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Tuesday, 24 March 1987
Page: 1368

Mr HOWE (Minister for Social Security) —by leave-This year will see the start of a system to ensure a new deal for children of separated and divorced parents. When fully developed it will be one of the most effective systems of child support in the world using-administrative assessments; judicial discretion in disputed cases; and automatic income withholding to benefit children who are not cared for by both parents. The Government recognises that child support is an area of great community concern. All of us on both sides of the House know that the present system is unfair and ineffective. More than 70 per cent of parents, no longer living with their children, simply do not pay regular maintenance. Inadequate support by non-custodial parents contributes to the poverty of children living in Australia's sole parent families. It also contributes to the heavy demand on our social security system.

Changes in Australian society over the past decade or so have had significant implications for appropriate child support arrangements. Between 1974 and 1985 the number of sole parent families increased by 73 per cent, from 183,000 to 316,000. The overwhelming majority of cases are the result of marriage breakdown or a split in de facto relationships. So most of the children in those families come from homes where two parents once shared the responsibility for expenses and care. Unfortunately, we have seen a situation develop where too many parents who no longer share a home with their children now fail to share their income with those children. All too often these parents no longer support their children the way they used to, and the responsibility falls to the social security system.

As the proportion of sole parent families has increased over the past decade, so has the proportion reliant on social security. The proportion of sole parents on a pension or benefit increased from 65 per cent to 85 per cent over the past decade. Currently, there are more than 250,000 lone parents on benefits caring for 450,000 children. For most of those households the pension or benefit is their only source of income. This Government decided to take action on this issue and placed a priority on child support reform-to reduce the number of children in poverty, and to ensure that parents face up to their responsibilities to their children.

The Government's intention to reform child maintenance arrangements was announced in the 1986 Budget Speech. Its proposals for reform were detailed in `Child support: A discussion paper on child maintenance', released for public comment in October 1986. In the community consultation which followed there was overwhelming support for the need to reform the currently inadequate child maintenance arrangements. The specific objectives of the proposal also received wide support.

They are: Firstly, that non-custodial parents should share the cost of supporting their children according to their capacity to pay; secondly, that adequate support be available for all children of separated parents; thirdly, that Commonwealth expenditure be limited to what is necessary to ensure that those needs be met; fourthly, to ensure that neither parent is discouraged from participating in the work force; and, fifthly, that the overall arrangements should be simple, flexible, efficient and respect personal privacy.

After close examination, the Government agreed that major changes were required to ensure meaningful improvements in the living standards of children, and to facilitate the regular payment of support. We have responded to the complexity of child support reform with sensitivity and concern. And as a result the Government has decided to introduce its reform in stages.

Stage 1 in 1987 will introduce legislation to establish the Child Support Agency to collect child maintenance, and to amend the Family Law Act to assent the priority of child maintenance, to make sure that court orders put the financial position of children ahead of everything except the essential commitments of the parents, and to remove reference to social security eligibility to make clear that child support should not be treated as a `top-up' to social security pensions and benefits. The current system has for too long awarded inadequate levels of child support. The social security system has been burdened with this responsibility.

Stage 2 in 1988 will introduce legislation for a formula to calculate maintenance as part of the Child Support Agency's administrative process under the Commissioner of Taxation. The legislation to establish the Child Support Agency will be passed this year. It will come into effect as soon as the necessary administrative arrangements can be put in place. The Agency will be able to collect all maintenance orders issued to couples who separate after the date of its establishment. It will also be able to collect orders made in respect of children born after that date, where the parents have not cohabited. Pensioners who already have an order can go to the Agency to have that order collected. The Agency will also collect orders made after commencement of the Agency for all custodial parents who are social security pensioners on the day they get the court order.

The Government is determined to give the scheme as wide an operation as possible so we will investigate the feasibility of including any periodic child mainenance obligation that could be enforced under the Family Law Act. This includes obligations in ageeements registered or approved under the Family Law Act; overseas maintenance orders; and orders under the law of one State being enforced in another State.

Further, for the first time since 1961 the maintenance of step children will be dealt with under the same laws as the maintenance of their step brothers and sisters. This has been made possible by the historic agreement of the States of New South Wales, Victoria, South Australia and Tasmania to refer constitutional powers on the question to the Commonwealth. The Commonwealth will consult with the States on the future of the present arrangements which govern the collection of child support by State bodies. With State agreement the Agency will take over the collection of all maintenance orders which are lodged for collection with those State bodies as those bodies are phased out. The Government will set up a consultative group as soon as possible to advise the Government on the introduction of a legislative formula.

The consultative group will provide a mechanism for refining the formula, to monitor the impact of stage 1 and to advise the Government of the role of counselling in maintenance assessment. The composition of the group will be announced in the near future. It became clear during our community consultations that certain issues concerning the legislative formula needed to be addressed with particular care. In particular, there was concern that the current family law practice of allowing parents to substitute housing or other provisions for maintenance should be allowed to continue in cases where this may best meet the needs of the family.

There was also a view that, in some circumstances, the legislative formula should take into account the income of the custodial parent. The Government's consultative group will examine the specifics of the formula to take account of these critical issues.

As always when the emotional question of child support is raised we have aimed to ensure that all interested parties have the chance to help shape a new system which will affect so many families at a very sensitive time in their lives. The proposed timetable will give us some flexibility in refining the final stages of the new scheme while allowing people to adjust to the new procedures.

The overseas experience is that the introduction of legislative formula and administrative assessment has proven to be a successful and effective reform but it is very clear that people overseas have needed time to adjust to the changeover from a discretionary court-based system. For this reason the Australian Government has decided on a two-stage reform to allow a smooth transition to the new scheme.

The Government did consider alternative and less major forms of reform, including continuing to rely on the judicial system. But several difficulties are likely to arise with continuing reliance upon judicial methods of assessment including the risk of seriously overburdening the Family Court if the majority of separated parents were to use its services. Current judicial processes act as a disincentive to obtain maintenance because they are often costly to initiate, often involve a delay in obtaining payment and are difficult to vary in light of changed circumstances. In addition, courts are required under the Family Law Act to look at parents' capacity to pay in setting maintenance; but evidence suggests that there is a going rate commonly applied.

A central feature of the reform is use of administrative assessment by formula but with reliance on judicial discretion in contentious cases. Considerable benefits are expected to follow. The procedure will eliminate the burden on the custodial parent to initiate court proceedings, will ensure higher payments and more uniformity in amounts in line with capacity to pay and will lead to a much greater coverage of the custodial parent population.

Finally, those parents who can afford to contribute will meet their obligation-a big reform on the current system where it is the taxpayer who has largely adopted financial responsibility for the children of separated parents. The timetable has another advantage in that it will permit the Government to address the important access issue. The Government is waiting on advice from both the Australian Law Reform Commission and the Family Law Council on matters relating to the access issue and we will consider those reports as a matter of priority.

The Government remains committed to the principle that access should not be linked to the new system of financial payments for children. We believe that we should retain the strong principle taken by family law to keep liability for child support and access to children as separate issues. But at the same time the Government is concerned to make some progress in investigating ways to ensure that access entitlements are adhered to: The child support reform is an important step towards improving the circumstances of many thousands of children who deserve a fair start in life. It is also part of this Government's commitment to make sure that family law keeps pace with social change.

There are four major parts of the proposed reform: Firstly, a legislative formula to replace the current discretionary system as the method of assessing maintenance obligations; secondly, administrative assessment of liability under the formula by a child support agency under the control of the Commissioner of Taxation with judicial assessment in disputed cases-this will mean in the great majority of cases the parties would not have to consider court proceedings as the maintenance issue would be resolved by a simple administrative process; thirdly, the collection of payments by the child support agency would be automatically withheld from a non-custodial parent's income wherever that is possible, as in the case of pay as you earn non-custodial parents-the self-employed will have to pay to the agency monthly; and fourthly, distribution of child support payments will be done through the Department of Social Security.

The child support initiative is an important reform, not only in its own right; it is also a clear indication of the Government's commitment to help Australian families. The children of separated and divorced parents are among the poorest groups in our society. The child support agency promises a new security for those children, and will contribute to a better start in life for them.