21 June 2001 Speech Notes

Child Support Amendment Bill first reading

I move that the Child Support Amendment Bill be now read a first time.

Following the first reading, I will move that the bill be referred to the Social Services Committee for consideration and that the committee present a final report on the bill on or before Monday 27 August. It is necessary for the bill to be passed by October 2001 to enable the Inland Revenue Department to do the work leading to the issue of assessments for the child support year beginning 1 April 2002.

Mr Speaker, the underlying principle of the child support scheme is that parents are financially responsible for their children, whether or not they live together. And the level of support provided by liable parents should be in proportion to their income.

This bill reinforces those principles by adjusting two key thresholds in the scheme, the level of the minimum child support payment and the upper level of income for which a liable parent can be assessed.

The current minimum rate of child support is $520 a year, or $10 a week. This rate was set in 1990 and has not been increased since then. It is the amount paid by about 79,000 low-income liable parents.

The bill proposes to restore the original value of the minimum child support payment by raising it to $663 a year, or $12.75 a week. This increase reflects movements in the Consumer Price Index from 1990 to that expected by April 2002, when the amendment will take effect.

Mr Speaker, it is important that all parents to the best of their ability accept their responsibilities towards their children, and to recognise that these rates have not increased for over a decade.

A complementary amendment raises the level of investment income allowed to liable parents who are long-time hospital patients or prisoners, who are exempted from paying child support if they meet certain income criteria. That investment income threshold increases from $10 a week to $12.75 a week, in line with the increase in the minimum payment.

In the future, both the minimum payment and the income investment threshold will be linked to the Consumer Price Index, and adjusted annually, to maintain relativity.

Mr Speaker, at the other end of the spectrum, the maximum level of income for assessment purposes is twice the yearly equivalent of the average ordinary-time weekly wage. This currently works out at $67,461 a year.

The bill proposes to raise that maximum income level to two and a half times the yearly equivalent of the average ordinary-time wage. This will raise the maximum income level for assessment purposes to $84,461 a year.

The result is that liable parents earning more than the current maximum will make a greater contribution to their children's financial support. It is estimated that about 3,200 liable parents will be affected. The effect of the change will vary according to the number of children involved and the liable parent's present domestic situation.

As a rough guide, however, someone who lives alone, pays child support for two children, and earns $75,000 gross a year will pay an extra $149 a month in child support. Someone in the same circumstances who earns $85,000 gross will pay an extra $338 a month.

The amendment will apply from 1 April next year.

Mr Speaker, the bill also introduces a number of minor remedial amendments relating to end-of-year assessment issues. Their purpose is to ensure that the original policy intent is reflected in the legislation, and that the legislation works effectively, to the benefit of all concerned. These amendments apply from 1 April 2001, but any liable parents who have objected to incorrect assessments before the date of the bill’s introduction will have their reassessments protected.

I commend the Child Support Amendment Bill to the House.

ENDS

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