avoidance measures to do that—and being accidentally overpaid an account are very different circumstances. Why should people avoiding their responsibilities be treated in the same punitive way as a single parent who has the larger share of caring responsibilities, when their circumstances are not in any way the same?

We are concerned that this measure will exacerbate the already difficult circumstances faced by single-parent households. We know that single-mother households make up a high proportion of families living in poverty. We know that it is the children who will suffer when their main caregiving parent has their income reduced through a debt recovery process. The median income of a child support recipient in my home state of Western Australia in December 2016 was just over $25,000. Around 56 per cent of people receiving a child support payment are also receiving an income support payment, and people already know how insufficient those income support payments are. Twenty-four per cent of people receiving a child support payment are owed arrears, and the average amount of arrears owing is $5,800. If you are on the median income of a child support recipient, you might be owed almost a fifth of your yearly income. Where are the measures to strengthen the system to ensure that parents are adequately supported to raise their children?

This change to overpayment recovery is not supported by evidence. There is no evidence showing that the existing recovery provisions for overpayments are not working or that there is a sufficient problem of payers not being reimbursed any overpayments, and this measure addresses largely anecdotal concerns. There is also no data available showing how many payees receive overpayments, nor data on whether or not these overpayments are recovered. If overpayment to payees is in fact such a significant issue, it should not be addressed through such a sledgehammer approach. We need to see the data, and a change such as this shouldn't be legislated on the basis of anecdotal evidence.

During the inquiry into the child support payment system, National Legal Aid raised concerns about the existing arrangements for the collection of overpayments, particularly through the withholding of child support payments, which can cause significant hardships, pointing out that these overpayments are often not the fault of the payee. A significant number of overpayments to payees are caused by factors outside the control of the payee—for example, the late lodgement of tax returns on the part of the payer, and I want to come back to that issue of late payment of tax returns.

This bill also allows amended tax assessments to be taken into account by the child support register in child support assessments if it results in a higher taxable income or where it results in a lower taxable income under certain circumstances. The amount of child support paid is currently based on a person's tax returns. Special circumstances such as tax evasion or fraud allow for reassessment. The proposed changes allow the child support payment to be recalculated based on an amended tax return. The amended assessment results in a higher adjustable taxable payment. This would be applied retrospectively to the paying parent's child support obligation. If the amended tax assessment results in a lower adjustable payable income, this would also be retrospectively applied where the paying parent applies for the amendment of the tax assessment either before the year's tax return is due to be lodged or within 28 days of becoming aware of the issue with the tax assessment, unless special circumstances exist. The time limit for assessment does not reduce the amount of any potential overpayment that could be claimed from a payee. However, again, there is a concern that this will result in child support payees receiving an unexpected debt, as they have received payments and spent the money believing the information provided to the tax office was accurate.

We share the ALP's concerns about part 2. We think part 2 should be either withdrawn or amended. We have concerns about the impact this will have. There are other issues in relation to child support that we think need to be addressed, and that's why I'll move a second reading amendment in a minute. We think these are very important concerns. They were raised during the 2015 inquiry. We would have liked to have seen those addressed as a matter of urgency. A case study was submitted to the child support inquiry which outlines an issue in regard to tax assessments that needs to be addressed. It said:

A client sought assistance from a commission. She had a private collect case and the father was originally assessed to pay the minimum rate for their three children. The client was not aware of the father's financial circumstances and did not question the assessments. Child Support retrospectively re-assessed several years of child support when the father lodged tax returns (late). This resulted in assessments that were much higher than the minimum rate. Because the case was private collect, Centrelink assumed that the client had received the (newly revised) assessed rate of child support. Shortly afterwards, the client was issued with a notice from the Family Assistance Office advising her that she had been overpaid almost $8,000 in Family Tax Benefit A and that this would need to be repaid. Centrelink then took immediate steps to recover the overpayment by withholding the supplementary amount she was entitled to receive, as well as a portion of her Family Tax Benefit. When she contacted Child Support she was told that as the case was private collect they could not assist in collecting the shortfall from the payer.

In other words, she hadn't received the money that she was assessed to have received but Centrelink took it into account as if she had already received that and then docked her family tax benefit. That is clearly unfair. This issue has been flagged for a long time and has not been addressed. It should be addressed. In circumstances such as this case study, where a retrospective adjustment results in a higher child support assessment and the case is private collect, consideration must be given to permit a payee to register the result in retrospective arrears for collection with the DHS. This is particularly due to the impact of revised calculation on FTB A in creating an immediate Centrelink overpayment even though the payee has not received the newly collected child support payments, which means that they have a debt even though they have not received any extra money.

I am moving a second reading amendment in relation to this issue and the non-lodgement of tax returns. The non-lodgement of tax returns has been identified time and time again as a difficulty in properly calculating child support payments.

The ACTING DEPUTY PRESIDENT ( Senator Whish-Wilson ): Are you moving that amendment now?

Senator SIEWERT: Yes. I move this amendment to the second reading motion:

At the end of the motion, add "but the Senate calls on the Government to:

(a) take action to address the chronic non-lodgement of tax returns, to ensure the integrity of the Child Support Program; and

(b) amend the legislation to protect Private Collect payees who receive a Family Tax Benefit A debt as a consequence of the payer's child support reassessment".

In its response to the inquiry into child support, the government has failed to address the key recommendation regarding parents who fail to lodge tax returns in order to avoid paying child support. Recommendation 7 reads:

The Committee recommends the Australian Government amend current policy to ensure that the penalties applicable to the non-lodgement or late-lodgement of tax returns are enforced for all clients of the Child Support Program.

Nonlodgement of tax returns allows parents to hide or minimise incomes and results in the CSA working from an estimated income. The nonlodgement of tax returns corrodes the overall effectiveness of the Child Support Scheme and must be addressed by this parliament. We think it is now just as urgent, if not more so, as addressing the issues around recovering debts from carers. We need to ensure that people have enough money to live on by addressing the integrity of the child support system. These practices are obviously corroding the effectiveness of the child support system but also landing principal carers in debt when recalculations occur and Centrelink takes them instantly into account. We believe it's important that these issues are addressed. My second reading amendment calls on the government to compel the lodgement of tax returns or to require this issue is addressed to ensure the integrity of the child support program.

Another way to ensure the integrity of child support is through a child support guarantee system, which was also discussed in the House of Representatives committee report. The committee recommended this be considered and modelling be conducted. A number of countries have a child support system in which the government agrees to make up some of the shortfall or the entire shortfall if the paying parent does not meet the child support requirements. In other words, children do not miss out because parents aren't doing the right thing. This removes the financial impact of spasmodic payments and nonpayments and is particularly important for low-income families living from week to week. It would also sever the use of child support as an avenue to practise abuse and controlling behaviour—which does occur. We believe there are important changes that need to be made to the child support program and we urge the government to get on and deal with the other committee recommendations, which would significantly improve the system.