This bill, the Social Services Legislation Amendment (Child Support Measures) Bill 2023, has the potential to make a really significant difference in the lives of children and families in all of our communities. It is positive to hear that those opposite support the bill, because I’m sure that many in this chamber have constituents who have come to them over the years frustrated and upset with the child support system, asking for our support for a way through. The truth is that we haven’t seen a lot of reform in this area, so this reform is a positive step and a step in the right direction, and our government has signalled that there is more to come. We do know that every child support case is different. Everyone has a different set of circumstances. Of course, some people who pay or receive child support do so without encountering any issues. It is a really important system, set up to ensure the best interests of and the best futures for children.
But it’s those occasions when we know that the system hasn’t worked or isn’t working that tell us that we need to look at how we can make things better. When we heard the stories of parents who’ve suffered financial abuse, including through missing or misrepresented levels of child support payments, our government knew we had to make changes. Those of us in this place who have the opportunity to make these changes to improve the way these systems, which are so important in people’s lives, work owe it to the people in our community, to their kids and in fact also to the people who administer these systems—all those people working at Services Australia—to help make the child support system in this country work as well as it can. I’m well aware that often there are not easy fixes for some of the issues encountered in this space, but it is really heartening to know that we have a minister and a government that aren’t shying away from changes to the child support system that will help deliver fairer outcomes for separated families. This is important work.
This bill will help improve the timely collection of child support owed to parents and help prevent future debt for low-income parents. We know child support is a big system. In the last financial year alone, $3.7 billion in child support payments was transferred between 1.3 million parents for 1.1 million children in Australia. In this bill, our government are proposing three key changes. We are expanding employer withholding, tightening the arrangements around departure prohibition orders and improving income accuracy for low-income parents. These represent the start of reforms of child support in this country that our government will deliver. As I’ve said, child support is a complex system; it has a lot of variability in it and, of course, people have variability in their circumstances. No one model is ever going to fit every family and their circumstances. So we can’t promise that the changes being introduced will sort every issue or will make the change that every single family is looking for, but we do know this will make an important difference for many families.
I, like many in this chamber, I’m sure, have had people in my community contact my office with a range of issues relating to child support. There are certainly some consistent themes that I can draw out from the contact. They include confusion about the way the system works, the structure of child support and the assistance that can be provided under that system. People have also pointed out to me the difficulty they find in getting the help they need when payments aren’t coming through as expected. Consistency of payments is another concern, and I’m really pleased to see that one of the features of the bill we’re debating today will help see child support paid on time, providing that certainty that we all know is so important in our lives and affects what budget a parent has to work with in any given week.
We know there’s more to be done beyond the changes being introduced in this bill. Our government is very much aware of the scale of the task to make the child support system work better. We know that many people who pay or receive child support do the right thing. As I said, in many cases the system works as it should. But, for the people it unfortunately doesn’t work for, we need to make sure there are strict measures in place so that, wherever possible, parents and kids are getting the child support they’re owed.
We know for a fact that some parents deliberately avoid paying child support or deliberately misrepresent their earnings to avoid paying as much child support as they should. In many cases this kind of behaviour can be a form of financial control and abuse. It can be used against former partners and ultimately, of course, leaves children and the parents caring for them worse off, sometimes with some quite significant repercussions. From conversations I’ve had with some parents—and again I’m sure others have also had these conversations—I know it is particularly difficult for those who have left abusive partners and now find they’re experiencing continued trauma as a result of child support being withheld. I do note the important work of the family law inquiry that was conducted in the 46th Parliament and brought renewed focus to these kinds of issues, as well as other relevant parliamentary inquiries that have highlighted how interwoven some of these issues are, including the family, domestic and sexual violence inquiry I was a member of in the previous parliament. We do know financial security is a serious problem in these areas and it disproportionally affects women.
At the beginning of this year our government outlined in its response to the family law inquiry the work we’ll be doing this year and beyond to improve the operations of the child support system in our country. We are strongly committed to seeing single parents and the children they are raising receive the financial support they are entitled to. That’s what this system should do. We are mindful of making sure that Services Australia and other government services don’t inadvertently make financial abuse or other forms of abuse worse, and we’re reviewing compliance, collection and enforcement. That is in no way a reflection on the people who do this work. It is difficult work, and they do it well. What we’re looking at are the structures and rules that support them to do this work.
This year the government will establish a child support consultation group, a group providing important input on issues being faced by parents and families, as well as a child support expert panel, which will consider the child support formula and whether it can more accurately represent the costs parents face today in raising kids. We will also support an evaluation of separated families to see what more should be done to support parents in situations where private collection arrangements have broken down, and we’ll commission research looking at the costs facing separated parents. All of this will help us continue to reform this very important system.
In this bill there are, as I said, a number of significant changes. The first change in this bill is extending employer withholding, which is the default method of paying child support and is an effective way to collect support. Last financial year, employer withholding enabled the collection of $743 million in child support from 91,000 parents. The changes we’re introducing in this bill will improve the active collection of child support debt in cases which have ended by extending the circumstances where Services Australia can deduct child support from a parent’s wages. It will help to ensure that child support is paid on time, giving parents the financial resources they need to meet the week-to-week costs that come with raising their kids. Currently, employer withholding can only be initiated in active child support cases, cases where there is an ongoing obligation for child support. The bill before us fixes that. It enables Services Australia to use employer withholding to collect child support debts in any case, including those where the case has ended.
An example of this might be where a case has been active and then, of course, a child turns 18 and the case ends. That scenario sounds reasonable, but, in fact, it means that in some cases the receiving parent is still owed a debt by the other parent, but they can’t take any action, because there isn’t an active child support case. What we have here is a sensible proposition that, even if the case has ended, there’s still the debt and it should be paid. We estimate this will recover up to $154 million owed in unpaid child support from a pool of around 18,000 parents. With an average debt of nearly $11,000 owing to the receiving parent we can see how this will make a big difference to families’ lives.
The second change is tightening departure prohibition orders targeted at parents who deliberately and repeatedly avoid their child support obligations. Parents with a departure prohibition order will no longer be able to offer a refundable financial security like a bond to qualify for exemption, unless Services Australia is satisfied that they will make satisfactory arrangements to repay their child support debt within an appropriate period. This makes these rules clearer across families. It means if a parent returns to Australia they get that bond back, regardless of whether they repay the child support debt they’re meant to. Under the current system, if the parent owing child support is someone of reasonably good financial means and can provide a bond, they can travel overseas while continuing to actively avoid their legal obligations to pay that child support, meaning that those children miss out. In this case, we are closing down a loophole that should be shut down. Parents who owe child support shouldn’t be able to exploit a pathway like this to avoid paying up. The changes will enable Services Australia to refuse an exemption to allow overseas travel even if someone has a bond or other form of financial security to offer. On this measure, the data tells us there is a smaller number of families involved—about 110 parents are in this situation—but it’s worth highlighting this small group of parents each have quite a substantial debt pool, averaging $43,500 each.
The third change is on improving income accuracy for around 150,000 low-income parents. This will help prevent debts in circumstances where low-income parents on income support are not required to lodge a tax return. The change will allow Services Australia to deem the parent’s adjustable taxable income to be equal to the self-support amount. We sometimes see at the moment inaccurate income estimates putting parents on lower incomes into a tough position financially—and these are people who are already in a tough position. It can result in a parent receiving less child support than they should or in fact being liable to pay more child support than they are able to. From 1 July this year, subject to the passage of this legislation, a parent who lodges a ‘return not necessary’ form and does not provide income information to Services Australia will have a provisional income created for them by Services Australia that is equal to their self-support amount, and that’s the amount of money the parent receiving the child support needs to ensure they can get by with their own living expenses. This will be an important improvement on the current situation, where Services Australia may be applying a provisional income figure to the parent being assessed that is significantly higher than the actual figure. Again, we know this will make a real difference to families who rely on this system and who want it to be as accurate as possible. It will bolster our existing efforts to ensure that child support information is accurate, and it reflects the up-to-date earnings data of families.
Child support is too important a system to leave as it is at the moment. As I’ve said, it is a system that, for many families, works in a reasonable way, and many families are satisfied with the measures and the way the system currently works for them. But there are certainly many families who have difficulties with this system, and we know that in many cases it is women who are suffering as a result of some of the problems that remain in the system. We know that there are opportunities for the system to be used to further financial abuse in relationships where there has been abuse. We know that sometimes the system is not operating as it should to give children the support they should have through life. For all those reasons, this is an important bill. It is an important first step in the commitments our government has made to make this a better system for Australian families, to understand how the system should work in their interest. We recognise the need to reform the system for the sake of parents and children. Parents and children deserve a system that is fit for purpose and effective. We know there is much more work to do, and I look forward to working with the minister, colleagues and other members of the parliament—to doing that work and to continuing to talk with members of my community, who, I know, have a personal interest in this and an understanding of some of the difficulties it can place people in.
To all those people in my community—I have seen quite a few of them recently—I say: this bill is a statement of our faith as a government. We are intending to make this a system that works better for Australian families. This is the first step, and there is more to come.