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Bruce Tichbon

Child support review

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One of the most volatile pieces of law in our society is up for review again. The public has till 29th of October to make submissions on the review of child support led by Revenue Minister Peter Dunne.

It is a courageous step for Dunne to open this debate again. Family law is a contentious area where politicians fear to tread. It’s like abortion; most politicians rapidly change the subject.

Notwithstanding, over the past few decades family law legislation has dramatically changed the financial and social landscape of New Zealand. The catchcries’ among policy makers have been ‘gender equity’ and ‘economic independence for women’ (although very few New Zealanders have any idea what these terms actually mean or how much they have redefined the family in this country). The official catch line is that the welfare of the children comes first, but when we look at the real trends it is hard to believe children lead the equation.

In the financial terms, the Matrimonial Property Act (now the Property Relationships Act) and the Child Support Act have radically changed family property ownership and transferred tens of billions of dollars between spouses. Not surprisingly, most of the transfer has been from men to women. In terms of family structure, the Domestic Violence Act, the DPB and others have dramatically changed gender roles. So much so, that the vast majority of sole parent households created are now female headed and hundreds of thousands of fathers are left wondering what happened to their desire to provide love and care to children they often hardly see.

The background to the Child Support Act illustrates the above trends.

The legal mechanism to financially protect the children of divorce, and the parents who must care for them, has existed for hundreds of years. Prior to the Child Support Act a system was enforced that seemed very fair. Both divorced parents were assessed for the cost of maintaining their child (or children) to independence. This cost was made known to all parties. If spousal maintenance was also to be paid (one parent being required to support the other) then this was levied separately and would generally be only for as long as it took for the receiving parent to retrain and get on their feet (typically 3 or 4 years).

The system was fair and transparent, but it did require one parent to take the matter to court if the parents could not agree.

In a stroke the Child Support Act 1991 blew all the fairness and transparency away. Suddenly only one parent was assessed instead of both parents. The amount to be paid by the paying parent was now based on their ‘capacity to pay’. This is basically a straight tax on the paying parent’s income, but court challenges have spent the past 18 years of the Act trying to work out what the heck ‘capacity to pay’ really is. Many paying parents are now paying conspicuously more than the cost of supporting their children; clearly the extra payments are bundled spousal maintenance. Sometimes this extra money goes to the parent who has control of the children; sometimes it goes to offsetting the DPB and other benefits that the government gives to the parent with the children.

Gross anomalies are immediately obvious; such as the cost allocated to supporting a child resident with the paying parent is typically a fraction of the cost allocated their child living with their divorced partner. The penalty regime imposed is draconian and seems to display contempt for paying parents (who are mostly men).

The new Child Support Act came into force in 1992. When the public realised what they had been dealt the backlash was tremendous. MP’s were inundated and public meetings were held all over the country. The then National government was forced to respond and in 1994 retired Family Court Chief Judge Peter Trapski was appointed to conduct a review. Like the current review, there was a public discussion document and a final report. The review report was a disappointment; it seemed to simply restate the radical agenda that had led to the Act in the first place. The review did have one good idea, that the payments of a paying parent should be pooled for all their dependent children so they could all be paid an equal amount.

The Trapski review seemed to change nothing, and the Child Support Act become an example of how the coercive State can force its citizens to put up with even the most unworkable and unpopular legislation. After nearly 2 decades the Child Support Act is gathering $362 m per year[i] but in a 2010 independent report the Office of the Auditor General noted “At 30 June 2009, child support debt totalled about $1.56 billion. Of this, $540 million was for unpaid child support assessments, and $1.02 billion was for unpaid penalties. Only about $195 million of the $1.56 billion debt is owed to custodians; the remaining debt is owed to the Crown, most of it for penalties”.[ii] The auditor general went on to note that IRD’s projections were that debt would increase to $7 billion by 2018.[iii]

It seems that the Child Support Act is not only a social disaster that is disliked by both women’s and men’s groups, it is also a financial disaster akin to a slow train wreck. The level of unpaid penalties described above is reaching insane levels.

The 2010 review appears to be a desperate attempt to turn the disaster around. Clearly, applying more and more punitive regimes to paying parents has not worked in the past and will work even less in future.

The review seems to try to reduce the unfairness by turning the clock back nearly 20 years and returning to assessing both parents and basing the amounts on the cost of supporting the children. However, it assesses the cost of the children before the divorce occurs, making the assessed figures too high and not representative of the cost of supporting children in the divorced situation. The extra funds of course will end up as bundled spousal maintenance. The failure of the proposed new regime to separate spousal and child maintenance is a major failing.

The proposed new regime also offers more flexibility to share costs in shared parenting situations. However, the unchecked ability to use allegations of domestic violence and sexual abuse against men has reached such a high level that it is hard to see much change from the current very low level of shared parenting (3.9 per cent of children and 4.6 per cent of relationships in the child support scheme).[iv]

The proposed new regime will fail because it does not address the real issues. The first step the government must take is to stop using family law as a vehicle for radical social agenda such as gender equity. Parents must in future be treated precisely as equals. The government must stop intervening and imposing artificial inequality (such as the way the Child Support Act creates a ‘Liable Parent’ and an ‘Eligible Custodian’) or the awarding of the DPB to one parent without consulting the other.

The first attempt at ending the gender war and creating parental equality was taken in 2000 when ACT MP Muriel Newman placed the Shared Parenting Bill before Parliament. This bill was motivated in large part by international experience that ensuring both parents are treated as equals and encouraged to remain involved with their children after divorce. Child support compliance rates are massively increased by parental equality and shared parenting. The then Labour led government and coalition partners voted the bill down at its first reading, ending all opportunity for it to be even discussed in select committee.

Another area not touched in the review is paternity testing for men. Overseas experience shows up to 20% of the men forced to pay child support are not the biological fathers. It is an insult to parents who must pay crippling levels of child support that a simple and cheap paternity test is denied to them, even though the technology has been available for over 25 years.

The current review of the Child Support Act 1991 is another important opportunity to revisit the issues and correct the public policy errors that plague family law. New Zealand must recognise the importance of family law based on the biological family, encourage parental equality, and rethink government intervention in the family. If a more holistic approach is taken, the review has a chance of succeeding.

You are encouraged to contribute to the review before 29 October. The discussion document Supporting Children is available at: www.taxpolicy.ird.govt.nz/publications/2010-dd-supporting-children/overview. The online consultation is available at www.supportingchildren.ird.govt.nz. Submissions close on Friday, 29 October 2010.

[i] 2009 OIA request – includes penalties and before pass on to custodians
[ii] Office of the Auditor General ‘IRD: managing child support debt (July 2010)
[iii] Ibid
[iv] IRD Discussion Document “Supporting children” September 2010