Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search


Forgiving debt to encourage child support payments

Forgiving debt to encourage child support payments

Budget 2015 includes changes to tackle child support debt and to encourage parents to pay what they owe for children for whom they are responsible, Revenue Minister Todd McClay says.

Over the next four years, the Government will forgive around $1.7 billion of penalties owed by parents to encourage more support to reach children.

“Child Support debt is currently $3.2 billion and rising, and only around $700 million is actual child support,” Mr McClay says.

“The rest is debt from penalties. This is the legacy of a penalty system that was overly punitive and which is now being changed.

“We need to get parents to start paying so that children, many of whom are in hardship, are better off. Liable parents are facing paralysing levels of debt from penalties, and as a result are not attempting to pay their outstanding amount, nor are they meeting their current obligations.

“Many have chosen to leave New Zealand. Some $827 million of the total debt, of which most is penalties, is owed by people living in Australia.

“A further $778 million, of which 84 per cent is penalty debt, is owed by those living outside New Zealand and Australia.

“This is in no one’s interests. We want child support paid so it goes directly to the children who need it, or back to the taxpayers who are paying it by default in the form of a benefit to that child’s family.”

Many people receiving or paying child support are on low incomes. Almost 54,000 of the 120,000 people with child support debt earn less than $30,000 annually.

And those low earners owe more than $700 million of the total $3.2 billion in debt.

“We want liable parents to pay what they owe,” Mr McClay says. “To make that happen, Inland Revenue will adopt a ‘fair and reasonable’ test to consider applying penalty relief where it makes sense to do so.

“In addition, mandatory write-offs of monthly incremental penalties will apply to those liable parents who are paying by compulsory deduction and meeting their payment requirements.”

If maximum discretion is applied, this will result in $1.7 billion of penalties being forgiven over four years.

More than $1.6 billion of this is already reflected as an impairment in the Government’s books. The measures will result in a net estimated decrease in Crown operating revenue of $47.1 million over the next four years. This is the value of the penalties currently in the Government’s books, less the expected increase in child support payments to the Crown.

In future, the growth of child support debt will be slowed by changes made in the recent child support reforms, including;

• Replacing the penalty rates from 10 per cent for late payment with a two-stage penalty, (2 per cent if a payment is not made by the due date, and a further 8 per cent if the amount remains unpaid after seven days).
• Reducing monthly incremental penalties from 2 per cent to 1 per cent.

“These measures should not be seen as a soft option,” Mr McClay says. “We remain focused on liable parents meeting the obligations to their children and will have no tolerance for parents who deliberately avoid responsibility.

“We intend to use every measure available to us to collect debt from those who do not make arrangements for payment even though they are able, including arrest at the border for people who have consistently refused to pay.

“Improving the rate of child support collected means more money going to low-income New Zealand families who rely on it to help cover the cost of raising children,” Mr McClay says.

All changes are expected to take effect from 1 April 2016.

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Hope For Nature: A New Deal For The Commons

Joseph Cederwall on The Dig: The disruption and destruction of the interconnected biodiversity of Earth is the most serious challenge humanity has ever faced. This is an ecosystem emergency on an extinction scale. It is also a serious threat to the inherent rights of the diversity of non-human life, ecosystems and human Cultures on Earth to exist and thrive. The current global paradigm is devastating life everywhere by disrupting vital “ecosystem services” like the food, water, and climate regulation systems that both humanity and biodiversity depend on in an interconnected balance. It is increasingly clear that the primary driver of this crisis is the limiting and infectious worldview around land and resource use so central to the global capitalist system. To fully understand the biodiversity crisis and explore what comes next, it is necessary to address this mind-virus at the heart of our modern civilisation – the dominion worldview. More>>


Gordon Campbell: On The Farming Sector’s Persecution Complex

The narrative that our farmers are ‘doing it tough’ plays into a number of wellworn stereotypes ... More>>


corrections, prisonCorrections: Independent Review Of Prisoner Mail Management

The independent review into the prisoner mail system has today been released, with Corrections accepting all 13 recommendations and making a number of changes to strengthen the management of prisoner mail. More>>


IPCA: Unlawful Detention Of Teenager; Influence Of Investigation

The Independent Police Conduct Authority has found that former Inspector Hurimoana Dennis unlawfully detained an Auckland teenager in 2015, and improperly influenced the outcome of a criminal investigation into his own son in 2014. More>>


SOP For Gun Bill: New Measures For Modified Pistols

The new controls will • Prohibit short-barrelled semi-automatic rifles which currently are defined as pistols because they are shorter than 762 millimetres. • Introduce tighter controls over pistol carbine conversion kits… • Prohibit firearms which contain a part known as a centrefire lower receiver… More>>

'Culturally Arranged Visitors Visa': Fix For Marriage Visa Issue

Earlier this year Immigration New Zealand issued guidance to front line Immigration staff that made it significantly harder for people to get visas to visit their partner. That guidance no longer applies with today’s announcement. More>>


Conflict Of Interest For Key Member: Budget Data Breach Investigation Shut Down

State Services Commissioner Peter Hughes has today terminated the investigation into how Budget-sensitive material was accessed at the Treasury and appointed a new inquirer. More>>

RNZ Report: Mysterious Foundation Loaning NZ First Money

A mysterious foundation that loans money to New Zealand First is under scrutiny, with a university law professor saying although it's lawful, it fails to provide the transparency voters need in a democracy. More>>

Justice: Criminal Cases Review Commission Established

“We’ve seen how our justice system can very occasionally get things spectacularly wrong, even with rights of appeals, and there needs to be a chance for the innocent on the right grounds to seek a final review of their case...” More>>





InfoPages News Channels