Wednesday, July 19, 2006

Incentivising bad behaviour

Ex-MPs John Tamihere and Willie Jackson have a daily talkback programme on Radio Live. Yesterday I was feeling particularly frustrated about the mis-reporting of Maori notifications to CYF which by lunchtime had escalated to the Prime Minister saying she was not surpised that 25,000 Maori children had been reported to CYF for suspected child abuse (I blogged on why this is wrong yesterday).

As the report was on the Radio Live news I decided to give Jackson and Tamihere a call about it and ended up having quite a long discussion with both about the benefit system and Tamihere's suggestion that the Maori Urban Authority take control of some people's benefits. One thing Tamihere and I were in agreement over is the terrible incentives inherent in the current system.
One example he described is the situation whereby parents are splitting their kids so they can both go on the DPB and receive more money. In reality they live together in a garage and the bulk of the income stream is poured into all the wrong things; drugs, alcohol, junkfood, violent DVDs and games.

At the outset the DPB was supposed to support a mother and children while the father made a living to offset some of her DPB payment. Not any more.

Here is a Jan 2005 news item about how this little rort came about;


Brian Smaller said...

as an aside, I watched Willie Jackson's TV1 program last night and one of his huests made the most bizarre statement I have heard in a long time. Atareta Poananga said that it was impossible for Maori to be rascist because they had "no power". Excuse me? Ms Paonanga would make more money than me, is probably better educated and has more power than I will probably every have in my life unless I can get my hands on one of those Iranian nukes.

Here is a powerful, strong Maori woman who is cheerfully advocating the 'powerlessness and hopelessness' that Maori apparently feel as oppressed colonialised indiginous people. Wouldn't she be better off being positive and encouraging Maori to succeed in the 21st century rather than sit and wait for some "compensation" boat to come in?

Lindsay Mitchell said...

Jackson and Tamihere are discussing now (on Radio Live till 3) her statement and both disagree. Jackson because he has seen Maori racism towards other ethnic groups. Tamihere because he doesn't believe power is relevant.

Anonymous said...

When we get consenus that Maori must move from being a Stone Age tribal people to being part of the 21st Century then an only then will we get an improvement in the appalling statistics surrounding Maori and everything Maori.

Unknown said...

As a liable parent, I can say that not all people on the DPB are as bad - but you're right to conclude that the system is flawed and open to abuse. I think the Judge was sending a strong message to government agencies that the system is inequitable. My sympathy goes to the liable parents of the Child Support Act (1991). What gets me is that this situation has existed for years. Enough is enough.

Brian Smaller said...

I have had no experience of the Liable Parent contribution thing but a good friend of mine is embroiled in it at present. He said that he pays 24% of his gross income. His ex-wife who has the kids gets the DPB of $XX.XX per week. He said that if he earned double what he gets now IRD would still take 24% of his gross but his ex would still get the same dpb. Is that right? Sounds awfully unfair to me. The government takes more and still gives the person with the kids the same amount.

Lindsay Mitchell said...

That's right Brian. Child Support isn't calculated on how much it costs to raise the child but on how much the liable parent earns. Bit like tax. It isn't calculated on what services you are paying for but how much you earn.

The revenue gathered in child support only offsets the DPB by about ten percent. That's because so many liable parents only pay the minimum which is about $11-12 a week. Either they are very low income or beneficiary. But child support acts like a high EMTR. If the liable parent betters his circumstances the govt takes more.
So sometimes he is better to stay on a benefit and only pay the minimum. It's all arse about face nonsense created by the DPB system.
The liable parent is expected to pay the taxpayer back as much of the DPB payment as possible while it is the custodial parent (usually the mother) controlling whether or not she stays on it.

And if the split was less than amicable then she may not be inclined to make the ex's life any easier.

Anonymous said...
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Unknown said...
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Unknown said...

Brian you are mostly right. Small point Lindsay, under the formula used, the 24% applies to the first $100,157. Sometimes higher payments are awarded through a process IRD calls the Administrative Review.
There are about 185,000 parents who pay Child Support, so while there are many who pay the minimum, there are many like me who paid thousands of dollars per year. Brian, your friend (with less than 40% custody of his 2 children - right?) could use help from those who have already some experience with the system first hand.
Lindsay, he is NOT better to go on a benefit, particulalry if he has the actual cost of looking after his children not recognised by the state. Parents who have the minority custody are disproportionately represented in the poverty stats.
See my blog for some more data on this which I am building by one post per day.

Lindsay Mitchell said...

Child Support Reformer, In my book nobody is better off on welfare because work has many other benefits apart from an income.

But people who only command a low wage can be better off or in the same financial situation on a benefit, especially if they supplement it under the table.

The most recent figure I have for liable parents paying the minimum ($13 a week now that I have checked) was around 70,000 in 2004.

You are fighting on behalf of well motivated parents but there are also a lot of deadbeat types out there who have little or no contact with their kids and are only interested in avoiding paying for them. They can be the mum or the dad and unfortunately they don't help your cause.

I'll have a look at your blog. More info on the Child Support system will be very useful.

Unknown said...

Lindsay, my figures are up to date (see I'm familiar with the dead-beat dad concept and detest being treated like one. In my experience, the vast majority of liable dads (all parents, for that matter) I know deeply love their children and could not be described as deadbeat.
I'm happy to share my perspectives/info so ask away if you like.