Ministerial Speech
Senator the Hon Joe Ludwig
Minister for Human Services
29 July 2008
- Check Against Delivery -
Address To Child Support Agency’s International Debt Summit
Hobart
Welcome delegates to the first workshop to tackle international child support debt. This workshop provides a fantastic opportunity to formulate a range of strategies and tools to ensure that CSA is managing international child support debt in the most effective manner.
Together, this government and the CSA have recently implemented the third and final stage of the most significant changes to the child support system since its creation twenty years ago. I am very pleased with the way the reforms have been implemented, and you should be proud of the work you have done to contribute to this.
However, there is still an area of concern and that is the increasing amount of outstanding child support currently owing to children of separated families. I think the new compliance package that I recently announced is an essential component to the wider changes.
The CSA’s compliance approach underpins the integrity of the new scheme with a balance of education, support, advice and enforcement activities.
The new measures that I announced include:
- enhanced tax return legislation
- a trial to use optical surveillance in serious cases
- a new partnership with the Insolvency and Trustee Service of Australia, and
- changes to salary sacrificing.
I have already publicly stated that I am very concerned about the $1 billion in child support debt and the rate at which this debt is growing.
In the past two years it has grown by over $50 million a year, at an average annual rate of 5.6 percent.
A lot of stress on receiving parents could have been avoided if the system worked better.
We hope that these new initiatives and the outcomes of the workshop today will help ensure that the new system works better to support these kids. Compliance is a key priority to ensuring the new Scheme works.
International debt
About one fifth of the current $1 billion child support debt is international debt, which is the reason why we are all here today. The level of international debt is a key issue for the CSA. The paying parents who live overseas and the paying parents who have moved to Australia who do not pay child support in full and on time are contributing significantly to the overall debt of the CSA.
Not that I need to tell you that, everyone in this room is an expert in this field and we are here to look at what we can do together to reduce the level of international debt.
Having experts such as you here today, I am confident we’ll find a way forward to address this issue.
Snapshot of figures
The following is a quick snapshot of international child support debt figures that you have provided to me, and are worth reflecting on as a reminder of why we’re here.
- International child support debt stands at a staggering $235 million out of the total gross maintenance debt for the Agency of $1 billion.
- Proportionately, this is 24 per cent of CSA’s child support debt, with only 4 percent of the active case load.
- The international case load grew by 13 per cent in 2006-07.
- Domestic case load growth was in comparison 1 per cent in the same period.
- The CSA is currently collecting overdue child support for 9672 cases where the receiving parent lives overseas.
- Tasmania alone has 93 international cases where the paying parents reside in Australia and have obligations to their children living in other countries and 297 where the paying parents reside overseas and have a debt to their children living in Tasmania.
- The total Tasmanian international debt adds up to almost $2.5 million.
These statistics are further evidence of how international child support is becoming an increasing part of the CSA’s business.
How we collect?
when it comes to international debt. In the cases where a paying parent comes to Australia we will use all of our powers to collect the money owed to children whether they reside in this country or not. *
(*The obligation is under the reciprocal arrangements with each country. Similar to Australia, international assessments could be made by administrative assessments from overseas, some are court orders, or child support agreements between parents. The legislation allowing the CSA to use its enforcement powers comes Under the Child Support Registration and Collection Act. )
However, when a receiving parent living in Australia asks the CSA to collect money from a paying parent who lives overseas, we rely on our reciprocal arrangements to collect ongoing liabilities and any outstanding payments.
The CSA has done a great job in negotiating reciprocating agreements with 97 countries including New Zealand, the United Kingdom, the USA and Canada. *
(*Some are formed under the Hague Convention, some are formed by mutual agreement between the countries.)
Unlike Australia, not all overseas jurisdictions have the enforcement powers we do. An exception to this is New Zealand, which has a similar system to ours. However, based on the level of New Zealand debt, currently 7646 cases in Australia owing over $92 million to children in New Zealand, clearly there is room for innovative ways to improve collections.
Unlike the CSA here, New Zealand authorities have to go to court to obtain a departure prohibition order. Improving processes such as these, may lead to a better outcome for children.
But we can also learn something from our New Zealand partners. New Zealand has a far better collection rate on cases we refer to them – currently at 63 per cent. This compares to 44 per cent when we’re asked to collect on their behalf.
In 2005, the CSA signed a world first fee-for-service agreement with its New Zealand equivalent to deal with New Zealand’s backlog of child support debt in cases where the paying parents live in Australia.
At the end of the 2007-08 financial year, New Zealand Inland Revenue had paid $3.6 million for CSA to collect child support in more than 4000 cases. Of the 4000 cases, CSA has already collected $15 million in child support, this is on top of the normal day-to-day business.
I would like to congratulate the International team based here in Tasmania for their great efforts on this project. The project has exceeded its original four-year target of $14.4 million — 18 months ahead of schedule.
This project should serve as a model for future reciprocal agreements with other countries once similar arrangements are made. It’s arrangements such as these that I encourage you to explore today.
The excellent partnership established between the Australian and New Zealand Child Support Agencies has facilitated a greater transfer of cases between the two countries. Since the partnership began seven years ago, $80 million in child support has been transferred between the two countries for the benefit of children from separated families.
We will also look at compliance opportunities with extended datamatching across various departments, such as the Department of Immigration and Citizenship.
Another avenue to explore is whether there are ways to collect information on what debts are owed when someone from overseas comes to Australia.
Aims of the summit
The aims of this summit are self-evident, formulating the best possible plan to curb the high level of international debt. Its focus will include:
- collection priorities for debt originating in Australia (that is, paying parents who live overseas)
- collection priorities for debt originating overseas (paying parents who live in Australia)
- clear priorities for international case management.
- a strategy to make the necessary changes. This may include review of procedures, workload management, capability building, tools and systems, communication and messaging, legislative and policy change and treatment of international debt at an organisational level for reporting and accounting purposes.
The way forward
These will not be easy solutions but they are necessary steps we need to take to ensure children across the world are receiving the support they deserve.
Australia should not be seen to be harbouring these people who have overdue child support and as Minister for this area I will endeavour to ensure that we, as a government, do all that we can. I wish you well today and look forward to hearing about the outcomes.
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