Editorial: Child support overhaul long overdue

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United Future Party leader, Peter Dunne. File photo / Sarah Ivey
United Future Party leader, Peter Dunne. File photo / Sarah Ivey

The fact that $2 billion is owed in unpaid childcare payments and penalties speaks volumes about the shortcomings of the child support system.

Clearly, many parents are not only alienated by the present arrangements but are easily able to wash their hands of them. Their children are the ultimate losers.

Reform along some of the lines suggested in a Government discussion document is overdue. Eighteen years have passed since the system was last overhauled. Much has happened subsequently to warrant change.

The document, Supporting Children, has an array of options. One of the most eye-catching is that the income of both parents should be taken into account when childcare payments are set.

That seems a reasonable notion given more women are now in the workforce, especially in part-time jobs. Additionally, it is right in principle that parents should provide financial support according to their capacity to do so, whether or not they are living with their children.

Indeed, such a change would echo the situation if the parents were still together. While some women could be dissuaded from seeking work, that hardly negates the value of this income-shares approach.

Most important, it would introduce a greater fairness. Many non-custodial parents obviously feel their financial obligations are too onerous. Some have chosen to walk away. Having done that, they face steep penalties.

Failure to pay in full and on time incurs an initial penalty of 10 per cent of the unpaid amount. A further 2 per cent is added for each month the amount remains outstanding. Unsurprisingly, $1.4 billion of the overall outstanding sum is penalties and use-of-money interest.

Not only does this indicate the futility of the present regime but it discourages those with sizeable outstanding obligations from re-engaging with the child support scheme.

Still more draconian responses, such as naming and shaming, would probably only alienate them further.

The Government should, therefore, tailor its reform to encouraging voluntary participation in a system whose fairness offers an incentive to pay and which is administered efficiently. On the latter point, the discussion document suggests child support payments could be automatically deducted from employees' income.

That seems a reasonable proposition, with the public interest outweighing any privacy concerns. Greater co-operation between Government agencies, a step that will be aided by the beefing up of the Inland Revenue Department's IT systems, is another obvious step.

Research commissioned last year by the Families Commission suggested 71 per cent of receiving parents and 24 per cent of paying parents believed the child support scheme did not work either very well or well at all.

That points to the extent to which obligations are not being met and the ease with which the system can be sidestepped. It also underlines the need for change.

Many of those angered by the present arrangements consider their individual circumstances are not being acknowledged, a situation that owes something to the formula underpinning the current scheme overriding anything else.

That might have seemed applicable in 1992, but families today are more complex. Both parents are more likely to be working, and separated fathers often do more towards caring for children. Any blanket approach will tend to founder in such circumstances.

The best of the proposals in Supporting Children go much of the way towards addressing most parents' concerns and encouraging the meeting of obligations. They should be adopted for the sake of the 210,000 children who rely on the child support scheme for financial support.

- NZ Herald

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