10. Expected outcomes from the reforms

Any changes at all to the Child Support Scheme will necessarily mean changes to the amount of money that some payees receive in child support and that payers must pay.

In some cases, the child support received by payees will increase as a result of these reforms. Recommendations that will have this effect include:

• the provisions for minimum payments;
• recognition of the higher costs of teenagers;
• different treatment of the earnings of resident parents above average weekly earnings; and
• measures to improve compliance.

In other cases, the child support received by payees will decrease as a result of these reforms. Recommendations that will have this effect include:
 

• recognition in the formula that expenditure on children declines as a percentage of household income as incomes increase;
• the provision for recognition of regular contact in the Child Support Scheme (offset by the limitation of FTB splitting to shared-parenting families); and
• the lower percentages applicable to children aged 0–12.

Where, as a result of these recommendations, child support payments decrease rather than increase, it does not necessarily mean a decline in living standards for children. Children usually have two parents and, where there is regular contact, they live for periods of time in both their parents’ homes. The majority of child support payers, as well as payees, are on modest incomes. Changes in child support obligations will not alter the financial resources available to the children across the two homes. They will only impact on the distribution of those resources between the two homes. Children’s living standards are affected by a range of other factors as well, including government benefits, the resident parent’s workforce participation, and whether the resident parent is living with any other adults in a common household.

As far as possible, the recommendations of the Taskforce are based upon the best evidence available to it about the costs of children, and the most defensible principles for the allocation of those costs between the parents. The Taskforce has recognised many anomalies in the existing Scheme. The correction of those anomalies requires that child support obligations must go up or down. The Taskforce believes that its recommendations can best be assessed by reference not to a comparison between the outcomes of the current and proposed formula, but by reference to the principles and evidence upon which these recommendations are based.

The proposed new formula cannot and will not address all the grievances that people have about the Child Support Scheme. Sometimes grievances about child support reflect concerns about other aspects of family law such as resentment about the difficulties in enforcing contact orders, or disagreement with the ‘no-fault’ basis of Australian divorce law. The Child Support Scheme cannot address these issues—although its design should minimise unnecessary conflict and should be responsive to the strong emotions at play when separated parents are required to work together to provide continuing support for their children.

In the long term, children will benefit most if the proposed formula is seen to be fairer and more explicable than the existing Scheme, if voluntary compliance is increased, and if disincentives to workforce participation for both parents are reduced. It is with children’s interests as the paramount consideration that these recommendations for reform of the Scheme are made to the Government.