Child support payments could be deducted automatically from pay under proposed changes by the Government.

Revenue Minister Peter Dunne yesterday released a discussion document, Supporting Children, outlining wide-ranging proposals to change the system.

Both parents' incomes could also be taken into account when payments are set under the proposals.

Parents owe about $2 billion in unpaid child support payments and penalties. The scheme arranges financial support for the care of 210,000 children.

Mr Dunne said it needed to be fairer. "The options in the discussion document also seek to get a balance between the welfare of the parent who receives child support and the obligations of the parent who pays it," he said.

"In keeping with the need for this balance, the document asks whether child support payments should be automatically deducted from employees' income, and whether the penalty and write-off rules for child support need to be amended to provide better and more effective incentives to pay."

Another option was to change the formula used to determine the amount of child support to be paid by a parent. Mr Dunne said it could be changed to take into account factors including the cost of raising children, the degree of shared care between parents who are living apart, and the income of both parents.

"An important part of getting the scheme right will be creating a situation where paying parents are more likely to comply with their obligations voluntarily.

"They are more likely to do that if they see their obligations as fair, transparent and reasonable - and not based upon some formula that seems to have no regard for their individual circumstances."

Mr Dunne said the 18-year-old scheme was "outdated and sometimes unfair".

Families were often more complex; both parents were more likely to be working and often separated fathers had a greater role caring for children than in the past.

Mr Dunne said the scheme needed to be fairer. At the moment, for example, a father might care for a child before and after school every day but because he did not have them for 40 per cent of nights (the present test) he was not considered to have shared care.

One option was to change the measure to a tiered system starting as low as 14 per cent of nights and recognising other periods of time.

Other options included using an estimate of how much it cost to raise a child as a basis for payments, and taking both parents' income into account - not just the absent parent's.

Mr Dunne said it was better if parents could reach their own arrangements but the scheme was a good backstop when that could not be worked out.

The discussion document can be viewed on Inland Revenue's website, and submissions on it will close on October 29.

BLUEPRINT FOR CHANGE:

* Make it compulsory for child support payments to be automatically deducted from salary and wages.

* Reduce penalties after people have made repayments for a reasonable length of time.

* Provide an amnesty on penalty fees for people who pay the whole original debt.

* Allow penalties to be written off in some cases - for example, when someone is ill.

- NZPA