The biggest changes to the child support system in more than 20 years have been signed off in Parliament today and will come into place in April next year.
The changes include the formula for calculating child support payments to include both parents' income and changes to payment, penalties and debt write-off.
Debt from unpaid child support sits at $2.6 billion and 60 per cent of that is from overdue penalty payments.
Revenue Minister Peter Dunne said the current system focused too heavily on penalties and people were not coming forward to the Inland Revenue Department (IRD) to make payments.
The Child Support Amendment Bill passed a third reading today.
The Social Services Select Committee held back the changes giving IRD time to adjust its systems in order to implement the new formula.
Mr Dunne said the bill had been a long journey.
He said the changes would bring child support up to date and fairer for the 210,000 children and families involved in the scheme.
"We still have a long way to go, but as this bills stands we are a step close to having a more equitable outcome for children."
He said child support was a backstop when separated parents couldn't work out payments between them.
He said the current formula was too complex.
Labour's revenue spokesman David Cunliffe said the bill was a huge missed opportunity.
It should have been written into the bill that the interests of the child should always come first, he said.
Mr Cunliffe said the new formula was still not flexible enough to deal with the full range of family circumstances.