KEY POINTS:
Child support should be paid to sole parents on benefits, says a report released by Children's Commissioner Cindy Kiro.
Her report on child poverty says New Zealand is "increasingly out of step with other countries in not allowing child support payments to be passed on to children whose
custodial parents are on a carer's benefit".
Under current rules, only 52,000 custodial parents whose ex-partners pay child support actually receive any cash from the child support system, either because they are not on benefits or because their child support is more than their benefit.
The other 90,000 custodial parents, who are on the domestic purposes benefit, have their child support confiscated by the state to partly offset the cost of their benefits. Last year $142 million was clawed back.
"The effect of this is to reduce the financial resources available to the child and make the scheme unpopular with the parent liable for paying child support," the report says.
"Internationally, there is a growing recognition of the wider social effects of child support and the potential of child support payments to lift children out of poverty and to shore up the commitments of parents to their children.
"Passing on child support to beneficiary custodians, and treating it like any other private income, could reduce poverty for a substantial number of children whose parents do not live together.
"Child support is passed on in this way in Australia and has been estimated to have lifted about 60,000 children out of poverty."
The report says child support should be passed on to all custodial parents, but it should be counted as income which could lead to the benefit rate being reduced, depending on the parent's other income. This would give sole-parent beneficiaries an incentive to name their children's fathers.
If this is done, it proposes abolishing the penalty for not naming the father, which reduces the domestic purposes benefit by $20 a week for about 15,000 beneficiaries. Axing the penalty would "further reduce child poverty".
The report says these changes would also remove an "anomaly" which currently claws back child support from sole parents on the domestic purposes benefit, but not from couples where a liable parent and someone on a benefit become partners.
An Inland Revenue spokeswoman said: "The rationale for this is that child support is able to be retained by the Crown only to the extent that the Crown supports the children financially. Married rates of benefit do not include an additional component specifically for the support of a child."
