History of the Child Support Scheme
The child support scheme was introduced in 1988 in response to concerns about the adequacy of court-ordered child maintenance and the difficulties that existed in the collection of maintenance in Australia. There were also concerns about the poverty of women and children following separation and divorce and the increasing government expenditure for maintaining children where the other parent did not contribute towards their upbringing.
The Australian Taxation Office was given responsibility at the time for collecting and enforcing child support payments and, from 1989, for assessing how much child support should be paid. The scheme is now administered by the Department of Social Services (DSS) and delivered by the Department of Human Services (DHS).
The scheme is based on the principles of parental responsibility for the financial wellbeing of children when parents are separated, and limiting the Government's involvement by allocating the costs of raising children in separated families between parents and the Government.
When the scheme was introduced, child support was generally based on a percentage of the paying parent’s income, with the percentage increasing as the number of children increased. An exempt amount was excluded from the paying parent’s income before child support was calculated. The receiving parent’s income would only be taken into account if it was higher than the ‘disregarded income amount’ which was significantly higher than the exempt amount.
Reforms to the Child Support Scheme
1993-94 Joint Select Committee Inquiry
A major inquiry into the operation and effectiveness of the scheme was conducted in 1993-94. Although the Committee supported the continuation of the scheme, it found many significant problems with its design and operation, and made 163 recommendations for changes to the scheme.
Some of the key changes resulting from this inquiry were:
- the introduction of a $260 a year minimum child support liability;
- an increase to the payer ‘exempt income amount’ for self support;
- a decrease to the payee ‘disregarded income amount’;
- the ability to credit up to 25 per cent of a child support liability through in-kind payments; and
- the introduction of an internal objections process.
2003 Standing Committee inquiry into child custody arrangements
In 2003, the House of Representatives Standing Committee on Family and Community Affairs undertook an inquiry on child custody arrangements in the event of family breakdown. This inquiry was the result of growing concerns from separated fathers wanting more day-to-day care of their children and ongoing public concern about aspects of the scheme. The Committee’s report, Every Picture Tells a Story, recommended changes to the presumptions of family law regarding shared care, and recommended that a ministerial taskforce be established to examine the child support formula.
In 2005, the Ministerial Taskforce on Child Support reviewed the child support formula and other aspects of the scheme. Its report, In the Best Interests of Children – Reforming the Child Support Scheme, was released in May 2005. The Taskforce made a number of recommendations for reforms to recognise changes in the way separated parents support and care for their children. The Government accepted many of the Taskforce’s recommendations and a series of major changes were implemented in three stages from 2006 to 2008.
Some of the key changes of these reforms were:
From 1 July 2006
- Separated parents with 14 per cent care or more were eligible for the ‘with child’ rate of certain income support payments.
- Introduction of fairer assessment of parents’ capacity to earn income.
- Increasing the amount of liability able to be credited by prescribed payment from 25 per cent to 30 per cent.
From 1 January 2007
- Independent review of child support decisions by the Social Security Appeals Tribunal.
- Providing separating parents more time (up to 13 weeks) to work out parenting arrangements before their FTB Part A is affected.
- Improved arrangements for parents who dispute a child’s paternity.
From 1 July 2008
- A new child support formula which uses both parents’ incomes, recognises the costs of providing care, and is based on research into the costs of raising children in Australia.
- Changes to the eligibility and rates of FTB for separated parents.
- Allowing parents to have extra income that was earned after separation excluded from their child support assessment, in certain circumstances.
- More flexible arrangements, with better legal protection for parents who want to make agreements between themselves.
The Ministerial Taskforce report: In the Best Interests of Children – Reforming the Child Support Scheme.
2014-15 Parliamentary Inquiry
In March 2014, the then-Minister for Social Services, the Hon Kevin Andrews MP, requested that the House of Representatives Standing Committee on Social Policy and Legal Affairs inquire into the scheme. The Committee’s report, From conflict to cooperation: Inquiry into the Child Support Program, was tabled in Parliament on 20 July 2015.
The Committee found that the child support scheme works well in the majority of cases. The Inquiry report makes 25 recommendations relating to child support policy and legislation; administration of the scheme by DHS; family law, including the funding of family support services; and the enforcement of tax return lodgment.
The Government accepted 18 of the 25 recommendations from the Inquiry report. The Government’s response to the Inquiry report was tabled in Parliament on 31 August 2016.
The Government continues to progress its response to the Child Support Inquiry recommendations.
2017-18 Budget measure
In the 2017‑18 Budget, the Government committed to implementing its response to three priority recommendations (8, 12 and 22) made in the Inquiry report.
These three recommendations were identified as areas in which the current policy can lead to outcomes that are inconsistent with the objectives of the child support scheme, or may require parents to undertake onerous court or administrative processes to achieve correct outcomes.
The measure addressed long-standing issues in the child support scheme relating to care disputes, amended tax assessments, child support agreements and payee overpayments.
Legislation for the priority recommendations was introduced into Parliament on 14 September 2017 and the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018 passed on 9 May 2018. Royal Assent was granted on 22 May 2018.
The key changes were:
From 23 May 2018
- there will be stronger incentives for parents to comply with court orders or participate in dispute resolution processes about care (8); and
- amended taxable incomes will be used in child support assessments in a broader range of circumstances (12).
From 1 July 2018
- changes in circumstances will be more easily reflected where parents have a child support agreement (12); and
- payees with overpaid child support will be treated more consistently with payers with debts (22).
These amendments will result in simpler processes and more equitable treatment for around 200,000 child support parents. More information can be found in the Child Support Guide.
To discuss the particulars of their case, parents can contact DHS by phoning 131 272 for the cost of a local call or by visiting the DHS website.