House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 7 - Other amendments commencing on 1 July 2008

Summary

This Schedule provides for other reforms that are to commence on 1 July 2008. These amendments change the way that the Registrar considers a payee's application to opt for collection of child support by the Registrar. This will make the process easier for the payee to opt for collection by the Registrar. Other amendments allow the Registrar to request the Repatriation Commission to make deductions from certain veterans' entitlements in order to pay child support debts.

Background

RECONCILIATIONS BETWEEN PARENTS

Currently, if parents reconcile, the payer continues to be liable under an existing administrative assessment until the payee advises the Registrar that he or she wishes the administrative assessment to end. If the parents separate again, having previously ended the administrative assessment, they must apply for a new administrative assessment. If the parents are trying to reconcile, the requirement to end the administrative assessment, and then to make a new application if the reconciliation is not successful, may be another stress on their relationship. To deal with this, a new section 150E is being inserted. It allows parents to reconcile for period of up to six months without the administrative assessment being terminated. During such periods of reconciliation, the administrative assessment is suspended. This means that debt does not continue to accrue against the payer during these periods. If the couple separates within six months of the suspension determination in relation to the reconciliation taking effect, the administrative assessment again comes into effect. However, if the reconciliation lasts for longer than six months, the administrative assessment is terminated.

PAYEE'S APPLICATION TO OPT FOR COLLECTION OF CHILD SUPPORT BY THE REGISTRAR

Payee parents presently have limited rights to make a choice as to whether to use the Registrar to collect child support. When the liability commences, payee parents can ask the Registrar to collect on their behalf. However, the Registrar can require parents to collect child support privately, despite parents not having made an election to do so, if the Registrar is satisfied that the parents involved can make their own sustainable private collection arrangements. Section 39 of the Child Support Registration and Collection Act deals with applications for liabilities which the payee has been collecting privately to become again enforceable under the Act. This might occur if the payer and payee are finding a private collection arrangement difficult to sustain. Presently, subsection 39(5) provides that the Registrar must grant the application if the payer is taken to have an unsatisfactory payment record, or if the Registrar is satisfied that special circumstances exist in relation to the liability which make it appropriate to grant the application. However, this situation does not adequately balance the interests of the payer and the payee. Accordingly, subsection 39(5) is amended to reverse the onus, in order to make it easier for the payee to opt for collection of child support amounts by the Registrar.

NON-AGENCY PAYMENTS

This Schedule also includes refinements of the 'non-Agency payment' provisions of the Child Support Registration and Collection to improve the flexibility of those provisions for the way parents manage their child support payments and to align the provisions with the Taskforce recommendations.

DEDUCTIONS FROM OTHER PAYMENTS

It is important for the effectiveness of the child support scheme that administrative assessments are backed up by appropriate enforcement mechanisms if a payer will not pay voluntarily. Presently, some of a payer's sources of income, such as social security payments, can be intercepted in order to pay a child support liability. However, many types of government payments, including various veterans' affairs payments, cannot be intercepted. While excluding these payments from deduction recognises matters such as service to the Australian community, a parent's obligations to his or her children should not be treated as reduced because of this service. Usually, veterans comply voluntarily with the child support obligations. However, there have been occasions where they have not complied. Consequently, the present changes allow deductions to be made from various veterans' affairs payments.

Explanation of the changes

Part 1 - Amendments

Child Support Assessment Act

Item 1 adds to section 12 of the Child Support Assessment Act, relating to a child support terminating event, a new element for the purposes of reconciliation between parents (see mainly item 2 ).

Item 2 inserts before section 150 a new section 150E. Section 150E deals with suspension of liability to pay child support where parents reconcile. Subsection 150E(1) provides that the Registrar must make a determination (a suspension determination) that child support is not payable for a child by a liable parent to the other parent of the child if:

(a)

the Registrar is notified, or otherwise becomes aware, that the parents have become members of the same couple; and

(b)

the Registrar is satisfied that the parents have become members of the same couple.

The Registrar must otherwise become aware that the payer and payee are again members of the same couple, for example, through information supplied by Centrelink. It is intended that the expression 'members of the same couple' has the same meaning as the expression members of a couple in section 5. That is, the members of the couple are legally married to each other and are not living separately or apart on a permanent or indefinite basis, or the couple are members of the opposite sex and are living together on a genuine domestic basis although not legally married to each other.

Subsection 150E(2) provides that if the Registrar makes a suspension determination, child support for the child is not payable by the liable parent to the other parent:

(a)

from the date the Registrar determines that the parents became members of the same couple; and

(b)

until the Registrar makes a determination under subsection 150E(3) in relation to the parents.

A note following subsection 150E(2) states that under section 12, there is a child support terminating event if the parents are members of the same couple for a period of six months or more.

Subsection 150E(3) provides that if, within six months of the suspension determination taking effect, the Register is satisfied that the parents have ceased being members of the same couple, the Registrar must make a determination under this subsection that child support is again payable by the liable parent to the other parent.

Subsection 150E(4) provides that if the Registrar makes a determination under subsection 150E(3), child support is again payable by the liable parent to the other parent from the date that the Registrar is satisfied that the parents ceased to be members of the same couple.

Subsection 150E(5) provides that to avoid doubt, child support is still payable by a liable parent for a child to a non-parent carer of the child despite a suspension determination being made in respect of the parents of the child.

A decision by the Registrar to suspend an administrative assessment, or to determine that child support is again payable, are reviewable decisions. Section 37A of the Child Support Registration and Collection Act provides that the Registrar must vary the Child Support Registrar on amendment of a child support assessment. Section 42C (a new section which is being introduced in Schedule 3 to this bill) provides that notices must be given to payers and payees in relation to registration decisions. Section 80 (which is set out in Schedule 3 to this bill) sets out decisions against which objections may be lodged. Table item 3, in subsection 80(1), provides that the payer or payee of a registrable maintenance liability may object to a decision of the Registrar about the particulars varied in the Child Support Register.

Child Support Registration and Collection Act

Item 3 repeals and substitutes subsection 39(5). New subsection 39(5) provides that the Registrar must grant the application unless the Registrar is satisfied that:

(a)

the payer of the liability has been complying with his or her child support obligations, or

(b)

the payer of the liability has satisfactorily explained and rectified a failure to comply with his or her child support obligations in relation to a payee; or

(c)

there are special circumstances that exist in relation to the liability that make it appropriate to refuse the application.

New subsection 39(5) therefore reverses the onus in relation to an application for collection by the Registrar, so that a payee's application to have a child support liability collected by the Registrar will granted unless the payer can demonstrate that it should not be granted for one of the reasons set out in subsection 39(5). Payees are in the best position to know whether, given the context of their overall relationship with the payer, collection by the Child Support Agency, would be the better option for them. This change attempts to balance better the needs of the payee, the payer and the Child Support Agency in relation a payee's decision to opt for collection by the Child Support Agency.

Item 4 amends section 71A by inserting '(1)' before 'Subject,'

Item 5 amends section 71A by inserting 'and in accordance with subsections (2) and (3)' after '30'.

Item 6 adds at the end of section 71A further subsections 71A(2) and (3). Subsection 71A(2) provides that, if:

(a)

the application referred to in paragraph (1)(b) specifies that the amount, or part of the amount, received by the third party is to be credited against the liability in relation to a specified percentage that is less than 100% of the amount payable under the liability; and

(b)

the Registrar is satisfied that the payer and the payee agree that the amount is to be credited against the liability in relation to that percentage of the amount, or the part of the amount, payable under the liability;

then the Registrar must credit the amount against the liability in relation to that percentage of the amount, or the part of the amount, payable under the liability.

Subsection 71A(3) provides that otherwise, the Registrar must credit the amount against the liability in relation to 100% of the amount, or the part of the amount, payable under the liability.

This change is being made to clarify that non-agency payments can be credited against less than 100% of the liability. It ensures that parents are able to use this flexibility in the way that they manage their child support payments.

Item 7 repeals subsections 71C(1) and (2), and substitutes subsection 71C(1). This is done in order to improve the clarity and comprehensibility of how crediting of prescribed non-agency payments occurs. Subsection 71C(1) provides, if:

(a)

the payer of an enforceable maintenance liability in relation to a payment period or initial period has made one or more payments to the payee of the liability, or to another person; and

(b)

the payment is a payment of the kind specified in the regulations (see Regulation 5D of the Child Support (Registration and Collection) Regulations 1988 for a list of the payments); and

(c)

the sum of those payments exceeds the sum all such payments previously credited under this section against the liability for all past periods; and

(d)

the payer does not have at least regular care of any of the children to whom the relevant administrative assessment relates;

then the Registrar must, despite section 30, credit the excess amount mentioned in paragraph (c), up to a maximum amount that is equal to 30% of the amount payable under the payer's liability for the period, against the liability in relation to the amount payable under the liability for the period.

A note following subsection 71C(1) explains that subsection 71C(1) is subject to section 71D.

Item 8 inserts after section 72B a new section 72AC. Section 72AC allows the Registrar to request the Repatriation Commission to make deductions from certain payments which the Repatriation Commission administers in order to pay child support debts. Subsection 72AC(1) states that the Registrar may do this if a person is a payer of an enforceable maintenance liability, or the person owes a child support debt, and a portion of that debt remains unpaid after the day on which the debt became due and payable under section 66 of the Child Support Registration and Collection Act, and the person is receiving one of a number of payments under the Veterans' Entitlement Act 1986 . These payments are:

(i)

an age service pension under Division 3 of Part III of that Act;

(ii)

an invalidity service pension under Division 4 of Part III of that Act;

(iii)

a partner service pension under Division 5 of Part III of that Act;

(iv)

income support supplement under Part IIIA of that Act; or

(v)

Defence Force Income Support Allowance under Division 2 of Part VIIAB of that Act.

Subsection 72AC(2) sets out the requirements of the notice which the Registrar must send to the Repatriation Commission.

Veterans' Entitlement Act 1986

Item 9 inserts at end of section 58J new subsection 58J(3). It provides that the Commission must, in accordance with a notice given under section 72AC of the Child Support Registration and Collection Act (see item 2 ) make deductions from instalments of the pension payable to the recipient and pay the amounts deducted to the Registrar.

Item 10 inserts after section 122D a new section 122E, which deals with deductions of Defence Force Income Support Allowance (DFISA) paid to the Registrar. It provides that the Commission must, in accordance with a notice given under section 72AC of the Child Support Registration and Collection Act (see item 2 ), make deductions from instalments of DFISA and pay the amount deducted to the Registrar.

Part 2 - Application provisions

Item 11 sets out the application arrangements for the provisions dealing with reconciliations between parents. It provides that this Schedule applies in relation to parents who become members of the same couple after the commencement of this Schedule.

Item 12 sets out the application of item 2 . That is, it sets out the application of section 150E, which deals with the effect on administrative assessments of reconciliations between the parents. It provides that item 2 applies in relation to parents that the Registrar is notified have become members of the same couple, and the Registrar is satisfied have become members of the same couple, after the commencement of this Part (that is, 1 July 2008).

Item 13 sets out that that amendments made by item 3 of this Schedule, that is, changing the onus in applications for variation to enable liability to become again enforceable under the Child Support Registration and Collection Act, apply in relation to applications made under section 39 after the commencement of this Schedule.

Item 14 sets out the application arrangements in relation to crediting of non-agency payments for less than 100% of the amount payable. It provides that the amendments apply in relation to amounts that are received, after the commencement of this Schedule, by a third party (as mentioned in subsection 71A(2) of the Child Support Registration and Collection Act as inserted by this Schedule) (see item 6 ).

Item 15 sets out the application arrangements in relation to the amendment made to crediting of prescribed non-agency payments. Subitem 15A(1 ) provides that the amendment made by item 7 of this Schedule applies in relation to payments, made after the commencement of this Schedule, of the kind referred to in subsection 71C(1) of the Child Support Registration and Collection Act (as inserted by this Schedule). Subitem 15(2 ) provides that to avoid doubt, the amendment does not apply to payments made before the commencement of this Schedule which have not, at the time of commencement, been credited under section 71C of that Act.