The Child Support Amendment Act 2001 –

what does it say about government policy towards fathers?

The recently passed Child Support Amendment Act (2001) raised the minimum weekly child support payment from $10 to $12.75.  It also raised the ceiling level of income on which child support is assessed by 25 percent.

It is claimed that the increase in the minimum payment is in recognition of inflation. Many of those paying this rate are themselves beneficiaries. For them, the increase could be the difference between being able to see their child and having no contact.

In Select Committee, Liz Gordon MP suggested that the increase in the maximum was also merely adjusting for inflation. In fact the ceiling is set in terms of the average New Zealand income. It has been adjusted annually. The ceiling is being raised from twice to two and a half times this average income.

These little-debated changes have come at the same time as the rapid passing of the Property Relationships Act and the defeat at first reading of the Shared Parenting Bill. They could be considered to pre-empt aspects of the current, drawn-out review of legislation on guardianship, custody and access. More debate and understanding is called for.

Considering the stated objectives of the Child Support Act, there are many flaws with the existing child support formula. This is clearly apparent in relation to "equity". The new changes do nothing to address these flaws. It is quite remarkable that, in a non-custodial parent situation, the formula: 1) takes no account of the income of the custodial parent; 2) places no requirements on the use of money transferred as "child support"; and 3) ignores the liable parent's direct costs of caring for the child. A liable parent could be caring for a child for nearly 40 percent of nights with no adjustment of child support liability in recognition of direct costs, or costs of "enjoyment of access", as they are called.

There is a recently published Australian study by Henman and Mitchell called, “Estimating the costs of contact for non-resident parents: a budget standards approach” (Journal of Social Policy, July 2001, 30(3), 495-520). Quoting from the abstract: “Costs of contact are found to be high. For contact with one child for 20 per cent of the year, costs of contact represent about 40 per cent of the costs of that same child in an intact couple household with a medium income, and more than half of the total yearly costs of that child in a household with a low income.”

Little, if any, of this cost will be taken into account when setting child support, even if the liable parent asks for a review.

A decision by Judge Durie a year ago gives a basis for comparison with the formula in the Act. In that case he determined that a parent's share of the costs of the children should equal the parent's share of the combined incomes of both parents. Hence if one parent earned $60,000 a year and the other earned $40,000, then the costs of the children should be split 60-40. The costs of the children are the sum of the costs incurred by each parent. Child support payments are used to meet the difference between the required share and costs incurred. To take a simplified assumption that costs are proportionate to the time spent with each parent, the above parent covering 60 percent of the costs, would meet 40 percent of the costs directly if caring for the child for 40 percent of the time (a borderline shared parenting situation), and so would be obliged to pay 20 percent of the costs in child support.

By the formula in the Act, if the above parent were considered non-custodial and was living alone, then with four children the child support would be nearly $15,000. Such a payment under the Durie formula, being 20 percent of the total costs, would indicate total costs of the children at $75,000, or more than the combined after-tax income of both parents.

Not only do we have problems with poor child support legislation, but we also have a poor match with other legislation. Under certain circumstances, the Property Relationships Act now allows for unequal splitting of relationship property in recognition of one partner's higher potential future income. In other words, a lump sum payment can be required on settlement, reflecting a person's future income. The payer will recoup this money through future earnings. The child support formula does not make any allowance for such forced settlements, but treats all future income in the same way. The result is “double dipping”, with the same income being levied first for a lump sum payment, and second for child support. The problem is clear if you consider the effect of replacing the lump sum payment with annual payments based on income. Out of that income, deductions would be made for both property settlement and child support purposes.

The treatment of non-custodial parents is problematic if we consider the move by Statistics New Zealand and by analysts towards a “social definition of family”. The census considers the family as being contained within a household, and more a social than a biological unit, hence a “parent” can be any person living in a household who might be seen to be “in a parenting role”. This household requirement, combined with the restriction that people are considered to live in one household only, means that non-custodial parents are not even considered to be part of their children's family.

In a media statement of 21 June 2001 on this child support legislation, a cross-household emotional connection between biological parents and their children was acknowledged: "Mr Maharey said the Bill reinforced the Government's firm view that all parents had a responsibility to contribute to the financial and emotional support of their children." The legislation had nothing to do with emotional support, except perhaps to inhibit it, and there was no mention of emotional connection in an announcement, in Maharey Notes of 5 November, when the Bill had been passed. (http://www.executive.govt.nz/minister/maharey/notes/nov01/051101.htm#2)

There are further problems with the implementation of the Child Support Act. For example, lawyers are engaged as review officers under the review process. This process requires them to consider claimed income and expenditure patterns by the liable parent and the recipient parent. A proper assessment would involve, for example, determining if the claimed expenditures are realistic, and if benefit entitlements are accurately stated. As the Minister of Revenue stated in the House on 30 May 2000, child support review officers do not receive specialized training to enable them to critically assess claimed income and expenditure levels. Nor is it a requirement for child support review officers to be familiar with benefit entitlements. In other words, these reviews are being undertaken by people who may be lacking the basic knowledge required.

Their views may not be based on impartial information, especially given the following comment on analysts working on the development of child support policy:

Talking to some [child support] policy analysts …, I have detected an implicitly punitive attitude towards non-custodial fathers, which is expressed in remarks such as “if a man leaves his wife he deserves what he gets” or “that man's problem is that he has too many wives”. (Fleming R and Atkinson T (1999) Families of a different kind, Waikanae: Families Remarriage Project, p.159)

In current debate on family policy and associated legislation, there is a worrying lack of discussion of wider social implications. We can speculate on some of the implications in the context of government objectives of building an “inclusive” society, and a knowledge economy based on development of skills with applications in long-term careers.

The Child Support Amendment Act 2001 raises the ceiling child support income to approximately $85,000. Consider the perspective of a family man contributing valuable skills in our new knowledge economy and earning an income approaching this level. He risks losing home and family at the whim of his partner. Under the recently passed Property Relationships Act he is likely to get far less than half the matrimonial property due to his earning capacity.

Of his take-home pay, if he had a student loan, he could be paying over 45 per cent in child support, leaving him in the position of someone on an income of about $37,000, but with the heartache of being distanced from his children. Out of an extra dollar earned he might see less than 15 cents following deductions. Child support payments could continue for 19 years. He has no say in how the money is actually used, but is expected to believe that it is for his children. For one child, he could be paying $1100 per month from his after tax income. This is about $256 per week, or 16 per cent more than the amount given for both a child and a parent on the Domestic Purposes Benefit. The amount is not affected by the mother's income, or by his time with the child, even up to 145 nights a year.

Meanwhile he can expect no support from the government in his attempts to maintain a relationship with his children.

What message is this giving our sons about study, hard work, building a career, and long term planning? What does it lead our daughters to expect from men? What basis is this for our children to form relationships and create an environment in which to bring up their children?

Stuart Birks

28 November 2001