House of Representatives

Explanatory Memorandum

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

OUTLINE

This bill provides the legislative basis for stages 2 and 3 of the Government's major overhaul of the Child Support Scheme, flowing from the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Patrick Parkinson, and following up the stage 1 reforms enacted earlier this year.

The bill includes the measures set out below.

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A new child support formula is provided, based on recent Australian research on the costs of caring for children, taking account of both parents' incomes after equal self-support amounts are deducted, recognising care of a child for more than 14 per cent of the time, and treating first and second families more equally.

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The role of the Social Security Appeals Tribunal is being expanded to include independent review of child support decisions, providing a review mechanism that is inexpensive, fair, informal and quick.

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The relationship between the courts and the new Child Support Scheme will be simplified. Parents will have better access to court enforcement of child support debts and courts will have increased powers to seek information and evidence in those cases and to make interim arrangements for their child support cases generally.

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The family tax benefit Part A maintenance income test will be changed so payments are reduced only for those children in the family for whom child support is paid.

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More flexible arrangements, with better legal protection, will be made for parents who want to make agreements between themselves about the payment of child support and for how lump sum payments are treated.

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The income definitions for certain tax-free amounts, foreign income and fringe benefits, as used to calculate child support on the one hand and family tax benefit and child care benefit on the other, will be aligned.

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Resident parents will keep all of their family tax benefit where a non-resident parent has care of their child for less than 35 per cent of nights in a year. Non-resident parents who have care of their child for at least 14 per cent will continue to be eligible for the rent assistance component of family tax benefit Part A and will continue to be eligible for a health care card.

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The minimum child support payment of about $6.15 per week will now, for non-resident parents who pay child support to two or more families, have to be paid to each of those families, rather than being divided between them. Parents who deliberately minimise their income to avoid paying child support will generally have a $20 per child per week minimum payment.

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Parents who are using income from second jobs and overtime to help re-establish themselves during the first three years after separation may have that income excluded from child support calculations.

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A simplified process will allow parents to suspend child support payments for a period of six months if they reconcile, and then resume the payments should they separate again, without having to apply anew.

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Parents who have financial responsibility for a step-child in a second family will now be able to apply to have the step-child considered when calculating child support for the parent's first family, if no-one else can financially support the step-child.

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The processes and rules for 'changes of assessment' will be made simpler and clearer for parents.

The Social Security Appeals Tribunal and court-related measures (stage 2 of the reforms) will commence on 1 January 2007. The new child support formula and remaining measures (stage 3 of the reforms) will commence on 1 July 2008

NOTES ON CLAUSES

Clause 1 sets out how the Act is to be cited, that is, the Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006 .

Clause 2 provides a table that sets out the commencement dates of the various sections in, and Schedules to, the Act.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

Clause 4 enables the Registrar to obtain information from a person where it is reasonably necessary to do so for the purposes of this amending Act.

This Explanatory Memorandum uses the following abbreviations:

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'Child Support Assessment Act' means the Child Support (Assessment) Act 1989 ;

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'Child Support Registration and Collection Act' means the Child Support (Registration and Collection) Act 1988 ;

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'Family Assistance Act' means the A New Tax System (Family Assistance) Act 1999 ;

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'Family Assistance Administration Act' means the A New Tax System (Family Assistance ) ( Administration) Act 1999 ;

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'Family Law Act' means the Family Law Act 1975 ;

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'Social Security Act' means the Social Security Act 1991 ;

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'Social Security Administration Act' means the Social Security (Administration) Act 1999 ; and

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'Taskforce Report' means the Report of the Ministerial Taskforce on Child Support, In the Best Interests of Children - Reforming the Child Support Scheme .