Rich dads owe millions

Nearly 400 Kiwi dads living the high life on more than than $100,000-a-year owe millions of dollars in child support.

The fathers, are contributing to New Zealand's billion-dollar child support debt, drive company-owned cars and enjoy overseas holidays while their former partners and children struggle to cope financially.

The situation has angered National's social welfare spokeswoman Judith Collins, who says "deadbeat dads" are essentially guilty of child neglect for reneging on their financial responsibilities they have to their children.

Figures released by the Inland Revenue Department to the Herald on Sunday last week show 387 fathers with declared incomes of $100,000 or more owe a total of $6.3m in child support.

Collins, however, believes the reality is far worse, with many high-income fathers minimising their taxable income to cheat their kids. Some become self-employed to hide their incomes or pour cash into a variety of trusts to reduce their child support liabilities. This was while their former wives and children lived off welfare or juggled extra jobs.

IRD figures show that at June 30 this year, there were a total of 140,365 liable parents. Of those 123,134 had a child support debt. Of more than $1billion owed in child support, 30 per cent of parents owed less than $500, 10 per cent owed $500 to $1000, 40 per cent owed between $1000 and $10,000 and 20 per cent owed more than $10,000.

Collins said laws needed to be tougher to ensure deadbeat dads met their financial obligations. Overdue child support needed to be treated in the same fashion as overdue taxes, where those people in default were prosecuted - and made bankrupt if necessary.

An IRD spokesperson said most liable parents would be in default of their obligations at some point, but many contacted them and most came to a mutually agreeable arrangement.

If agreement wasn't reached, the IRD would take compliance action which included compulsory deductions from wages, the issuing of deduction notices to third parties such as banks - or in the worst case scenario, legal action.

An Auckland mother, who did not wish to be named, said despite those measures, too many fathers were getting away with not financially supporting their children. Her former husband had paid nothing toward the care of their two children since their marriage had broken up three years ago.

He had a declared income of around $20,000 a year when, in fact, he was earning well in excess of $100,000 a year.

Most of his money had been squirrelled away in a trust, which the IRD seemed incapable of touching, she said. "He has a new house, a couple of vehicles and has overseas holidays. How can he do this on the money he claims he earns? The situation is ridiculous."

She had written to government ministers demanding change but had had no joy. "No one wants to know about this. My former husband is leading a very affluent lifestyle while I struggle, but no one cares."

A Wellington mother, who did not wish to be named, said it was the children who suffered most. Her former partner had been in the country's 0.5 per cent of wage earners, but had paid her nothing.

"When I think about what a difference even $50 a week would have made to my son's primary school years, it makes me incredibly sad. We couldn't afford after-school tutoring, which he needed, or music lessons and he had to give up karate when I could not afford to buy him a uniform. If only deadbeat parents could realise its their kids, not their exes, they are hurting," she said.

Defaulting liable parents by region:

Takapuna: 71 per cent
Manukau: 76 per cent
Whangarei: 73 per cent
Hamilton: 70 per cent
Rotorua: 74 per cent
Tauranga: 69 per cent
Gisborne: 74 per cent
Wellington: 69 per cent
Christchurch: 64 per cent
Dunedin: 63 per cent
Invercargill: 70 per cent
Australia: 94 per cent