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Labour, Let Downs, and Child Support

Labour, Let Downs, and Child Support

Weekly Column by Dr Muriel Newman

This week, the Column looks at soaring child support debt, and examines how Labour’s failings not only allowed it to happen, but perpetuates the situation. Last week’s fiasco over unpaid child support debt and penalties – now standing at over $730 million – is indicative of this Government’s failure to properly address an issue fraught with problems.

Since it’s inception, the Child Support Act has been problematic. Designed by the Lange Labour Government in the late 1980s, the Child Support Bill was passed into law by National in 1991 and required “liable” parents who separate to contribute towards offsetting the cost of the domestic purposes benefit. The DPB, established in 1973 to provide temporary relief to 9,234 single parents, had doubled by 1975 and a decade later stood at 56,448. Today, more than 110, 000 Domestic Purposes Beneficiaries receive $1.52 billion in taxpayer-funded benefits.

While the concept of both parents remaining responsible for their children’s financial support – even though their relationship had broken down – was common sense, the new law created some unfortunate complications.

Firstly, in being retroactive, the Act over-rode many voluntary and court-ordered agreements that already existed between separated couples. Sweeping away such established arrangements opened old wounds, and created financial and emotional despair.

Secondly, the new law failed to take into account the significant financial contribution made by non-custodial parents who cared for their children for up to 40 percent of the time.

Thirdly, as the law was based on the choices made by custodial parents, non-custodial parents were forced to accept the consequences – no matter how unfair. As one distressed liable parent recently said: “due to the DPB being such a lucrative lifestyle choice for many women in New Zealand, it is not right to immediately assume that non-custodial fathers must accept financial responsibility. In an environment where women can lie about contraception, and go back on their word of “what do we do if you get pregnant”, it is simply not acceptable to snatch away a guy’s future, his life, his happiness, his will to live – simply as a cost recovery for a welfare programme that provides clear incentive for women to deceive and manipulate a man until the money starts rolling in”.

Answers to my written Parliamentary Questions this week show that some custodial parents on the DPB receive over $50,000. While this rate of payment is obviously not the norm, it does illustrate that – for some sole parents – a DPB income is far more lucrative than a wage. In these cases, there is little incentive for custodial parents to move into paid work.

Another growing problem is that one in five DPB mothers now fail to identify the father of their child. While the reasons for this are far from simple, the end result is that the fathers of almost 35,000 children are avoiding paying any child support at all, leaving the taxpayer to pick up the total cost of supporting the mothers and their children.

Fourthly, the design of the law – based on a liable parent’s taxable income – enables some parents to avoid their financial obligations by minimising their taxable income. Justice J E Fogarty, an architect of the Australian child support scheme, raised this issue in 1993 at the First World Congress on Family Law and Children’s Rights. He observed that: “child support is a social rather than a legal or fiscal issue and that its development must be driven by social rather than legal or fiscal values.”

It is this fiscal approach which leads to the law’s fifth anomaly, which enables liable parents to avoid all but the bare minimum of financial responsibilities for their children if they quit their job and go on a benefit. The $12.65 maximum weekly payment for liable parents on a benefit shields them from having to accept any responsibility for fathering large numbers of children.

This minimum payment creates the gross anomaly whereby a working liable parent with two children can be required to pay almost $20,000 a year, while a man like Jules Mikus – who fathered at least nine children – was only required to pay a total of $663 a year.

It is also the fiscal approach that is largely the cause of the child support compliance failure, which has seen the amount owed in unpaid debt, penalties and interest more than double to over $730 million under Labour’s stewardship.

The Government’s recently announced so-called “solution” – which would see $1 wiped off penalties and interest for every $1 of debt paid by defaulting parents – would not only create a massive incentive for the future withholding of child support payments, but would also be a slap in the face for every law-abiding liable parent who has struggled over the years to pay their dues.

In proposing such a simplistic solution, it is clear that the Labour Government’s priority is simply to reduce the size of the embarrassingly large child support debt rather than trying to improve the system. If it’s objective were instead to reduce non-compliance by creating a fairer child support system, then it would need look no further than introducing Shared Parenting. Under a Shared Parenting regime, where both parents share responsibility for their children’s welfare, the need for the DPB is significantly reduced – and, if other countries’ experience is anything to go by – liable parents are far more willing to comply with their financial responsibilities because they have frequent and on-going contact with their children. Right now, thousands of non-custodial parents – mainly fathers – are locked out of all effective contact with their children by New Zealand’s Family Court. This secret court – which has been accused of being biased against fathers, of condoning widespread use of false allegations against non-custodial parents, and of perpetuating hostility and aggression between parents – does little to encourage embattled liable parents to willingly pay their child support dues. Overseas experience has again shown that – if this court were more open – outcomes would become fairer, parental battles more infrequent and child support compliance more common.

The Care of Children Bill currently before Parliament provides an ideal opportunity to introduce Shared Parenting and to open up the Family Court. Both these initiatives would help make the child support regime a fairer one – although it does not negate the need for a comprehensive review of the Act – and in doing so would significantly improve the future for children and parents as well as the taxpayer.

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