House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families and Social Services, Senator the Hon Anne Ruston)

Schedule 6 - Child support

Summary

This Schedule will allow the Minister to determine average weekly earnings trend figures ordinarily published by the Australian Statistician, for child support assessment purposes, where publication of trend estimates for Average Weekly Earnings series has been suspended, for example due to the impact of the COVID-19 pandemic on the labour market.

Schedule 6 commences the day after Royal Assent.

Explanation of the changes

Child Support Assessment Act

Item 2 adds new subsections 5A(6) and (7). If the Australian Statistician has not published the Average Weekly Earnings - Trend - Males - All Employees Total Earnings (MTAWE) figure referred to in subsection 5A(1) for a relevant June quarter by the end of the first 30 September after the end of that quarter, new subsection 5A(6) allows the Minister to make a legislative instrument determining a figure. New subsection 5A(7) deems the figure determined by the Minister to be the trend MTAWE figure for the relevant June quarter. This figure is annualised to be used to determine the costs of children which underpin administrative child support assessments for periods commencing in the subsequent calendar year. It is also used to generate various other elements used in child support formula assessment.

The Australian Statistician has temporarily suspended publication of this trend figure from June 2020 as a result of the impact of the COVID-19 pandemic, although various other wage statistics, including seasonally adjusted figures, continue to be published. This is the first time in history that this figure has been suspended. In consultation with the Australian Statistician, an alternative figure will be selected to be used for the purpose of calculating child support assessments. The 30 September date balances allowing the Australian Statistician sufficient opportunity to publish the required figure against the need to have the figure set for the purposes of making new child support assessments from the following 1 January. The determination by legislative instrument must be tabled before Parliament, and is disallowable. The discretion given by this enabling power is necessary to give scope for an appropriate figure in extraordinary circumstances, and ensure children of separated parents continue to share appropriately in the standards of living of their parents.

Should a parent disagree with the assessment of their capacity to provide financial support based upon the costs of children determined in this way, they remain able to seek a departure from administrative assessment under Part 6A of the Child Support Assessment Act, which will enable a more individualised assessment of their obligations to their child or children to be made, if grounds are identified. Departure decisions, or refusal to make a departure decision, are subject to full merits review both internally (under the Child Support (Registration and Collection) Act 1988 Part VII) and externally by the Administrative Appeals Tribunal (Part VIIA).

Item 1 amends paragraph 5A(5)(b) as a consequence of the amendments made by item 2 .

Item 4 adds new subsections 58AA(4) and (5). If the Australian Statistician has not published the Average Weekly Earnings, Australia figure under the headings Average Weekly Earnings - Trend - Persons - All Employees Total Earnings (AWE amount) figure referred to in subsection 58AA(1) for a relevant December quarter before the end of the first 31 March after the end of that quarter, new subsection 58AA(4) will allow the Minister to make a legislative instrument determining a figure. New subsection 58AA(5) deems any figure determined by the Minister to be the trend AWE amount for the relevant December quarter, if the Australian Statistician has not published the Average Weekly Earnings. This figure is used to generate an ATI indexation factor to allow determination of an indexed adjusted taxable income for a parent where the Commissioner of Taxation has not assessed the parent's taxable income for the last relevant year of income for a child support period. Determination of a parent's adjusted taxable income by the Registrar is needed to allow an administrative child support assessment for a parent to be made where the adjusted taxable income for the last relevant year of income is not available.

The Australian Statistician has temporarily suspended publication of various trend figures from June 2020 as a result of the impact of the COVID-19 pandemic, although various other wage statistics, including seasonally adjusted figures, continue to be published. There is a risk the December AWE amount will not be published. If needed, an alternative figure will be selected, in consultation with the Australian Statistician, to be used for the purpose of calculating child support assessments. The 31 March date balances allowing the Australian Statistician sufficient opportunity to publish the required figure against the need to have the figure set for the purposes of making new child support assessments using updated taxable income in the next financial year. The determination by legislative instrument must be tabled before Parliament, and is disallowable. The discretion given by this enabling power is necessary to give scope for an appropriate figure in extraordinary circumstances, and ensure children of separated parents continue to share appropriately in the standards of living of their parents.

If a parent disagrees with the adjusted taxable income generated by the application of the ATI indexation factor, they may seek internal merits review of the particulars of their administrative child support assessment (under the Child Support (Registration and Collection) Act 1988 Part VII) and externally by the Administrative Appeals Tribunal (Part VIIA). Alternatively, if they do not think their assessment reflects their capacity to support their child, they can seek departure from administrative assessment of child support to allow a more appropriate income to be used, under Part 6A of the Child Support Assessment Act.

Item 3 amends paragraph 58AA(3)(b) as a consequence of the amendments made by item 4 .

Item 5 is a technical amendment to subsection 155(2A) as a consequence of the amendments made by item 4 .

Item 6 is an application provision:

•

the amendments of section 5A apply to the June 2020 quarter and later quarters (the trend MTAWE figure for the June 2020 quarter will be used in child support assessments made from 1 January 2021);

•

the amendments to section 58AA apply to December quarters ending after commencement (the December 2020 quarter trend AWE figure will be used in child support assessments made from 1 July 2021).