2022-2023

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(CHILD SUPPORT MEASURES) BILL 2023

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Amanda Rishworth MP)

SOCIAL SERVICES LEGISLATION AMENDMENT

(CHILD SUPPORT MEASURES) BILL 2023

 

OUTLINE

 

This Bill amends the Child Support (Assessment) Act 1989 , and the Child Support (Registration and Collection) Act 1988 , to:

·          extend the application of the Child Support Registrar’s employer withholding collection powers;

·          allow the Registrar to refuse to issue a departure authorisation certificate where a security is offered unless satisfied it is likely that the parent will make suitable arrangements to pay their outstanding liabilities; and

·          introduce a new default income for parents not required to lodge a tax return, to simplify the income reporting requirements for payers and payees.

 

Schedule 1 - Amendments

 

Employer Withholding

 

This amendment extends the Child Support Registrar’s ability to collect amounts due to the Commonwealth in relation to deductible liabilities when the ongoing enforceable liability has ended, through the existing employer withholding mechanisms in Part IV of the Child Support (Registration and Collection) Act 1988 .

 

Departure Authorisation Certificates

 

This amendment makes changes to the way the departure authorisation certificate provisions operate by providing the Child Support Registrar with an additional ability to refuse to issue a certificate.  This addition would only occur in circumstances where a security is offered but the Registrar is not satisfied it is likely that satisfactory arrangements will be made to wholly discharge the relevant outstanding child support liability or carer liability.

 

Child Support Income Reporting Requirements

 

This amendment simplifies child support income reporting requirements for low income parents, where the parent is not required to lodge a tax return.  It will allow the Child Support Registrar to determine the amount of the person’s adjusted taxable income for that year to be the relevant self-support amount.

 

 

 

 

 

 

Financial impact statement

 

MEASURE	FINANCIAL IMPACT OVER THE FORWARD ESTIMATES (2021-22 - 2024-25)
Employer Withholding	$8.535 million
Departure Authorisation Certificates
Income Reporting Requirements

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

A Statement of Compatibility with Human Rights has been completed in relation to the amendments in the Bill in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 , and assesses that the amendments are compatible with Australia’s human rights obligations. A copy of the Statement of Compatibility with Human Rights is at the end of this Explanatory Memorandum.

SOCIAL SERVICES LEGISLATION AMENDMENT

(CHILD SUPPORT MEASURES) BILL 2023

 

NOTES ON CLAUSES

 

Abbreviations used in this explanatory memorandum

 

• Child Support Assessment Act means the Child Support (Assessment) Act 1989;

 

• Child Support Registration and Collection Act means the Child Support (Registration and Collection) Act 1988;

 

• Income Tax Assessment Act means the Income Tax Assessment Act 1936 ;

 

• ATO means the Australian Taxation Office

 

• Registrar means the Child Support Registrar, established under Part II of the Child Support Registration and Collection Act

 

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Child Support Measures) Act 2023.

 

Clause 2 provides a table setting out the commencement dates of the various sections in, and Schedule to, the new Act.

 

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule to the Bill has effect according to its terms.

 

 

Schedule 1 - Amendments

 

Summary

 

This Schedule amends the Child Support Assessment Act, and the Child Support Registration and Collection Act, to:

 

·          extend the application of the Registrar’s employer withholding collection powers;

·          allow the Registrar to refuse to issue a departure authorisation certificate where a security is offered unless satisfied that it is likely that the parent will make suitable arrangements to pay their outstanding liabilities; and

·          introduce a new default income for parents not required to lodge a tax return, to simplify the income reporting requirements for payers and payees.

 

Background

 

The child support scheme aims to ensure that children from separated families receive an appropriate level of financial support from their parents.

 

The Registrar delivers the scheme and provides services to parents and carers to assist them to apply for a child support assessment and facilitate the collection and transfer of child support payments, under the Child Support Registration and Collection Act.

 

The Registrar will make a child support assessment (under Part 5 of the Child Support Assessment Act), to calculate the required amount of child support payable.  A child support assessment will detail the liability each parent has for the maintenance (or payments) of each of the children in the child support assessment.

 

Child support payments are calculated according to an administrative formula that uses an income shares approach and is based on research into the cost of raising children in Australia.  Child support payments can be transferred between parents privately, or the Registrar can collect and transfer the payments on parents’ behalf.

 

Where payments are not made voluntarily, the Registrar has a range of powers to enforce the collection of child support.  These include:

a)     directing an employer to deduct child support from a parent’s salary or wage;

b)     intercepting tax refunds;

c)     collecting via third parties such as banks;

d)     deducting payments from social security and other government payments;

e)     preventing a person from leaving Australia without paying the debt or making a suitable payment arrangement; and

f)      litigation to recover a child support debt in any court with appropriate jurisdiction.

 

Most child support decisions can be reviewed. If a parent disagrees with a decision made on their case, they can lodge an objection with Services Australia for an internal review.  If either parent disagrees with the objection decision, they can apply to the Administrative Appeals Tribunal for an independent review of the decision.

Explanation of the changes

 

Part 1 — Departure authorisation certificates

 

This amendment makes changes to the way the departure authorisation certificate provisions operate by providing the Registrar with an additional ability to refuse to issue a certificate.  This would only occur in circumstances where a security is offered but the Registrar is not satisfied that arrangements will likely be made to wholly or substantially discharge the relevant outstanding child support liability or carer liability

 

Where a person (or carer) has a child support liability (or carer liability), and they owe a child support debt that is unpaid, under Part VA of the Child Support Registration and Collection Act, the Registrar can make an order prohibiting the person from departing Australia (a departure prohibition order).

 

The Registrar must take into account a number of factors when considering whether to make a departure prohibition order.  These include whether the person has persistently and without reasonable grounds failed to pay child support debts, and whether the person has wholly discharged their child support or carer liability.

 

A person who is subject to a departure prohibition order may apply for a certificate authorising them to leave Australia for a foreign country.  The Registrar must issue a departure authorisation certificate in certain circumstances, including where the Registrar is satisfied that the person will return to Australia.

 

If the Registrar is not satisfied of the initial considerations, the Registrar must still issue a certificate if the person provides appropriate security for their return.  If a person fails to comply with the terms of the certificate, the security provided is forfeited to the Commonwealth.

 

These amendments will mean that if the Registrar is not satisfied it is likely that arrangements will be made for the person’s liability to be wholly discharged within a reasonable period of time, the Registrar will be able to refuse to issue a certificate even if appropriate security is offered.  These amendments will not affect the Registrar’s obligation to issue a certificate if satisfied it should be issued on humanitarian grounds, or if refusal to issue would be detrimental to Australia’s interests.

 

Child Support (Registration and Collection) Act 1988

 

Item 1 inserts a new definition in subsection 4(1) of departure authorisation certificate , which references the existing definition in subsection 72K(1).

 

Item 2 repeals and substitutes paragraph 72L(3)(a), which provides that the Registrar must issue a departure authorisation certificate where they are satisfied it is likely, within a period the Registrar considers appropriate, they will be required to revoke the relevant departure prohibition order under subsection 72I(1), and a security for the person’s return to Australia has been given under section 72M.

 

Subsection 72I(1) provides that the Registrar must revoke a departure prohibition order if the person no longer has a child support liability or carer liability, the person has made arrangements satisfactory to the Registrar for the liability to be wholly discharged, or the Registrar is satisfied that the liability is completely irrecoverable.

 

Substituted subparagraph 72L(3)(a)(i) provides that a certificate must be issued if the Registrar is satisfied that if the departure authorisation certificate is issued it is likely, within a period that the Registrar considers appropriate, that subsection 72I(1) will be satisfied, and the Registrar will be required to revoke the departure prohibition order.  This is similar to considerations already before the Registrar under subparagraph 72L(2)(a)(ii).  In contrast, substituted subparagraph 72L(3)(a)(i) does not require that arrangements satisfactory to the Registrar to revoke the departure prohibition order are in place, but instead that it is likely that they will be in place within a period that the Registrar considers appropriate.

 

This is in addition to the requirement, replicated in new subparagraph 72L(3)(a)(ii), that the person has given security under section 72M for the person’s return to Australia.

 

Item 3 omits and substitutes the previous reference in paragraph 72L(3)(b) applying if the person is unable to give a suitable security, that was limited to despite this, requiring a departure authorisation certificate be given on humanitarian grounds or where it would be in Australia’s interests. 

 

The substituted words provide that where the Registrar is either not satisfied that substituted subparagraph 72L(3)(a)(i) will be met, or that the person is unable to give a security, the Registrar is none the less required to issue a certificate where humanitarian grounds require it, or where refusal would be detrimental to Australia’s interests.  The Registrar will therefore still always be required to issue a departure authorisation certificate on humanitarian grounds, or where refusing to issue the certificate will be detrimental to Australia’s interests, despite no security being given or circumstances existing that make it likely the Registrar will revoke the departure prohibition order.

 

Item 4 provides that the amendments made by Part 1 apply in relation to applications for departure authorisation certificates made on or after the commencement of this item.

 

Part 2 — Extending employer withholding

 

This part extends the Registrar’s ability to collect amounts due to the Commonwealth in relation to deductible liabilities where the ongoing enforceable liability has ended, through the existing employer withholding mechanisms in Part IV of the Child Support Registration and Collection Act.

 

Where a person has an enforceable maintenance liability, the Registrar can collect amounts that are due.  One way this is achieved is by the Registrar requiring employers to make deductions from the salary or wages of an employee who is a payer of child support for amounts relating to deductible liabilities and remitting those deducted amounts to the Registrar (under Part IV of the Child Support Registration and Collection Act).

 

The Registrar must, as far as practicable, collect amounts due to the Commonwealth by a payer (who must be an employee) of a current or ongoing enforceable maintenance liability under or in relation to a deductible liability (as described in section 43 of the Child Support Registration and Collection Act) by deduction from their salary or wages.

 

The amendments provide for the Registrar using the employer withholding provisions of the Child Support Registration and Collection Act to collect deductible liabilities where a person’s ongoing child support liability has ended, but they still have outstanding child support and related debts.  This will enable the employer withholding provisions to be applied, if necessary, along with other methods of debt recovery, after an enforceable maintenance liability period has ended.

 

Child Support (Registration and Collection) Act 1988

 

Item 5 repeals and substitutes subsection 43(1). New subsection 43(1) provides that the general rule of collection by automatic withholding will apply to employees who are payers of a deductible liability.  These deductible liabilities are the payer’s enforceable maintenance liability, a liability to pay a child support debt, a liability to pay a child support related debt, or a carer liability.

 

The result of this item will be that where the payer is an employee, employer withholding will be able to commence in relation to child support cases that have ended if an employee still has an unresolved liability to pay a child support debt, a child support related debt or a carer liability (and no ongoing child support liability).

 

Where a registered liability is enforceable, section 30 results in the liability becoming a debt to the Commonwealth from time to time, as amounts are payable, in accordance with the particulars of the liability entered on the Child Support Register.

 

There may be circumstances where a previously enforceable maintenance liability is no longer enforceable.  These include where an election is made by the payee or jointly by the payee and payer (section 38A) that the liability no longer be enforced, due to a low-income non-enforcement period (section 37B), as a result of a decision by a Court or the Administrative Appeals Tribunal (section 37), where the payee ceases to be the main provider of ongoing daily care for the child covered by the maintenance liability (section 39B), or otherwise due to a decision by the Registrar (section 38B) or because the particulars of the liability entered in the Child Support Register are varied so that the liability is no longer enforced (section 38).  In these circumstances, child support debts will not accrue such that they are later able to be collected by employer withholding.

 

A note to the subsection directs the reader to subsection 4(1) for the definition of ‘employee’. A second note alerts the reader that for those engaged under a contract for services, the application of this Part is provided for in section 65AA.

 

Item 6 repeals and substitutes subsection 43(3) to provide that subsection 43(2) does not apply if the particulars of the entry in the Child Support Register contain a statement that employer withholding does not apply in relation to the enforceable maintenance liability.

 

The Registrar must, as far as practicable, use employer withholding to collect amounts due to the Commonwealth under or in relation to a deductible liability.  Substituted subsection 43(3) will allow payers to continue to make an election for employer withholding not to apply while the maintenance liability remains enforceable, and, if the Registrar is satisfied that timely repayments will be made, the particulars in relation to the enforceable maintenance liability entry in the Child Support Register to be varied.

 

The amendments made by this item will not provide payers the ability to elect that employer withholding not apply in circumstances where they have no current enforceable maintenance liability. This may be because their child support case has ended (and they therefore have no ongoing child support liability) but an unresolved liability to pay a child support debt, pay back a child support related debt or a carer liability remains.  The Registrar will still be required to collect amounts due to the Commonwealth under or in relation to a deductible liability using employer withholding, but only where practicable to do so.

 

Item 7 omits the words ‘an enforceable’ in relation to a maintenance liability in paragraph 45(2)(a) and substitutes the words ‘a registered’ in relation to the maintenance liability.  This will continue to require variation or revocation of a notice given under subsection 45(1), including after a liability ceases to be enforceable, to take account of variation of particulars of the maintenance liability entered into the Child Support Register.

 

Item 8 adds new subsection 45(4), to avoid doubt, which clearly maintains the effectiveness of a notice to an employer to make deductions from a payer’s wages, even if the nature of the underlying liability changes.

 

This subsection clarifies that where the nature of the deductible liability changes to being either enforceable or not enforceable (such as in circumstances described in Item 5 above), the notice provided to an employer remains in force on and after the occurrence of the event identified in paragraphs 45(4)(a) or 45(4)(b), subject to any variation or revocation of the notice.  In effect, once the notice has been given the weekly deduction rate specified in the notice (regardless of whether the nature of the deductible liability changes) will continue, subject to any future variation or revocation. This gives the Registrar the choice of leaving existing deduction arrangements in place, or if this is not appropriate, changing them.

 

Item 9 provides that the amendments made by Part 2 apply in relation to a deductible liability (within the meaning of the Child Support Registration and Collection Act as so amended) whether:

a)     the payer becomes liable to pay an amount under or in relation to the liability; or

b)     such an amount becomes due to the Commonwealth; or

c)     a notice is given under section 45 of that Act in relation to the liability;

 

before, on or after the commencement of this item.

 

Part 3 — Determining adjusted taxable income

 

This amendment simplifies child support income reporting requirements for low income parents, where the parent is not required to lodge a tax return.  It will allow the Registrar to determine the amount of the person’s adjusted taxable income for that year to be the relevant child support self-support amount.

 

Where the Registrar makes an administrative assessment of child support (under Part 5 of the Child Support Assessment Act), one of the elements the Registrar considers is a person’s taxable income.  This is taken from a person’s taxable income assessed under the Income Tax Assessment Act.

 

If the person does not have a tax assessment establishing their taxable income, then the Registrar may determine the amount of the person’s adjusted taxable income for that year.  In practice, the taxable income is determined using available information based upon a hierarchy, starting with the most reliable method and after a number of steps ending with the least reliable or least accurate.

 

A person may not be required to lodge a tax return for a particular year when their income is under the tax-free threshold for that particular year.  However, there are some circumstances where a person will still need to lodge a tax return, including where a person was a liable or recipient parent under a child support assessment.

 

The Commissioner of Taxation can exempt a parent with a child support assessment from being required to lodge a tax return if their taxable income is less than a specified amount.  This exemption is dependent on whether they were in receipt of a specified Australian Government pension, allowance or payment.  This is also known as a non-lodgement or ‘return not necessary’ advice.

 

This amendment provides the Registrar with an additional method for working out a person’s taxable income for a particular year under where satisfied that a person is not required to lodge a tax return.

 

Where the Registrar is so satisfied, in practice on the basis that a person has received advice from the Commissioner of Taxation that a return is not necessary, their income for that year can be deemed to be the equivalent of the child support self-support amount during the parent’s last year of income in relation to the relevant child support period.  The self-support amount is the amount that is normally deducted from the parent's adjusted taxable income for their own support.

 

Child Support (Assessment) Act 1989

 

Item 10 consequentially inserts the words ‘the relevant period ’ after the words ‘a child support period’ in subsection 58(1) in order to establish a defined term for reference later in section 58.

 

Items 11, 13 and 15 substitute the new defined term, ‘the relevant period’, for the words ‘the period’ in paragraph 58(1)(a), and ‘relevant period’, for the words ‘child support period’ in paragraph 58(4)(d) and subsection 58(5).

 

Item 12 inserts new subsections 58(2A) and 58(2B), which allow an additional method for the Registrar to be able to determine a parent’s adjusted taxable income.  Section 58 applies if a parent is to be assessed in respect of the costs of a child in relation to a child support period.  If either the parent’s taxable income in relation to the period has not been assessed under an Income Tax Assessment Act, or the Registrar is unable to ascertain whether or not the parent’s taxable income has been assessed, the Registrar will use the most reliable method possible, in subsections 58(2) to 58(4) to determine a parent’s adjusted taxable income.

 

New subsection 58(2A) applies where the Registrar is satisfied that a parent is not required, under section 161 of the Income Tax Assessment Act, to give the Commissioner of Taxation a return for the last relevant year of income for the purposes of assessing their taxable income.  This is commonly known as a ‘return not necessary’ notice or advice, which is issued in circumstances where a liable or recipient parent under a child support assessment is receiving government benefits for an entire income year and their income was less than a specified amount for that relevant year.  If the Registrar is satisfied that this has occurred, they may determine that the parent’s adjusted taxable income for the last relevant year of income is the amount under new subsection 58(2B).

 

New subsection 58(2B) provides that the amount is the equivalent of one third of the annualised MTAWE figure for the relevant June quarter in relation to a child support period if that period were to start on 1 January during the parent’s last relevant year of income in relation to the relevant period.  This is the same as the self-support amount at 1 January during the parent’s last relevant year of income in relation to the relevant period.  If the Registrar is not satisfied that the parent is not required to lodge a tax return, (in practice, has not received a return not necessary notice or equivalent) then they will continue to use the next most reliable method for determining a parent’s adjusted taxable income in section 58.

 

Item 14 inserts reference to new subsection 58(2A) in paragraph 58(5)(a).  This provides that if the Registrar can determine an income under subsection 58(2A) or (2B) then they should do so, rather than use the default figure provided in subsection 58(5). This continues to allow the Registrar to use the most reliable method possible to determine a parent’s adjusted taxable income for their last relevant year of income.

 

Item 16 provides that the amendments made by Part 3 apply in relation to child support periods starting on or after the commencement of this item.

 

 

 

 

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES LEGISLATION AMENDMENT

(CHILD SUPPORT MEASURES) BILL 2023

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

 

The child support scheme (Scheme) was introduced in 1988 to ensure children from separated families are supported by both parents.  For this reason, child support assessments are generally determined by a child support formula, which calculates how much child support is payable based on each parents’ income, the number and age of the children in the assessment, and the care arrangement in place.

 

In 2021-22, the Scheme contributed to the economic security of 1.1 million children, by assessing $3.71 billion in child support payments.  The Child Support Registrar collected and transferred $1.82 billion in liabilities (agency collect), and the remaining child support was private managed by parents (private collect).

 

Since its introduction, the Scheme has assessed $33.32 billion in child support payments and has collected 94.9 per cent of child support liabilities raised [1] .  While the Scheme is effective in reducing the poverty rates in single parent families, the Australian Government is concerned that $1.69 billion in child support debt has accrued.  While this amount represents a small portion of the total liabilities raised over 35 years of the Scheme, the Government is committed to ensuring that children are financially supported by their parents.

 

Research has shown that child support paid on time reduces single parent poverty by 21 per cent [2] .  This is particularly relevant given the median income of parents who receive child support was $33,653 (as at December 2022).

 

While most parents take their child support responsibility seriously, the Government recognises that sometimes parents choose to deliberately avoid meeting their child support obligation.  The Child Support Registrar’s extensive enforcement powers include: the ability to directly garnishee wages; recover funds from bank accounts, tax returns or certain income support payments; prevent parents from travelling overseas; and litigation.

 

The Bill proposes four measures to ensure the Scheme continues to be effective in the fair assessment of child support, and collection of child support debt.

 

Measure 1 — Departure authorisation certificates

 

A Departure Prohibition Order (DPO) can be issued to prevent a child support parent from travelling overseas where they have persistently failed to pay a child support debt.  The Child Support Registrar is currently required to issue a Departure Authorisation Certificate (DAC) if a parent provides appropriate security which is then refunded on their return to Australia.

 

The Bill allows the Child Support Registrar to refuse to issue a DAC for parents, unless satisfied that it is likely that the parent will make suitable arrangements to pay their debt within an appropriate period of time. This will ensure that parents with the means to offer a DAC security, but who elect to not use those means to meet their child support obligation, will need to make arrangements to repay their debt in order to travel.

 

Parents would continue to be able to apply for a DAC on other grounds such as for humanitarian reasons, because it is in Australia’s interests, or because the Child Support Registrar is satisfied the debt will be resolved in an appropriate period of time

 

Measure 2 — Extending employer withholding

 

This Bill expands when employer withholdings can be used, by allowing the Child Support Registrar to use employer withholding to collect child support debts, carer debts and child support related debts (such as penalties for non-payment), that relate a period when the relevant child support liability was enforceable under the Child Support (Registration and Collection) Act 1988 , even after the liability stops being enforceable.

 

Increasing the active collection of unpaid child support is expected to recover up to $164 million in debt from 18,250 parents, and reduces the risk of ongoing increases to the total child support debt pool.

 

Measure 3 — Determining adjusted taxable income

 

A parent is able to meet their tax lodgement obligation by lodging a tax return, or, if they are not required to lodge a tax return, lodging a Return Not Necessary (RNN) advice with the Australian Taxation Office (ATO).  A child support parent may not be required to lodge a tax return for a financial year if they received a specified Australian Government pension, allowance or payment on each day of that year and has adjusted taxable income (ATI) that is less than the child support self-support amount ($27,508 in 2023).

 

Tax lodgement is critical to the accuracy of child support assessments as taxable income is the basis on which the Child Support Registrar is able to determine a parent’s financial capacity, and calculate their child support assessment. 

 

 

After a parent lodges their tax return for the last relevant financial year, the Child Support Registrar receives the parent’s tax assessment from the ATO, and is generally required to calculate a new child support assessment.  When a parent lodges a RNN advice, an income tax assessment is not undertaken by the ATO, and, under current child support law, the parent may need to advise Services Australia of their ATI for that financial year.

 

The Bill allows the Child Support Registrar to deem a parent’s income to be equal to the self-support amount as at 1 January of the financial year they lodge a RNN advice. This will reduce the administrative burden for up to 150,000 parents each year who lodge an RNN advice and need to separately advise the Child Support Registrar of their ATI.  It will also improve income accuracy and prevent child support debts for parents who do not advise the Child Support Registrar of their ATI, and for whom a higher provisional income amount is consequently determined.  These low-income parents have a high incidence of child support debt that they are unlikely to have the capacity to pay.

 

Human rights implications

 

This Bill engages the following rights outlined in the Convention on the Rights of the Child:

·          both parents have common responsibilities for the upbringing of the child;

·          the right of every child to an adequate standard of living;

·          Governments to take all appropriate legislative and administrative measures to ensure children receive the protection and care they need, including taking into account the duties of that child’s parents.

 

The Bill engages the following rights outlined in the International Covenant on Economic, Social and Cultural Rights:

·          the right to an adequate standard of living;

·          the right to work;

·          the right to just and favourable work conditions.

 

The Bill engages the following rights outlined in the International Covenant on Civil and Political Rights:

·          the right to social security;

·          the right to freedom of movement, including to leave any country, including their own;

·          the right to freedom from arbitrary or unlawful interference.

 

Convention on the Rights of the Child

 

Article 18 recognises that both parents have common responsibilities for the upbringing and development of the child.  Article 27 recognises that parents have the primary responsibility to ensure their children have an adequate standard of living.  Article 27 also requires Governments to secure the recovery of maintenance for the child from the parents.

 

This Bill engages these rights by strengthening the Government’s ability to enforce a parent’s responsibility to pay child support, and ensuring that both parents financially support the living standards of their children through the payment of child support.  In doing so, the Bill aligns with Article 3 of the CRC which requires Governments to take all appropriate legislative and administrative measures to ensure children receive the protection and care they need, including taking into account the duties of that child’s parents.

 

In 2021-22, Services Australia collected around $743 million in child support through employer withholding.  The expansion of employer withholding recognises the effectiveness and efficiency of collecting child support directly from salaries and wages, and ensures that, regardless of the status of the case (active or ended), Services Australia is able to implement an active collection arrangement for unpaid child support.

 

Tightening compliance for parents with a DPO in place because they have high levels of child support debt and a history of non-compliance, will more strongly influence them to meet their child support obligation.  This is intended to protect the living standards of children by ensuring child support debts are paid, and ongoing child support payments are delivered regularly and on time.  In 2020-21, the average child support debt collected from parents with a DPO in place was nearly $21,500.  This measure is expected to impact around 110 parents with an average child support debt of $43,100.

 

International Covenant on Economic, Social and Cultural Rights

 

The right to an adequate standard of living.

 

Article 11 recognises the right of everyone to an adequate standard of living. 

 

This Bill engages this right by improving income accuracy for parents who are not required to lodge a tax return. The Bill recognises that the responsibility to recover maintenance must be balanced by the Government’s obligation to calculate a parent’s child support assessment based on their actual financial capacity. 

 

When a parent lodges an RNN advice, and a higher provisional income is applied, the impact on the parent will depend on the provisional income amount, the role of the parent and the care arrangement in place.  Of the 150,000 low-income parents who lodge a RNN advice each year, around 70 per cent are a parent who receives child support (payee), and 30 per cent are a parent who pays child support (payer). 

 

The tables below show the assessment inaccuracy for assessments with one child aged under 13 years of age depending on if the payee or payer lodges a RNN advice, the income of the other parent, and the care arrangement in place.  The tables compare the effect of this Bill (deem income to be the self-support amount ($27,508)) with the application of a default provisional income ($55,016) which may be used when the Child Support Registrar has no income information for that parent.  A positive value indicates the parent is eligible to receive child support.  A negative value indicates the parent is liable to pay child support.

 

 

 

Table 1: Parent 1 has 100% care of a 5 year old child

Parent 2’s income	Parent 1 lodges RNN advice by income used				Parent 1’s income	Parent 2 lodges RNN advice by income used
	$27,508	$55,016	Difference			$27,508	$55,016	Difference
$20,000	$493	$493	$0		$20,000	-$493	-$4,676	-$4,183
$40,000	$2,124	$2,124	$0		$40,000	-$493	-$4,676	-$4,183
$60,000	$5,524	$5,321	-$203		$60,000	-$493	-$4,505	-$4,012
$80,000	$8,700	$8,415	-$285		$80,000	-$493	-$4,410	-$3,917
$100,000	$11,700	$11,092	-$608		$100,000	-$493	-$4,209	-$3,716

 

Table 2: Parent 1 has 65% care and Parent 2 has 35% care of a 5 year old child

Parent 2’s income	Parent 1 lodges RNN advice by income used				Parent 1’s income	Parent 2 lodges RNN advice by income used
	$27,508	$55,016	Difference			$27,508	$55,016	Difference
$20,000	$0	-$1,169	-$1,169		$20,000	$0	-$3,507	-$3,507
$40,000	$1,593	$424	-$1,169		$40,000	$531	-$2,976	-$3,507
$60,000	$4,143	$2,864	-$1,279		$60,000	$1,381	-$2,049	-$3,430
$80,000	$6,525	$5,209	-$1,316		$80,000	$2,175	-$1,203	-$3,378
$100,000	$8,775	$7,266	-$1,509		$100,000	$2,925	-$384	-$3,309

 

Table 3: Each parent has 50% care of a 5 year old child

Other parent income	Parent with 50% care lodges RNN advice by income used
	$27,508	$55,016	Difference
$20,000	$0	-$2,338	-$2,338
$40,000	$1,062	-$1,276	-$2,338
$60,000	$2,762	$408	-$2,354
$80,000	$4,350	$2,002	-$2,348
$100,000	$5,850	$3,441	-$2,409

 

Around 70 per cent of child support customers who lodge an RNN advice are the parent who receives child support.  The Bill will address the issue that if a parent who receives child support does not advise their income, they may receive too little child support.  It will also address the issue that if a parent who pays child support does not advise their income, their child support obligation may exceed their capacity to financially support their children. These low-income parents have a high incidence of child support debt that they are unlikely to have the capacity to pay.

 

Improving the accuracy of child support incomes will ensure parents receive and pay the right amount of child support.  This supports the living standards of children, and also ensures that parents who receive Family Tax Benefit (FTB), receive the correct entitlement.

 

Measures which strengthen the collection of child support debt (expanding employer withholding, tightening DAC rules) engage these rights by improving the active payment arrangements from a child support debtor to the parent who is eligible for maintenance.  While the expansion of employer withholding primarily affects assessments which have ended, and means that children did not benefit from this financial support when intended, it does ensure that parents who are owed child support will be reimbursed for the costs they have already met of raising their children.

 

The right to work, and the right to just and favourable work conditions.

 

Article 6 recognises the right to work, which includes the right of everyone to gain their living by work.  Appropriate safeguards should be in place to safeguard this right. 

 

Article 7 recognises the right of everyone to the enjoyment of just and favourable conditions at work.

 

This Bill engages these rights by expanding the use of employer withholding to collect child support debts, carer debts and child support related debts from parents whose assessment has no ongoing child support liability. While the deduction of these debts from salaries and wages engages the right to work and just and favourable conditions, it does not impact an employee’s total earnings or introduce new obligations for employers. 

 

Employer withholding is the default payment arrangement when the Child Support Registrar is responsible for collecting child support (agency collect), noting that parents are able to apply to pay directly when they have an ongoing liability. 

In 2021-22, Services Australia collected $743 million in child support through employer withholding from around 91,000 child support parents.

 

Employer withholding as a child support collection method does not impact a parent’s total salary or wages, and does not determine their capacity to pay child support.  A parent’s capacity to pay child support is based on their child support income which is calculated by reducing their ATI by the self-support amount to ensure their personal living costs are recognised.  Paying parents are only required to pay a proportion of income above this amount as child support.  This means that the self-support amount is not the only income available to parents for self-support purposes.

 

Where a parent is subject to employer withholding, a protected earnings component is built in to quarantine a portion of the payer’s income prior to the employer making deductions towards the child support liability.  The protected earnings amount in 2023 is $456.53 per week and is updated annually in line with changes to the maximum basic rate of JobSeeker payment. While the protected earnings amount does not absolve a payer from their child support liability, it ensures they have sufficient income week to week for self-support. 

 

Child support legislation contains other protections for parents who are subject to employer withholding. It is an offence for an employer to refuse to pay or employ a person, dismiss, terminate, prejudice, or intimidate a person (or threaten any of these actions) on the basis the employer is required to comply with employer withholding obligations.  Employers are prevented from disclosing child support information, are required to keep records of all child support deductions made and paid, and must provide access to authorised Services Australia officers to any documents related to employer withholding.

 

International Covenant on Civil and Political Rights

 

The right to social security.

 

Article 9 recognises the right of everyone to social security, including social insurance.

 

By improving the income accuracy of child support customers who lodge an RNN advice, this Bill engages Article 9 through the Scheme’s interactions with Government payments which have an annual income test based on ATI, and/or which apply a maintenance income test. 

 

Any impact of this Bill on an individual’s entitlement to social security or a family assistance payment would not be considered an impingement on the right to social security where that change relates to ensuring the calculation of their entitlement is based on accurate income.

 

Some Government payments are based on an annual income test which uses ATI to determine an individual’s financial need.  ATI is used for payments such as FTB Part A, FTB Part B, Child Care Subsidy, Youth Allowance, Carer Allowance, concession cards, Paid Parental Leave, and is reduced by how much child support an individual (or their partner) pays. 

 

If the Bill results in a parent paying less child support, this may result in a higher ATI and a lower entitlement to a Government payment.  The financial benefit of a lower child support obligation will generally be higher than any reduction to a payment entitlement because payments have income free areas, and apply income test tapers which are a proportion of each dollar of child support paid. 

 

If the Bill results in a parent paying more child support, this may result in a lower ATI and be offset by a higher entitlement to a Government payment. 

 

The receipt of child support does not affect a parent’s ATI but it may affect an individual’s entitlement to Government payments which apply a maintenance income test (FTB Part A, Youth Allowance and ABSTUDY).

 

If the Bill reduces the amount of child support a parent is eligible receive (i.e. the Bill improves the accuracy of a payers income), any reductions in child support may be offset by lower maintenance income test reductions and a higher rate of payment. This impact is reasonable and proportionate because the change relates to accuracy of incomes, rather than a change in entitlement.

 

If the Bill increases the amount of child support a parent is eligible to receive (i.e. the Bill improves the accuracy of a payees income), any increases in child support may result in a higher maintenance income test reduction and a lower rate of payment.  The parent is expected to be better off financially, as the higher child support entitlement would generally exceed any decreased payment entitlement due to a higher maintenance income test reduction.

 

The right to freedom of movement, including to leave any country, including their own.

 

Article 12 recognises the right of every person to liberty of movement, and freedom to leave any country, including their own.

 

The Bill amends the circumstances in which a DAC must be issued to a person who is subject to a DPO, by inserting an additional criterion which the Child Support Registrar must consider before issuing a DAC. If a parent does not qualify for a DAC under these expanded rules, the parent could be prevented from departing Australia, which would limit their right to freedom of movement under Article 12.

 

The proposed limitation on the right to freedom is reasonable, necessary and proportionate to achieving a permissible purpose under Article 12(3).  That is, this right can be restricted under domestic law on the grounds that the rights and freedoms of others is impacted.  Where a parent does not meet their child support obligation and has a debt to another person, they impact the rights of the child to receive maintenance and the rights of the child and the other party to an adequate standard of living.

 

This Bill does not introduce a new limitation to the freedom of movement.  Instead it tightens a current limitation, ensuring that child support debtors subject to a DPO, and with a history of defaulting on their child support debt payment obligations, are no longer able to bypass the restrictions imposed by the DPO just by providing a security for their return to Australia. Parents will continue to be able to apply for a DAC on other grounds including:

·          the parent is likely to depart and return to Australia within a specified period of time, and it is likely the Child Support Registrar will be required to revoke the DPO (e.g. because the Child Support Registrar is satisfied the child support debt will be paid in a reasonable timeframe), or

·          for humanitarian grounds, or

·          because it is in Australia’s interests.

 

No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

 

Article 17 recognises the right for individuals to not be subject to arbitrary or unlawful interference with their privacy, family, home or correspondence.

 

The Bill engages this right by expanding the Child Support Registrar’s current collection and enforcement powers which are exercised for the express purpose of enforcing child support liabilities.  Expanding the Child Support Registrar’s powers may be viewed by affected individuals as an unlawful or arbitrary interference into the lives of persons; however, these amendments are necessary for the Government to engage its responsibilities to ensure other human rights and responsibilities are protected.  For example, to protect the rights of children to an adequate standard of living and maintenance is protected.

 

To the greatest extent possible in the obtainment of the objects of the Child Support (Registration and Collection) Act 1988 and the Child Support (Assessment) Act 1989 , it is the intent of the Commonwealth Parliament that the Acts are administered in such a way as to limit interference with the privacy of persons.  Additionally, there are privacy and secrecy provisions contained in the child support legislation that protect the information of individuals and impose criminal penalties for unauthorised disclosure.

 

Conclusion

 

The amendments in the Schedule are compatible with human rights because to the extent they limit human rights, those limitations are necessary, reasonable, and proportionate. 

 

[Circulated by the authority of the Minister for Social Services, the Hon  Amanda Rishworth MP]