House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer,the Hon John Dawkins MP)

CHAPTER 10

THE CHILD SUPPORT REGISTRATION AND COLLECTION ACT 1988

PAYMENT AND RECOVERY OF CHILD SUPPORT DEBTS.

Overview

Broaden the range of payments that the Registrar may accept for credit against a registered liability

THE CHILD SUPPORT (REGISTRATION AND COLLECTION ) ACT 1988

PART V

PAYMENT AND RECOVERY OF CHILD SUPPORT DEBTS

Summary of proposed amendments

10.1. The Bill will broaden the range of payments that the Registrar may accept for credit against a registered maintenance liability.

Background to the legislation

10.2. The Registration and Collection Act has a provision that enables the Registrar to credit to a payer's liability to the Registrar, amounts that are paid to the payee directly by the payer providing they both agree that the payment is for maintenance and should be credited against the liability to the Registrar. This facility is used quite extensively by clients of the Agency but in practice it has proven to be restrictive in the range of payments that can be credited.

10.3. In particular payments that are not made directly to the payee cannot be credited. As a result payments made to third parties for a whole range of pre separation debts, whether joint debts or debts of one or both of the parties, or payments that the payer has made to a third party after the separation to assist the custodian and children do not qualify. This often leads to increased tensions between the Agency, payees and payers and can frustrate future collection strategies and efforts.

10.4. It is widely held that the Agency should be able to consider these types of payments when both parties agree and all that is stopping an amicable conclusion is the restrictive wording of this provision.

Explanation of the proposed amendment

10.5. The Bill will insert a new provision at section 71A to extend the payments that may be accepted to include those that are made to third parties. The requirement for the parties to agree remains and this will ensure that the thrust of this whole provision remains dependent upon the agreed wishes of the parties [Clause 17.71A].

Examples of a payment to a third party which is accepted for credit against the payer's liability to the Agency

10.6. (1) The payer contacts the Agency to advise that a payment has been made for the payee to a bank to settle a credit card debt which had been incurred by the payee to purchase school needs for the children with the custodian. The Agency contacts the payee who confirms the payment to settle the debt to the bank, and agrees that it should be credited towards the payer's liability with the Agency because of the special circumstances.

10.7. (2) The payee contacts the Agency to advise that the children have been provided with new footwear by the payer whilst they were on their regular access visit at the weekend and that the value of the footwear was $85.00. It is agreed that the amount should be offset against the next payment of maintenance that is due. An appropriate form is provided for completion which is duly returned and the amount is credited to the payer's liability to the Agency.

10.8. The payee in this case is a pensioner and when the monthly payout is made by the Department of Social Security the advice to the payee shows that an amount of $85.00 has been accepted as having been paid direct and the cash balance due has been paid to the credit of the nominated bank account. The Department of Social Security subsequently advises that there has been an adjustment made to the sole parent benefit for the full amount of the maintenance received, as cash and for the amount paid for the footwear.

10.9. (3) The payer contacts the Agency to advise that it has been agreed with the payee that mortgage payments on the matrimonial home will be met in future by him to ensure the asset is not lost pending sale and the final property settlement. The Agency contacts the payee to confirm the agreement and establishes that she is prepared to accept that the ongoing liability should be credited to the extent of an agreed figure and another amount be paid in cash each month. The Registrar can accept the arrangement as this is agreed by the parties.

Commencement date

9.10. The amendment will apply from the date the Royal Assent is given to the Child Support Legislation (Amendment ) Bill 1992 [Clause 2].

Clauses involved in the proposed amendments

Clause 2: proposes that the Act proposed by the Bill will commence on the date it is given the Royal Assent.

Clause 15: provides for the insertion of a new section 71A.