Scoop Election 08: edited by Gordon Campbell

On Peter Dunne’s review of child support

September 2nd, 2010

In his comments this morning about his planned review of the child support legislation, Revenue Minister Peter Dunne is showing every sign of just tinkering with the scheme – rather than engaging with the regular complaints about the rigid legal formula that sets the level of child support payments. Dunne is promising to take two new factors into consideration. Firstly, he says he wants to foster shared parenting, by taking into account the extent of non-overnight contact and care by the non-custodial parent. Secondly, he wants to take the income of the custodial parent into consideration – given that so far, this has not been treated as being in any way relevant to what the non-custodial parent has to pay. Just how either of these factors can be incorporated into the child support formula remains to be seen – at least until Dunne unveils the details later today.

So what’s missing from this picture? So far, there is no indication that Dunne plans to address one of the recurring complaints about the child support regime. In practice, ordinary wage and salary earners cannot avoid paying the amounts set by what is widely seen to be an inflexible formula – one that makes it extremely difficult for the non-custodial parent to begin a new life and family.

Yet at the same time, wealthier individuals can arrange their income to artificially lower the amount of child support they are required to pay. There is no little or no capacity within IRD (or political inclination) to investigate such arrangements that have been entered into by high income non-custodial parents for the sole purpose of minimizing their obligations. Routinely, they end up paying little, or nothing to former spouses or partners – whose income has been severely reduced, and who now have to raise the children of these failed relationships.

Secondly, while the apparent intent to include the income of the custodial parent in the calculation is a step towards recognising the social reality of failed relationships, this could have serious social consequences – especially within a climate of welfare reform. The custodial parent – often it is a woman – who moves off the DPB and finds paid work, may now have that effort penalized by dint of it being used to reduce the child support amount payable by their former partner.

Women therefore, could be being forced out into the workforce by Paula Bennett on one hand, while having that extra income taken into account by Peter Dunne on the other, in order to reduce the child support they receive. To stop this from happening… surely, the income of the custodial parent can only be considered to be relevant once a certain level of income has been reached, and then only in proportion to the numbers of children involved. Which means that the scope for reducing ‘unfairness’ by this method is really quite limited.

Also, given the reality faced by many custodial parents, Dunne’s stated intention to consider non-overnight care as a factor – presumably in relation to reducing the level of child support payable – looks perverse, and could well be have bad outcomes for many sole parents. While a bit of help from a former partner with after-school care may be welcome, surely Dunne doesn’t intend to treat such contact as an argument for reducing child support payments?

What such situations reveal is the highly charged social climate in which child support operates – and the lack of consideration to these issues when the child support mechanisms were rammed into place 18 years ago, mainly as a way of cutting the cost of welfare. (One of the complaints commonly made about the system is that non-custodial parents are not paying child support to their children – they are paying the IRD to offset the cost of the DPB.)

Dunne has the job ahead of him. As things stand, the sense of unfairness is widespread – and it has been voiced to journalists by aggrieved parents and regularly aired in the media for the past two decades. To that extent, a substantive review is long overdue. The difficulty is in arriving at a system that is able to treat the breakdown of a relationship as a no-fault context – since this seems the best way of minimizing the acrimony harmful to shared parenting, and of enabling both parents to get on with their lives.

Judging by the bitterness that it routinely engenders, the child support formula does not do that. Hardly surprising, given that no research into its possible impacts was done before it was enacted. One of the scheme’s original aims was to make it difficult for an irresponsible (usually male) parent to abandon one family and carelessly start another without paying support for the child or children left behind. Such people undoubtedly exist. Yet given the extent of marital breakdown, a more common reality is that the non-custodial parent can be rendered financially unable to start a new life, because of the level of payments required to be paid to the previous family. In such cases, a two tier system of first and second class children can be created – where the children of the first relationship have prior call on any resources, and the children of the subsequent relationship must make do with what is left over. Such pressures – directly generated by the child support formula – can make subsequent relationships far more likely to fail.

Clearly, it is an extremely difficult task to devise a universal formula for calculating child support payments that is sensitive to the needs of all involved. Custodial parents deserve all the support they can get – especially at a time when sole parents are coming under fire from the ideologically extreme process of welfare reform that the government has just launched. Rather than attacking custodial parents on benefit support, the National /Act coalition would be better advised to target the tax arrangements that enable its wealthier supporters to juggle their finances and dodge their child support responsibilities. Meanwhile, many less affluent people who cannot afford to pay the amounts required are being compelled to do so, with severe consequences for them, and for their former and current spouses and children.

How to proceed? It seems an essential starting point that the income of both the custodial and non-custodial households – plus partners – be taken into consideration. A child–focussed approach to child support means placing the needs of the children of former and current relationships on an equal footing. In which case, the child support formula would be only the starting point – not the end point – of the calculations, and an arbitration process sensitive to each case is required. It would be an expensive process. Yet if we can pour massive amounts of money into failed finance companies, we should be willing to put serious money into ensuring that parents and children are left with a reasonable chance of surviving family breakdowns.

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    1. 2 Responses to “On Peter Dunne’s review of child support”

    2. By Bruce Thorpe on Sep 2, 2010 | Reply

      I think there are issues other than the amount asked from the contributing parent.

      A contributing parent might have a more positive attitude if there was overt assurance that the contribution was directly related to the children’s expenses rather than a subsidy of the other parent’s changed lifestyle, or new partner.

      Mostly I think there is a need for a more direct involvement and acknowledgement of that parent into the disposal of the contributions.

      I would suggest any amount past some really small weekly household levy, access to the account should be dependent on a signature from either the contributing parent, or another specified impartial agent using agreed criteria.

      Finally, I suspect many of the parents in arrears are low income fathers, whose economic circumstances have been through a couple of dips during the breakdown of the marriage, who are also aware his contributions are simply treated as repayments to the state.

    3. By Stu on Nov 14, 2013 | Reply

      A simple change in law to allow child support to be tax deductible would appease most complaintents as working out from gross income and expecting it to be paid from net earnings is cruel to say the least.
      Taking away the “living” portion of income is also grossly unfair to most people paying child support as now a payer must pay based on their full gross income.
      The new system will indeed further cripple many payer’s as many of the “ex’s” receive the DPB and therefore the calculations of the payee’s household income will not apply.
      A rough work out on the new scheme at 50k p/annum would leave around 28k p/annum to live on. Take out rent and food and our single paying parent is left with around $100 bucks to try make a life with.
      I have no desire to work hard for this system and am instead choosing to not work and take the opportunity to retrain for the next couple or five years.
      Watch as the student loan debt increases dramatically over the coming years as many paying parents catch on and choose to up skill rather than be shafted for productive hard graft.

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