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Mr PRICE (Chifley) --On behalf of the Joint Select Committee on Certain Family Law Issues, I present the committee's report, incorporating a dissenting report, entitled Child support scheme--an examination of the operation and effectiveness of the scheme, together with the recommendations and conclusions, an electronic version on disk and evidence received by the committee.

Ordered that the report be printed.

Motion (by Mr Price)--by leave--agreed to: That this House authorises the publication of the recommendations and conclusions and the electronic version on disk of the report of the Joint Select Committee on Certain Family Law Issues entitled Child Support Scheme--an examination of the operation and effectiveness of the scheme.

Mr PRICE --by leave--The report of the Joint Select Committee on Certain Family Law Issues is a benchmark report here and overseas. It consolidates for the first time all material leading up to and including the introduction of the child support scheme. It provides a rigorous and critical analysis of the scheme. The report has broken new ground in opening up the parliamentary committee system to ordinary people, allowing them to express their opinions and views and to have them taken into account by a group of parliamentarians.

The committee received 6,197 submissions--a record. It is history now that the hotline established by the committee received over 150,000 calls in two days. I tabled in the House an interim report entitled Thanks for listening. As the committee moved around Australia hearing witnesses, it invited members of the audience--that is, the public--to make short statements to the committee. Many did so. This participative approach and the overwhelming public response were the core input to this report.

The committee has listened and developed a powerful reform package consisting of some 163 recommendations for change. These changes aim to strengthen the scheme--not weaken it. The recommendations involve a major shake-up of the administration and seek to restore the balance of power between clients of the scheme and the agency. Administrative procedure must not override the rights of clients under legislation. The CSA must become more effective and, at a very basic level, be capable of responding and acting upon telephone calls and letters. The CSA must become a client focused and a client sensitive organisation.

Parents need to be cloaked with rights when dealing with the agency and with the ability and opportunity to seek redress when these rights are abrogated. When the agency fails, clients should be compensated for their financial losses. There are proposed modifications to the formula--the minimum necessary to restore equity in the scheme. These recommendations are a blueprint for reform. They chart the way ahead. These recommendations make up a finely balanced package that does not lend itself readily to the government cherry picking its way through recommendations. The committee believes that more research needs to be undertaken and that there ought to be further evaluations of the scheme and appropriate finetuning over time.

Has the child support scheme been a success? Yes, it has been a qualified success. The community now accepts that parents should and must be responsible for their children. Much has been made of the 75 per cent collection rate--a world best. In fact, it appears to represent somewhat of a sleight of hand. Firstly, default assessments of over 202 million are excluded and private collection is included. Consequently, the agency collection rate is closer to 42 per cent than 75 per cent.

There are competing objectives of the scheme and they are not prioritised. They need to be prioritised to provide greater accountability and transparency in the scheme. In practice, the scheme appears to be more about saving government revenue than about adequate support for children. The following order of priorities of objectives, with one multiplication and one addition to the scheme, has been recommended. Adequate support is available for all children not living with both parents. Parents share in the costs of supporting their children according to their respective capacities to pay. Commonwealth expenditure is limited to the minimum necessary to ensure that child support to all children not living with both parents is adequate and that work incentives for both parents to participate in the labour force are not impaired.

The administration of the Child Support Agency was almost doomed from the start. Whilst a huge effort went into developing the policy and legislation underpinning the scheme, little effort went into the administration and operation of the scheme. What little chance they had was snuffed out by the exponential growth of the scheme.

The agency's case load has grown from 23,000 to 275,218 in May 1994. It is increasing at the rate of about 7,000 per month. The ombudsman has been consistently critical since the 1989-90 report. The issues of concern included lost documents, delays in registering agreements and court orders, delays in all stages of the process of the recovery of arrears, delays in arranging for auto-withholding of wages, delays in recording and acknowledging payments, inadequate telephone service, failure to answer correspondence and return telephone calls, inability to provide full and accurate information, miscalculation of arrears, inaccurate advice concerning arrears, inappropriate recovery action and failure to take remedial action after proper notification of mistakes.

I still do not understand why the ombudsman's reports have not been heeded and acted upon. It is the clients of the agency who have suffered and endured. There was a hopelessly inadequate central structure and administration. Branch offices were little more than freewheeling fiefdoms. The officers were swamped with work and the systems designed to deal with it created and added to the workload. I am pleased to say that with the appointment of Moira Scollay in charge of the agency reform and change has begun. The committee welcomes and applauds these changes that have started since the inquiry was first announced.

Of most concern, however, is the powerlessness of the clients dealing with the CSA and the inability of clients of the agency to effect any form of redress. For this reason, the committee has recommended a radical package including the provision of dedicated case officers with responsibility and accountability for each client, development of a code of conduct, development of appropriate service standards, provision for clients to escalate their concerns to higher level management, provision of effective staff training, development of national guidelines, recruitment of staff with appropriate service and client skills, use of easily understood correspondence, improvement of the telephone service for clients, avoiding the use of inappropriate computer generated correspondence and ensuring administrative practice is consistent with legislation.

One of the main reasons for locating the agency in the Australian Taxation Office was to use the collection and enforcement skills within the ATO. There is little evidence that the agency or the ATO has been successful. By any standards, $481 million of debt is mammoth. If the CSA were a private company it would risk bankruptcy.

The agency released its national compliance policy only in June this year. The CSA has little idea of the make-up, age and profile of its debt. Its enforcement practices have been described as woeful and its use of court proceedings has been described as cumbersome. This area has not had consistent staffing, nor has the agency consistently used the powers available to it. The solution is not merely to throw in more staffing resources but rather an effective and efficient use of existing powers the agency already has.

Included in the committee's recommendations are that the CSA must consistently use its power under section 120 of the act to force NCPs who are more than three months in arrears to provide full details of their assets and income, the CSA be allowed to report defaulting NCPs to credit reference bureaus, the CSA be allowed to change the family law to allow the parties to a child support enforcement proceeding to be identified where an order has been made, the CSA to report within six months on the costs and benefits of using private process services, the CSA to pilot the use of private collection agencies, the Department of Finance to base its costing of additional staff in the enforcement area on the amount of child support collected rather than the amount of money the Department of Social Security saves and the CSA to report in the next 12 months on any additional power it may require to improve enforcement.

There appears to be a loophole for those who are self-employed or receive a salary package and/or investment income. The CSA was unable to quantify the problem. No group in society should be allowed to avoid or evade its responsibilities to its children. It is like a cancer undermining the scheme. Accordingly, the committee has recommended some tough measures to deal with the problem, including adding fringe benefits back into the child support income base, limiting superannuation contributions to a maximum of nine per cent of income, a targeted program of auditing CSA clients with business and/or investment income, random audits of non-salary and wage earners, allowing the CSA to vary an assessment where the parent has a greater capacity to pay and backdating the assessment for four years, allowing assessments to be backdated up to seven years where parents fail to fully disclose all income, expenditure and assets, deeming income on non-income producing assets and deeming income from an asset where the ownership has been transferred to minimise child support liability.

Some may argue that these provisions are draconian, and they may be. The committee was keen to ensure that the level of voluntary compliance by parents and their advisers would be significant. There should be no reward for those who wish to devise schemes for minimising child support.

The establishment of the Child Support Review Office in July 1962 was a welcome reform to the system. Its function is limited to dealing with departure applications and it has no power to deal with any other administrative decisions made by the CSA. A number of problems have been identified such as the CSRO does not perform a proper external review, rather it makes original decisions, the CSRO does not publish its decisions, there is no guarantee of consistency of CSRO decisions and clients of the

CSRO are unable to reasonably predict their chance of a successful appeal. The committee has recommended that a proper external review office be created called the Child Support Appeals Office to review all administrative decisions of the agency. The agency must also institute an appropriate internal review mechanism that allows the agency a first-in opportunity to fix up its own mistakes.

No government can continue to fund the increasing expansion of the agency. What is required is not incremental change but a radical rethink about the agency's role and focus. The CSA is involved in too many cases. There must be strong encouragement for parents to make sensible, mutually beneficial private arrangements about their responsibilities for their children, freed from government intervention. For those parents who have in the past or will in the future require the intervention of the CSA, that intervention should only persist until a stable pattern of child support payments has been established.

Some 56 per cent of CSA clients pay their child support on time either through auto-withholding or voluntarily paying the agency. These parents should be allowed to opt out of the scheme into private collection arrangements. The CSA must have a new role of advising parents of their rights and obligations under the scheme and facilitating private collection arrangements. This will require an up-front investment of time, but it is also about securing and anchoring a longer term responsibility for child support until the child or children turn 18.

As a result, the core role of the agency should be advising parents of their rights and obligations under the scheme, facilitating private collection arrangements, handling those cases where such arrangements are not possible or break down and pursuing those non-custodial parents who refuse to pay. Over time this will shrink the cost of the agency and shrink the size of the agency.

The CSA needs to dramatically change the way it deals with non-custodial parents, especially their first contact. There is an average delay of 142 days between the start date of liability and the day upon which DSS pays the custodial parent the first child support payment. In addition, an average of 65 days of arrears accumulates before the NCPs are first informed of the amount of their liability. If there is an administrative delay the period of arrears is greater. The committee proposes to halve the delay to 79 days and eliminate the initial build-up of arrears. This dramatic change will help everyone. Custodial parents will receive their first child support payment 63 days earlier and more reliably. The NCP will not start off on the back foot and in arrears.

Many of the submissions from NCPs wanted detailed accounting of how child support money was spent on their children. This was rejected by the committee as being too intrusive. However, the committee did feel that there was a good case to increase the flexibility of the scheme by allowing NCPs to direct certain percentages of their child support payments to specific expenses of their children: 20 per cent without the custodial parent's consent, a further 35 per cent with the custodial parent's consent and up to 100 per cent in cases of emergency.

Whilst much of the research underpinning the cost of children is internationally consistent, I for one have great difficulty appreciating the equiva

The Australian formula is heavily reliant upon dated American research that may not be valid in Australian circumstances. It is unfortunate that the committee had access neither to relevant Australian research into the cost of children nor to studies which might have examined the impact of the scheme on the relative household income asset and debt levels of parents. Until such time as these studies are undertaken, any review of the formula will be somewhat limited.

DSS has the government monopoly on modelling the impact of the formula. Over a six-month period, DSS modelled eight self-support levels and three disregard income levels, providing some 2,000 pages of modelling information to the committee. It is hard to disagree with one commentator who described the research into the cost of children in the modelling as `statistical voodooism'. The committee had little choice in accepting the percentages; however, it recommends modifications to the formula, and these are considered to be the minimum necessary to restore equity. These changes cost the government approximately $13 million in a full year.

I thank my committee members, especially the secretariat, headed by Jane Vincent. They have worked hard and long hours. Matthew Mason-Cox has made an extraordinary contribution to the report, which I acknowledge. I seek leave to incorporate a table of the committee's proposed formula modifications and a table of concerns which people have raised with the committee.

Leave granted.

The tables read as follows-- CUSTODIAL PARENT TOP TEN ISSUES Total % (1) CSA enforcement action in respect of child 671 34.0 support liability is unsatisfactory (2) Scheme is an effective mechanism for 433 21.9 obtaining child support (3) Telephone access is difficult 266 13.5 (4) Communication problems with CSA 251 12.7 (5) CSA payment transfer to CP is slow 221 11.2 (6) Self employed NCPs can easily avoid their 206 10.4 child support obligations (7) Infrequent/varied payments by CSA to CP 204 10.3 (8) Stage 1 parties disadvantaged as must 169 8.6 return to Court to alter child support liability (9) CSA has difficulty in locating payer 117 5.9 (10) Lack of explanation by CSA 104 5.3 Total number of submissions received from 1976 custodial parents NON CUSTODIAL PARENT TOP TEN ISSUES (1) Formula is too harsh 1209 36.7 (2) Formula fails to adequately recognise 713 21.7 NCP's costs access visits (3) NCP has no control over how child 601 18.3 support is spent (4) Formula should be calculated on an after 587 17.8 tax rather than before tax income basis (5) Property settlement should be taken into 586 17.8 account in calculating child support (6) Communication problems with CSA 540 16.4 (7) Formula fails to recognise other 471 14.3 family obligations (8) CSA biased against NCP 385 11.7 (9) Application of formula is too inflexible 367 11.1 (10) Recognition of parents responsibility 363 11.0 Total number of submissions received from 3292 non custodial parents