Friday, March 13, 2015

Child Support fiasco

NZ's  child support scheme is a direct result of the DPB. Some background:

New Zealand’s legal tradition is based on that of the UK. Until 1981, maintenance orders and agreements were determined and/or administered by the courts. In 1981, the Liable Parent Contribution Scheme was established to collect maintenance for the benefit of children living with income support recipients. The Scheme was administered by the Department of Social Welfare. Arrangements for parents not in receipt of income support continued to be made through the courts.
In 1992, the Child Support Scheme was established, administered by Inland Revenue. It is compulsory for custodial parents receiving income support to seek child support through the scheme. Other parents can use the scheme or can make voluntary or court-based agreements.
Due to increasing rates of separation and childbirth outside marriage, rates of sole parenthood have risen significantly in recent decades, and are higher than in Australia. Nearly half of mothers have spent some time as a sole mother before they turn 50. Young mothers are the most likely to be sole parents. Approximately 30% of sole parents have never lived with the other parent of their children. The rate of sole parenthood is much higher amongst Māori and Pacific Islands families.
So now we have this mammoth system that requires a ridiculous $180 million of taxpayer's money merely to adjust.

Anyway, from April 1 a new child support formula will apply. Already parents - custodial and non-custodial - a receiving new assessments. According to the IRD;

“Rather than being a one size fits all, from 1 April 2015 a new formula includes both parents' incomes and circumstances, and recognises a wider range of care. So the amount of child support some parents pay or receive may change".

The system is supposed to be fairer. Of course every parent that has to pay more isn't going to see it that way.

Already Stuff has ample examples of people angrily laying out their grievances. Hopefully they will be motivated to sort out a private arrangement instead of leaving it to the IRD. If neither parent receives a benefit that is their prerogative. Stop moaning and sort it yourselves.

One aspect of the changes which caught my attention however involves one parent being on welfare.

In the case laid out by the female parent, who pays CS to the male parent who is on  a sickness benefit (no longer exists so assuming a JobSeeker benefit), she claims her monthly payment has risen from $730 to $931  but he woesn't get any of it.

I am assuming she means he doesn't get any of the CS payment full stop - not just the increase. If he was on Sole Parent Support that would be the case because CS payments are kept by the state to offset that benefit. The same must apply to the JobSeeker benefit especailly as ex DPB with older children have been transferred to this benefit.

On my reading of the examples so far, most people are getting substanstantially increased CS bills (though naturally enough they are the most vociferous).

It will be most interesting to see how much the benefit clawback increases under this new regime. From memory it has never exceeded a paltry 10 percent.


Anonymous said...

...sort it yourselves...

Exactly. My ex got what she would have been entitled to had she gone through the system. The calculations were easy and she accepted the offer I made despite being manipulative about everything else. The IRD were happy to talk about the principles despite not being involved. It was a painfully expensive few years.

Jim Rose said...

I heard the Minister on the radio say it's 50% no change with the rest some increases, some decreases with a few outliers in both directions

Lindsay Mitchell said...

Thanks Jim. That's useful to know.

Anonymous said...

Sorting it out yourselves only works when both parties are prepared to put the welfare of the children first.
I broadly support the new formula taking into account incomes of both parents and recognising the proportion of time the father (usually the father) has care, but in my situation I don't understand the new assessment.
My ex-husband has been assessed to pay one third of what he was assessed to pay last year. He had care exactly three nights in the whole year (because he refuses to have regular contact), and at $60/hour earns nearly triple what I do. Neither of these factors should have made a significant difference.
If the new formula is fairer, that means my ex-husband had previously been assessed to pay triple what is fair, and that doesn't seem likely to me.
But it really doesn't matter what the assessment is because he doesn't pay anyway. And since IRD is also chasing him for years of income tax on undeclared income as far back as they can go I don't think I'm likely to get anything anytime soon.

S. Beast said...

It's the non custodial parents with the clever accountants who are the real problem as they financially abandon their children. Don't think they have addressed this yet.