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Ministerial Speech

Senator the Hon Joe Ludwig
Minister for Human Services

9 October 2008

- Check Against Delivery -

Speech to the Child Support National Stakeholder Engagement Group

Thank you for coming today to continue our engagement on child support now that the new formula is in place. Today we meet in the traditional lands of the Wurundjeri people and I want to pay my respects to the local elders for their traditional custodianship of this area.

Today I want to talk about three key points:

1. We have a fairer child support scheme in place which should be allowed to be bedded down before we consider further significant policy changes.
2. We will continue to focus on improving the effectiveness of compliance and enforcement as an important element in improving the overall efficacy of the Scheme.
3. There are opportunities still out there for government to better help separated and separating families by looking to join up service delivery across the broader family law system.

Before I start on those topics, I recognise that it has been a trying time for parents and stakeholders as we have been bedding down the introduction of the new child support formula.

I believe that the implementation stage has been successful. It has been a long journey getting to this point, as so many here intimately know.  There was the House of Representatives Committee Inquiry “Every Picture Tells a Story”, the Ministerial Task Force “In the Best Interests of Children”, the legislative process and the difficult road of implementation.

I want to recognise the hard work done in getting us here. It has taken hard work from the CSA staff, everyone from Matt and Sam down and right to the front line. But also I recognise the effort you as stakeholder groups have made into building this formula and seeing it through, and you too all deserve the thanks of the Government. In the most recent phase, as stakeholder representatives you have been particularly helpful in alerting the social service sector and CSA customers to the nature and effect of the reforms, and for that we as a Government are grateful.

We are now in the post-implementation phase of the reforms.  It’s time to take stock of where we are and look ahead to the future.

The role for Government and the CSA in particular, now shifts to monitoring how well the new system is working. 

1. Better and fairer system

We all know the key elements of the new formula now in operation:

• The incomes of both partners are dealt with on an equal basis,
• The child support obligation recognises both the share of care of the children, and the cost of supporting children has been independently calculated to better reflect contemporary family realities.

The two key elements of the child support equation are made to interact in a sound way: the incomes of the partners and their share of care.  If the incomes of both parents are equal and the care is shared 50/50, then there is no transfer from one partner to the other.  As one partner’s share of combined income increases so does the obligation. Similarly, as the share of care increases the child support obligations falls in proportion.

The system fairly balances income earned with care obligations undertaken. 

The incentive structures are there.  Parents are encouraged to share parental responsibilities.  This preserves the original vision of Child Support legislation introduced in 1989 that parents share the cost of supporting their children according to their capacity to pay while providing adequate support to care for the children.

In short, the new scheme is, as I have stated, a better and fairer system. However, I understand there will be teething problems, which is why I want to hear from you where the pressure points are in this massive new system that transfers $2.8bn for children. 

This message is being recognised within the child support community.  Today I am releasing some of the latest independent market research results of parent satisfaction with the new Scheme.

Since 2007, the Child Support Agency has conducted surveys of CSA clients using a standard set of questions in May and August 2007 and February and August 2008.

This allows us to track the concerns of separated parents over time.

Some of the results are really quite instructive.

These first three questions relate to the fairness of the whole system.  These green bars relate to the paying parent part of the community, the orange bars refer to receiving parents.

The research shows there's been a boost in confidence in the child support system since the introduction of the new scheme.

Earlier this year, there was some concern about the new scheme with only 58% of paying parents expecting the new initiatives would make the system fairer.  But in August after the scheme’s, introduction this has risen 17% percentage points to 75%. 

If we take the average of the first three research periods (May and August 07 and February 2008) on the issue of whether changes improve fairness, we measure a positive response in about 62% of cases.   So the most recent result of three quarters acceptance is much more positive than we could have expected.

The research also shows that 76% of paying parents now believe the formula is more balanced.  All previous responses had a 4 in front, a three year average of about 43% acceptance.  It’s a positive shift. 

It’s good to see that this positive view of the new arrangements is also occurring in the receiving parents group. 

Between February and August this year there has been a jump from, 52% to 63%, about ten percentage points, on the issue of whether the new formula is more balanced.  If we look at the average of the first three times the survey was conducted a positive result was received in only 51% of cases.  The most recent responses show a much more positive result than could have been expected.

So there is evidence of growing agreement across the customer base that the more recent changes are both fairer and more balanced.   So we need to continue to monitor how the scheme is operating.  This will probably take about 12 months before we have any real feel for how well the new scheme is working.

2. Improving the effectiveness of compliance and enforcement

I now wish to turn to the 2nd theme - the importance of continuing to improve the effectiveness of compliance and enforcement activities.   We need to deliver more timely and complete child support payments to receiving parents and to strengthen the integrity of the system.

This is all the more important now we are in the post-implementation and monitoring stage.

I strongly believe a fair formula and a fair Scheme cannot be genuinely fair until the obligations assigned under the Scheme are in practice actually met. I am determined and unshakeable in my resolve to ensure children get the support they are entitled to under the new formula.

The issue of compliance was canvassed in the research and I would like share the attitudes that were observed.

The question asked in the survey was whether “CSA is too soft on parents who don’t do the right thing?” 

Paying parents said yes 54% of the time in August compared to 49% in February this year, and receiving parents said yes to the question 81% in February but in August this figure dropped to 58%, a fall of 23% percentage points.  So there is the perception that non compliance is less of a concern.

Still what do the hard numbers tell us?

• Only 50% of paying parents pay their child support obligations in full and on time - 40% pay 75% or more of their liabilities
• We have a large number of parents who are not lodging their tax returns within a reasonable time, often leading to underpayment of child support until returns are lodged
• We have an estimated 30,000 parents who may be deliberately avoiding their child support responsibilities through use of income minimisation schemes.
• Many people have multiple child support cases in areas.
• Total child support debt has increased to over $1bn.

Earlier this year in June, I launched the CSA’s new Compliance and Enforcement Strategy and also announced additional initiatives to enhance the effectiveness of this work. I am pleased to report today that since that time, another key Memorandum of Understanding has been affected between CSA and Department of Immigration and Citizenship to share information on passenger movements and facilitate more timely enforcement intervention where appropriate.
During the 14 month period from 1 July 2007 to 31 August 2008, this compliance and enforcement work has resulted in the collection of an additional

• $22.6 million from tax refund intercepts
• $37 million from intensive debt collection activities
• $12.5 million from litigation
• $11.4 million from investigation of income minimisers
• $5.4 million from application of Departure Prohibition Orders.

In total, this work has so far collected nearly $20 million more than forecast to this time. In the last 12 months an additional $73 million was collected and this is an important offset to the net movements in total child support (a forecast reduction of $210 million) and Family Tax Benefit (a forecast increase of $140 million) as a result of the new Scheme.

It is clear we need to maintain and further enhance our efforts in this area.

3. Joining up service delivery across the broader Family Law system

Perhaps the most exciting and most promising area for further work is improving the connectedness of the broader Family Law system for separating and separated families.

I am sure we all agree separating and separated families are confronted by a complex and largely fragmented service delivery system. Much of this fragmentation is sustained by existing bureaucratic structures and Ministerial portfolio responsibilities and well-intentioned passion to achieve outcomes within the various silos. This still leaves the families needing to access the system and its services to struggle to make sense of what they should do.

My sense is that as stakeholders in this system, we ought be looking to find ways to support parents navigate the system and where possible provide more joined up service delivery not just in government services but also with non-government providers. I believe we need a new portal to these services - one which provides an easier entry point and where the various referral pathways can be identified for the parents.

Further improvements to service delivery has to include a focus on early intervention initiatives including improved access to parent support services such as financial counselling, improved referral processes, greater use of Family Relationship Centres in realising agreement between parents on their respective parenting responsibilities and more holistic approaches to parents’ circumstances by Centrelink and CSA.  I think there is also value in looking to how we can improve the linkages between the Courts and the administrative arm, and between the stakeholders and the decision makers.

I have asked my Department through the CSA to explore how we can start on this new work to determine what appetite exists to engage in this thinking and development work over coming months. At the same time I will be discussing this opportunity with my Ministerial colleagues- Hon Jenny Macklin, Minister for Families—and the Attorney-General Robert McClelland.

Conclusion

The three elements I have outlined today are mutually reinforcing.

We have a better and fairer system, a more balanced system, but it only works if separated parents accept it and strive to comply with the obligations they face. 

We need a tough compliance regime, but improving compliance also requires building greater confidence in the system. This can possibly be done by providing more integrated services to families considering separation.

The results of CSA’s research indicate that the child support community appears to have accepted the recent changes and is moving forward.  Let’s work together to consolidate this progress and seek opportunities to support separating families in caring and providing for their kids. After all, the system exists to serve the children.

Media Contact

Joe Scavo — 0413 800 757.