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Senator NEAL (New South Wales) (5.33 p.m.) --Mr Acting Deputy President, I rise to speak on the report of the Joint Select Committee on Certain Family Law Issues relating to the child support scheme, on which report substantial comment has been made already. The whole issue of the financial support of children after separation is an emotive one. It often entails a situation where couples are having difficulty coming to terms with the separation and also with how their children should be dealt with and cared for after separation. It also often entails a situation where the financial resources available are being spread too far, with two households having to be set up, and are inadequate to meet the needs of all parties concerned in a satisfactory way.

As earlier mentioned by Senator Carr and Senator Reid, there is no doubt that parties affected by the Child Support Agency are largely from the poorest groups in our community. Approximately 91 per cent of custodial parents--that is, parents with children in their care--and 68 per cent of non-custodial parents earn less than $20,000 per annum. Of that 91 per cent of custodial parents, many are at least partially in receipt of the sole parent benefit.

This report has attracted huge public interest. In fact, in addition to the phone-in, during which the parliamentary phone system almost melted down, and the extensive oral submissions to the committee, we received in excess of 6,000 written submissions. The submissions showed a strong public dissatisfaction with the manner in which the Child Support Agency was being administered. I accept these views and I endorse very strongly the idea that some action must be taken to remedy the situation. I will refer to the recommendations contained in the majority report to some extent at a later stage.

Notwithstanding these concerns, it is my view that the Child Support Agency has gone along the track of satisfying its prime objective, which is to improve the position of children of separated parents. The fact is that children covered by the scheme--that is, children born after 1 October 1989, or children and their siblings whose parents separated after that date--are more than twice as likely to receive financial support from non-custodial parents as children not covered by the scheme. This clearly indicates that children to whom this scheme applies are in a much better position than children who are not covered by this scheme.

At the commencement of the scheme in 1989, only 30 per cent of non-custodial parents paid maintenance. Now, 73 per cent of children covered by registered child support agreements collected by the Child Support Agency receive maintenance. The level of maintenance is also up. An average of $26 per week was paid in 1988, while in 1992-93, the latest year for which figures are available, $42 was payable.

The fact is that children of separated parents are financially better off now than they were before the commencement of the scheme. Essentially, I am saying that the children for whose benefit this scheme was brought in are better off--notwithstanding many of the complaints of parents who are also affected by the scheme--and, in my view, that is what is most important.

A lot of the report is taken up with satisfying the complaints of affected parents. I am fully in agreement with the majority of the recommendations contained in the report. I refer in particular to changes in the system for dealing with clients. It was indicated in many of the submissions, both oral and written, that the Child Support Agency and, consequentially, the Department of Social Security were insensitive in their dealings with clients, being both custodial and non-custodial parents. It was said that they seemed to lack any appreciation of the emotional difficulties being faced or the fact that many parents after separation are unaware of their legal obligations and how the system operated and had a great deal of difficulty understanding a lot of the correspondence they received from the agency. As it was put to us, there has been some attempt already by the Child Support Agency to deal with these problems.

One of the most common complaints received was that it was an almost impossible task for clients of the agency to get in touch with that organisation. Often they would sit on the phone for hours and hours, trying for many days before receiving a response. When eventually they were able to speak to someone, often they were not able to deal with a person who had any knowledge or awareness of their particular case.

There has been a marked change in the system, with the Child Support Agency placing a great deal more emphasis on answering phone inquiries, dividing them into inquiries for general information and more specific inquiries dealing with particular cases. With the present changes, it is now normal to at least have a telephone inquiry answered within 10 to 15 minutes, which is outstanding, bearing in mind what it was previously.

The report also recommends that a lot of the written material that is forwarded to those dealing with the Child Support Agency be simplified. I have some legal training but I was at a complete loss to understand what it was trying to express in its statements and correspondence. Any simplification will help everybody concerned. There was also a major problem in the collection of child support and a concern that it was taking too long. Senator Spindler referred to this earlier.

There are a number of recommendations in the majority report which I support strongly, in particular one concerning processing times. An example was given of a parent in receipt of sole parent benefit who forwards the application form for child support to the Department of Social Security or drops it in. Evidence was provided to us that the first step involved, which was to transfer the form to the Child Support Agency, took an average of 17 days. The worst cases took up to 63 days--and that was before any processing was commenced.

There are also a large number of recommendations in the report about improvements in collection. Changes there are long overdue. Improvement also needs to be made to the checks on the receipt of child support and its transfer to the custodial parent. Some evidence was provided to the committee that in many cases, if child support was not paid on time, no checking was done until the custodial parent rang up and queried it or made a complaint.

There is presently a major problem in the collection of child support moneys, even though it is stated to us by the government agencies that 73 per cent of child support payable is being collected. There is an accumulated debt, as of April 1994, of $272 million. That means that $272 million that should be going towards the care and support of children is not being collected. This is obviously a major problem. The report also contains recommendations to deal with this difficulty. I strongly support those.

I am less than enthusiastic about some of the matters raised in the report about the child support formula and the attempt by the committee to deal with the cost of bringing up children. The committee was not in as good a position as a lot of its predecessors. The percentage payable for child support was based extremely roughly on the Lovering survey. Essentially, people involved in that survey went out and bought a basket of items roughly involved with the care of a child. They then worked out roughly what that cost might be as a proportion of income of those on average incomes. It is not a system, I think, that creates a fair assessment of what it really requires to bring up a child--at least in a financial sense.

We really did not have any better information provided to us than that. There was a lot of debate within the committee about whether it would cost as much to bring up a child as the child support formula provided. Opinion was quite divided. Being the parent of a couple of small children, I am not astonished by any costs involved in bringing up a child. I am of the view that in most cases no amount of child support can fully satisfy all the needs of the child, but it must take into account the capacity of the parents to pay--in particular the capacity of the non-custodial parent.

In dealing with the formula there were three matters on which I really could not agree with the majority of the committee. As a result, I prepared a brief minority report which is appended to the majority report. I will briefly go through those three matters. The first recommendation that I put forward was that the Child Support (Assessment) Act should be extended to all children of separated parents. As I earlier stated, the act at this stage applies only to a small proportion of children of separated parents. It applies only to those children who were born to parents separated after 1 October 1989, or the siblings of those children. That means that approximately one-third of children of separated parents are covered by the child support act. Because of my view that the children covered by this scheme are in a much better position than children not covered by it, I think it is certainly in the interests of those children not covered to come under it.

There are a number of matters other than those which relate to direct benefits to children which indicate that for the community there is an ongoing cost in having two competing systems of providing child support--or maintenance, as it is known under the Family Law Act. This ongoing cost does not translate into any benefits. Even though there has been a dramatic increase in the level of maintenance payable under the scheme, there seems to be a fairly close link between the amount of child support being paid on average pursuant to judicial orders and that being paid as a result of the application of the formula. At the moment, the average maintenance payable pursuant to court orders is $42 and the average maintenance payable pursuant to the formula is $42. Even though in strict legal terms it cannot be said that there is a requirement to work out the amount a certain way, it is contrary to the principles contained in the Family Law Act for the child support formula to be used.

The fact is that, in a practical situation where most maintenance orders are being made by magistrates who deal not only with family law but with criminal law and every other matter that comes to the local court, magistrates rely very heavily on the formula as an indicator of what is fair to be paid as maintenance. The whole principle of using the child support formula as an indication for quantifying what the payment of child support should be was endorsed by the Family Court in a case in 1992. This indicates very strongly that there is really no practical reason to continue to have the competing schemes and no continuing reason to have the cost of dealing with matters through the Family Court system and through the local court when children covered by the child support scheme are in a better position than the children in families not covered by the scheme, and that it would be of great benefit to reduce the cost, while at the same time putting the children in a better position. That proposal was supported by a large number of submissions received by the committee, in particular from the Family Law Council and the Law Society of New South Wales family law branch.

The second matter on which I dissented from the majority report concerns the reduction of the custodial parent's disregarded income level below its present level. As has been indicated, there was a large number of submissions that drew a direct comparison between the exempt income of the non-custodial parent and the disregarded income of the custodial parent. They saw these figures as being equivalent. They looked at the two figures, which were quite vastly different, and drew the conclusion that the incomes of custodial parents and non-custodial parents were not being properly dealt with.

I suppose we really have to go back to the essential principles involved and have a look at what those two figures really represent. The amount which is set aside for non-custodial parents is a figure which is provided as an initial starting point for their support. It is very difficult with these sorts of formulas to clearly state exactly what they cover, but I will make an attempt at it in the hope that the substantial effect of the formula is expressed.

Essentially, we start off with the income of a non-custodial parent and deduct the self-support, or exempt, component. Once we have deducted that money and set it aside, the percentage is applied. Let us say a non-custodial parent is earning $10. The self-support component of $1 is set aside, and to the remaining $9 the percentage formula--18 per cent--is applied for one child. So the general view that that self-support component that is taken out is the only money which the non-custodial parent can rely on is essentially false because the percentage balance which is remaining is also retained by the non-custodial parent.

I turn to the custodial parent's disregard component. This is the component whereby, if the custodial parent earns over a certain amount, the excess amount must be taken into account in determining the amount of child support payable. The custodial parent's disregard income is meant to represent the in kind contribution of that custodial parent towards the care of the child. In other words, custodial parents do not actually pay money, but when they are looking after the child they cover the child's costs--the electricity in the house, the rent, and the cost of transporting the child around. Also, to some extent custodial parents forgo the opportunity for employment, and this component is in some way meant to make up for that.

In making the mistake of dealing with these two figure as equivalents, the committee recommended the reduction of the custodial parent's disregard income level to the cut-off point for the sole parent's benefit. I believe there is a real danger in doing this. I suppose that with 91 per cent of custodial parents earning less than this amount anyway, the practical effect of reducing the disregard income level is quite minimal. But the fact is that the majority of sole parents are amongst the poorest in our community, and by creating another barrier to their breaking out of the poverty trap and improving their financial position, we are making it even mo

The last recommendation, which I strongly disagree with, is the reduction of the maximum cap for non-custodial parents. Previously if they earned over 2.5 times the average weekly earnings, which is about $83,000, they did not have to pay a percentage of income earned over that amount. The recommendation contained in the report reduces that cap to two times the average weekly earnings, which effectively means that those non-custodial parents who earn between $63,518 and $83,147.50 get an unexpected windfall. Those people--I cannot say I believe them to be the poorer members of our community--get to pay less child support for their children who, very often, are in the care of sole parents.

I return to the majority report to express my strong support for the majority of recommendations. I am unable to agree with only those three matters. I have to say that I, being a new senator, was very pleased to see how seriously all the senators involved took their job and how hard working and diligent the secretariat was. It was a privilege to be involved with the committee.