Child Support Amendment Bill

Honourable members, we now move to consideration of the Child Support Amendment Bill. The question is that clause 1 stand part, and debate is on clauses 4 through to 25A and schedules 1A to 2.

💬 Hon Trevor Mallard: Part 1 or clause 1?

The CHAIRPERSON (H V Ross Robertson): Part 1—Part 1.

The Child Support Amendment Bill represents a lost opportunity to address the well-being of children in vulnerable families. It is a real disappointment. Labour supported this bill’s referral to the Social Services Committee in the hope that it could be advanced, that it could actually gather some focus, and that the Government would be brave enough to step forward and say: “We want children to be a priority.” We know that Labour at the last election took a platform that involved having all policy filtered through the view of what it would mean for children and actually asking: “What is a difference we could make for vulnerable children with every policy? How can we make sure that no policy makes children worse off?”.

Well, this policy certainly does nothing positive for children. It is based on the presumption that we raise children, particularly the vulnerable children, in the same way that they are currently raised. The funding model for this formula that we have, presented in the legislation, is based on an understanding of what is currently in place. It is a lost opportunity.

We know that 25 percent of New Zealand kids are raised in poverty—that is, 270,000 children are currently being raised in poverty. We also know that in this particular group of vulnerable families, that proportion is likely to be much, much higher. About 133,000 children are dependent on families in difficult situations like this. So this is a missed opportunity. That is the first thing to say about this bill. And we have heard that, of course, from a large number of groups who represent the interests of children: the Auckland Coalition for the Safety of Women and Children, the Child Poverty Action Group, the Dunedin Community Law Centre, the Families Commission, the Human Rights Commission, the New Zealand Law Society, the Office of the Children’s Commissioner, the Equal Justice Project, and the Women’s Studies Association.

This bill represents a lost opportunity to raise these vulnerable children in a situation where they are not battling the disadvantage of poverty, and, therefore, Labour cannot in good conscience continue forward in support of this bill. In the select committee we raised concerns about this approach. We asked whether the legislation that New Zealand had signed up to in the United Nations Convention on the Rights of the Child could be brought to bear on this, whether we could honour the commitments we made there in this bill, and whether the scope of the bill could be broadened.

The advice that we received was that we could ask the Minister to broaden the Act to consider the rights of children, and to consider children’s well-being in this formula more explicitly. So we put that to the select committee, and that debate in the select committee was a lively one, but ultimately the Government members voted down the opportunity to broaden the Act so that it did explicitly look at the welfare of children. I think that is to the Government’s shame.

This legislation has been consulted on for a very long time. We see a Government that at least on the surface wanted to make a difference. It wanted to examine the shared-care arrangements that we currently have, and find a fairer formula. That is the language that has been used. We dispute that we have actually got to that point. But that was the language used. It was a long process. We thought, given the current Act that chugs along and given the view of many of those who submitted that this is no improvement, we could have extended the period for this legislation in order to get it right. It seems a sensible thing to do, when time in this Chamber is being used for the debate, to make sure that we are looking after those vulnerable children and to make sure that the Act is as good as it can be, to make sure that the well-being of those vulnerable children is prioritised.

There was a second opportunity, when some concerns were raised about the legality and the potential litigation that might arise from taking such a step, to get some advice. So the select committee sought further advice on how we as a committee could reference the United Nations Convention on the Rights of the Child obligations to the objects of the legislation whilst preserving the integrity of the Child Support Act and making sure that there were no litigation opportunities.

Again, we put that to the vote and the Government members blocked it. They simply did not want the rights of children explicitly noted in this legislation—and you can check the select committee records. These were things that we had discussion on, and these were things that were voted down on the select committee. I think that is very much to the Government’s shame.

We in the Labour Party do think that children should be the priority. They represent the future of this country. Those children are the future of our country. They are the people who will earn wages that will pay into superannuation schemes that will keep all of us in our old age in the lifestyle to which we wish to become accustomed. If these children do not have the opportunities to maximise their potential, they will grow up without realising their potential. That has an onflow to the rest of society, and we cannot afford to have children in this country who do not reach their potential—quite aside from the social concerns that sit with this.

This legislation, let us remind ourselves, is actually about those families who cannot reach a voluntary agreement as to how they are going to support their children. This legislation is about families who are in a difficult situation and are often vulnerable because they have had disagreements, and they now find themselves in a situation where they are forced by the State to adopt a formula as to how that care arrangement will work. So we are talking about a group in society that is in a difficult position.

I have already touched on the fact that 25 percent of New Zealand’s children are living in poverty and that this new formula is modelled on keeping that same proportion going forward. It should be noted also that taxpayer support here is actually going to those who are liable more. So what is happening is that this is also going to cost the taxpayer more, even though the children do not get additional support. We think that in this bill there are a number of things that are wrong and that should be addressed.

The Government did not take a view on a pass-on mechanism, which many submitters recommended, as a way of incentivising parents to meet their payments—to make sure that they know that their payments are going to be passed on directly to their children. The Government refused to express a view on that. It refused to really even consider that as an option. What we also know is that this bill has some real negative implications for women in our society. We know that most of the caring for children in these circumstances is done by women. They are usually the primary caregivers. The fathers, more often than not, are those who are the liable parents, so they are making the financial contributions that support the children. We know that women in this vulnerable situation are often in situations of poverty and are forced to make trade-offs between buying school uniforms for the children, or buying nutritious clothes, power—food, rather—or paying the power bill—

💬 Todd McClay: Nutritious power?

—for a warm house. The member at the back says “nutritious power” and mocks the issue. I think this is a very, very serious issue. The fact that women in this vulnerable situation are likely to be worse off, we understand from the modelling the officials have done, is a tragedy and it is a shame. It could be done better.

We think that the 28 percent shared-care threshold is too low. Those who have the children for 2 days a week do not bear the full proportion of the cost that that represents, because during the week the children go to school, they go to the dentist, they go to the doctor, and so on. So it is likely that the one who has them as the primary caregiver is meeting all of those bills. The one who has them for 2 days a week is actually not meeting the majority of costs. So having a reduction to 28 percent, as is dictated in the formula, seems an unfair way to go. It means that those women—largely—will be worse off.

There is also a big concern on our part around the transparency of the new formula. The new formula is designed, we are told by the Government, to be fairer. It is a more complex formula. It takes more factors into consideration. On the surface that might appear to be a good thing. We agree that there is some need to take shared-care arrangements into account. We do not quibble with that. The legislation definitely needs updating. Any constituent MP will tell you that coming through their door some of the more difficult cases that they have to deal with are around the care of children. But the new formula is too complex. It is very difficult for affected parties to understand. The Inland Revenue Department itself has acknowledged this, saying that it will have to retrain its staff. It is going to have to pour more of its own budget into that area, just to train its own staff to use the formula that is expected to be used in the care of children.

We cannot expect parents to understand it immediately. It is opaque. We on the committee spent many, many hours, under the chair’s guidance, going over and over how the formula would work and how it would apply to different people. What we saw was that officials could not immediately answer the questions. They had to go back and they had to—

I rise to speak to Part 1 of the Child Support Amendment Bill, and I wish to pick up the themes that my colleague the Rev. Dr David Clark has just espoused. The first of those is to note that Part 1 is the main, operative part of this bill. It internalises the new funding formula and it contains the operative provisions that set the amounts of child support that are required in the event that a couple contemplating separation cannot reach a voluntary agreement. There are a number of issues that arise in this part.

The first of them is the complexity of the funding formula. As Dr Clark has told the Committee, the reality is that it took many hours of consideration for the members of the Social Services Committee—of which I was not a member at the time—to understand the mechanism embodied in this formula. It took officials a number of hours to be able to explain it to the members of the select committee. It has, as Dr Clark has said, required the Inland Revenue Department to contemplate retraining its staff. So what? The so what is that if it is that hard for professional officials and the average doctorate-holding member of Parliament to get their heads around this, then it sure as heck is going to be difficult for the average Joe in the street or Jane in the street to be able to clearly understand their rights and obligations in the event that they cannot reach a voluntary agreement. So transparency—the lack of it—and complexity are two issues that are built into this reform.

Why does that matter? It is because the incentives that the law really ought to be putting in place are that a couple can have every support to find a mutually supporting, voluntary agreement to manage the transition from one family structure to another in the interests of the children. By not making the counterfactual transparently clear in a simple and easily understood form, then it is much more difficult for couples who are already under extreme stress to be able to manage their way through that difficult period.

That, of course, brings us to another point that we debated quite vigorously in the second reading speeches, which is that the formula does not specifically prioritise the interests of the children; it is a fall-back. What it should have had and what Labour members argued for—but which National members, I am told, actually voted to block consideration of—was an accompanying provision, for example, in the purpose statement that would underline the best of our jurisprudence, which is that the children come first. What I understand informally is that there was resistance to that from the Minister of Revenue and his office because they were worried about litigation risk against the Crown. I would have thought in these circumstances—vulnerable children; big powerful Crown—that actually the Crown ought to be able to wear that risk in the interests of legal clarity for the common law. That would have, it is also true, better reflected article 3 of the United Nations Convention on the Rights of the Child, which is not specifically picked up in this bill.

There is, of course—turning to the substance of the formula—a real concern about the adequacy of the payments made. Submitters raised concern about that adequacy using the proposed formula, particularly given that a significant proportion of New Zealand’s children are currently growing up in poverty. As we said in the second reading debate, there are 270,000 children growing up below the poverty line in New Zealand. That is an awful shame. It is a stain on our national character, because those—over a quarter of a million—kids are going to have their lives, their prospects, and their children’s prospects impaired because they did not get the start that we would expect every child to get. Of that 270,000, roughly a half, we were advised—about 133,000 children, or more than the population of Dunedin or Hamilton—are growing up in single-parent families. Many of those, no doubt most of those, are dependent upon child support.

It is essential, firstly, that the formula correctly upholds the interests of those children, and, secondly, that the basic income adequacy is there for the liable parent to be able to meet those obligations. Two issues flow from that. The first is that we are embarked now on a debate about whether New Zealand should have expectations around a living wage. Well, too damn right it should, because the counterfactual is that we are paying wages that might be legally lawful, but are acknowledged to be less than a family can possibly survive on, and the implications of that are taken out of the well-being and the future potential and productivity of the children growing up in that household.

Let us turn to the pass-on mechanism. Expert submitters recommended using a pass-on mechanism to increase the collection of support payments—that is, if a liable parent knows that the money they are paying is actually going to go to their own children, international evidence indicates they are more likely to pay. At the moment, of course, the money goes to the Crown, and the Crown pays the child support to the custodial parent and the kids, and because that chain is indirect, sometimes the liable parents find it easier to not meet those obligations. Well, they should meet them. There is no justification for not meeting them within the terms of either whatever agreement that couple has agreed to or the legal minimum that is required. Too many liable parents have not met them and have built up child support debt. The current Government loves to harangue the Opposition for the fact that when it was in Government it had less than $1 billion of child support debt. It is now $2.3 billion and climbing—$2.3 billion of child support debt has not been collected from liable parents. Anything that can get that down is probably worth considering, including, I think, close scrutiny of the pass-on mechanism. Of course, the risk to be addressed is that if the pass-on mechanism is not supplemented by some fall-back, then, of course, families could be in extreme poverty if they are not so provided for.

We note that the Children’s Commissioner, in particular, was critical of the understatement in the supplied regulatory impact statement, which said that the pass-on mechanism may affect rates of payments. The international evidence is clear that it does so.

Turning to the implications for women of the funding formula contained in Part 1, the legislation, of course, has very significant implications for women. On average, as is well known, women earn less than men and are more likely to be the primary caregiver. They are more likely to be in the vulnerable position here. The actual effect of this bill is to apportion a greater share of the cost of child rearing to the women—a greater share of the cost of the child rearing goes to the women. Now, is that not extraordinary? We know we have got a child poverty problem, we know the women bear the brunt, we know they are disadvantaged, but the great National Government has brought to the Committee legislation that makes those problems worse.

We believe, according to evidence that we have seen, that the 28 percent shared threshold in the legislation is too low. Parents caring for a child 2 days a week are unlikely to share a proportionate responsibility for providing the basics of life. Although food bills might be able to be shared proportionately, the primary caregiver is more likely to be responsible for things like school costs, uniforms, clothing, medical, dental, and so on. As every parent knows, this one included, those costs can really mount up.

Let us just sum up the points that have been made in this part of the Committee of the whole House debate. There is a real problem with transparency. There is thus a problem with accountability. Couples do not have a clear counterfactual upon which to base their decisions. There is no pass-through, and women are worse off. Those are all serious issues with the funding formula contained in Part 1 of this bill. Thank you.

I am pleased to take a call in the Committee stage of the Child Support Amendment Bill. As I told the House last night in the second reading, it is with sadness, really, that the Green Party continues to oppose this legislation. We absolutely support the goal of a fairer, more transparent child support system, but right from the get-go with this legislation we have found ourselves unable to support it, because of a number of concerns that we have, which have not been addressed by the Social Services Committee’s deliberations on the bill.

I think it is really important to ground this debate in the subject matter, which is, of course, the rights of children to be well supported and cared for when their family is going through difficult circumstances. By definition, to qualify for child support, children’s parents and/or caregivers have been unable to reach an agreement about how to financially support that child. That is not an ideal circumstance for any child, by any stretch of the imagination. It is a time when children are likely to be stressed and vulnerable, and a time when it is absolutely important that the legislation and the scheme governing the support for those children maximise their best interests and seek the best possible outcome for those children.

To take probably our most fundamental concern with this bill, it is the fact that it fails to maximise the best interests of children and it fails to take that opportunity to do so. We have heard from one of the previous speakers, Dr Clark, about the efforts that the select committee went to to consider enshrining a commitment to the best interests of children into the purposes of the Child Support Amendment Bill. That would have gone a long way, I think, to alleviating the concerns that we as the Green Party have about this bill. Unfortunately, the attempt to do that was blocked by the Government members of the select committee, and even the attempt to have some further advice from officials on that point was blocked.

I think that when we consider that not even in the Child Support Amendment Bill are we prepared to enshrine the best interests of children, we really have our priorities wrong as a Parliament when it comes to how we are taking care of our kids. It is also a missed opportunity to alleviate child poverty. We heard from a number of submitters that the child support scheme could be improved in such a way that would actually directly benefit some of the 25 percent of New Zealand children who are living in poverty—for example, the ability for parents who are reliant on benefits to receive a passed-on child support payment, rather than having that whole payment retained by the Crown as a means of offsetting their benefit.

Additionally, the ability for the Crown to advance child support payments to families in order to ensure a stable and guaranteed income for the children and family, even if the liable parent is late or behind on their payments, would have made a huge difference for thousands of children and helped to alleviate child poverty. That opportunity has been missed, and that is a great shame.

To turn to what takes up the bulk of Part 1 of this bill, which is the new child support formula—really, this is at the heart of the changes that the bill introduces—we remain incredibly concerned at the complexity and lack of transparency of the new child support formula that this bill introduces. It has been acknowledged by officials in their advice to the committee, that the new formula is much, much more complicated than the one it replaces, and the one it replaces is already reasonably complicated and already a source of friction for many parents who need to calculate their liabilities or their entitlements under the existing child support formula. That will only get worse under this bill, because the new formula is incredibly complicated. It introduces a huge number of new variables, and the upshot of that, I think, is that it will become basically totally impenetrable for the average parent to work out their own liabilities or entitlements under the child support scheme. They will probably need to sit down with the advice of a professional accountant in order to be able to figure it out, and, certainly, without the full and complicated information required to plug in all the variables, they will not be able to do their own calculations, check the calculations that the system has spat out for them, and feel confident that the system is fair and transparent.

That, I think, has the real potential to create new grievances between parents, because if it is felt by either a receiving or a liable parent that they have not had a fair deal from the new formula, they really have no ability to go in themselves and check against it, because it is so complicated that it will simply be impenetrable for them. That, I think, produces a real weakness in the scheme that actually puts it at considerable risk.

What we also heard from officials with regard to the new child support formula is that it is going to put the Inland Revenue Department’s systems, both administrative and IT systems, under considerable strain. We know that the Inland Revenue Department’s IT system is already creaking and groaning under the weight of what it has to administer, and we have seen recently in other legislation before this House regarding the student loans scheme that the system basically cannot cope with the changes that are being introduced. And here again we have an example of that with the child support formula. It is so complicated that it is going to require significant investment in that IT system for it to actually be able to administer and process the formula.

We know already that that whole system needs replacing, so it is a very inefficient use of resources to invest in it—and we have heard from officials that about $91 million will be required to administer the new formula—when that whole system is going to need to be replaced soon anyway. I would not be surprised, actually, if it was the straw that broke the camel’s back and caused the system to collapse.

So significant are these problems that the introduction of this bill has had to be delayed by a year so that the Inland Revenue Department’s systems can get up to scratch. I think that tells you a lot about the readiness of the department to administer the new child support scheme. Simply put, it is not a good idea to go ahead. So we have very fundamental concerns with that, with the cost to the taxpayer of an additional $91 million and a contingency of $28 million to even put into place the administrative requirements, the training of new staff, and the IT systems to administer the scheme, and no additional benefit for the children who are supposedly at the heart of the scheme. We have very fundamental concerns about that.

Finally, I want to turn my attention to the Minister’s Supplementary Order Paper 181, which is before the Committee. The concern I want to raise with this is really a process concern. This legislation goes back a very long time. The consultation to begin to review and reassess the child support scheme goes back a number of years. There was a very lengthy public consultation process undertaken and a very lengthy report produced, and over several years this legislation has progressed incrementally.

We also had a very full process at the select committee when we considered this legislation. We took our time over it, as we heard from Dr Clark, largely because we had to spend so long trying to get our heads around the new formula. But we had a very lengthy process and we had plenty of time for advice from officials about amendments to the bill. Indeed, the select committee recommended a number of amendments. And yet here we have at the last minute, with no advance notice, and the amendment available only earlier this afternoon, changes on the floor of the Committee from the Minister, when, in fact, I believe that he has had years and years and years to get this right and to put those amendments in place. I think it is very unacceptable that this kind of last-minute process has been followed with those amendments in the Minister’s Supplementary Order Paper.

Those are some of the reasons that the Green Party has fundamental concerns with this legislation, that we opposed it at the first and second readings, that we will oppose it through the Committee stage, and that we will oppose it at the third reading. Thank you.

It is a pleasure to speak on the Committee stage of the Child Support Amendment Bill and to support it. The reason I support it is that this bill transforms this area of the law and makes it more effective, makes it fairer, and makes it more efficient to distribute child support to those kids who need that funding. I think members who have already spoken on the bill earlier and who are opposing the bill misunderstand, actually, what this bill stands for. This bill, presented by the Minister of Revenue, the Hon Peter Dunne, does not seek to solve all the problems of the world and the problems that children have in our society. All this bill does is act as a mechanism by which payments are made and collected between parties, often spouses, who have raised a kid but who for some reason, whatever reason, have found themselves separated. It is the payments between those parties that this bill covers.

So where people are talking about solving poverty, and where people are talking about making this bill more effective, and about the United Nations Convention on the Rights of the Child, that is not what this bill solves. I think if you read the bill and you read the commentary, you understand that the mechanism to have those transfer payments made is within this bill. There are a whole range of other programmes and payment schedules that deal with those problems. Working for Families, the accommodation supplements that various families receive—those are the appropriate payments to be made to support families and to support, especially, young children being raised in our country. So I think we need to get the context around what this bill actually covers.

The other part of the context, which Mr Cunliffe referred to in his speech, was around the debt around child support. We in the Finance and Expenditure Committee 2 years ago—and I know he sat on that select committee—actually looked at why those payments and penalties have escalated over time. He said that $2.3 billion had accumulated, much of it in penalties and much of it leading—and he is agreeing with me; I am glad we agree on some things—to distorted behaviour in those who were liable for certain payments to actually abscond, move away, and not make those payments, on the basis of the penalties that had been incurred over time. That is why this bill is solving that type of problem. It is not about the punitive aspects of child support; it is about effectively managing the payments that are made to those children, so that the children who are in receipt of these moneys are able to benefit from them. That is what this bill does.

Admittedly, as has been stated across this Chamber, the bill has a complicated formula, but I submit that we should give credit to the people of New Zealand that they will be able to understand these things when they sit down with their adviser or an Inland Revenue Department officer, when they sit down with those people who are able to assist. The formula is an objective formula that is based on a calculation and based on modern ways of looking after children. The expenditure that is incurred for children, and the incomes that those parents derive from their everyday lives—those are the factors that are taken into account when that formula is calculated. I ask members, if they do not understand, to read the bill, to sit down and read it—

💬 Hon David Cunliffe: I seek leave to table a copy of the formula, because the member either cannot remember—

The CHAIRPERSON (Lindsay Tisch): No. The member is interrupting a debate.

Well, the “Prince of Ponsonby” might not understand it, but I certainly do.

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. In the second reading of this debate we firmly established that Ponsonby is not in the New Lynn electorate, yet—

The CHAIRPERSON (Lindsay Tisch): The member will resume his seat. That is not a point of order. The member is interrupting the flow of debate and it is unacceptable.

All I will say about the formula is that it is objective and it leads to fairer outcomes. Admittedly, there are some who will lose money, according to the formula, but it is an objective formula that you can look up or you can get advice on. Thank you.

We have just been told by Peseta Sam Lotu-Iiga, the chair of the Social Services Committee, which I have the privilege of being a member of and which heard the submissions and deliberated on the Child Support Amendment Bill, that this bill will make child support—what was it—more effective, fairer, and more efficient. I would not mind running through that criteria and really testing whether or not that is, indeed, what this bill has achieved. Unfortunately, on this side of the Chamber that is not the impression that we have been left with, having traversed this bill in the select committee.

I would like to start with the general principle of why child support is there. We were just told by the chair of the select committee that it is not actually about child welfare and well-being. Well, what is it about? What is it about? If it is not about the welfare of the child, about making sure a child is well supported whether they are with one parent or two, then what is it about? What we strongly argued in the select committee was that, surely, if that is what this should be about—if it is about income adequacy when parents, for whatever reason, no longer combine their incomes—then surely that is about the welfare of the child. And if it is, why would we not put the paramountcy principle up front in the centre of this legislation?

The interesting debate that was had at the select committee was that it was pointed out to us by officials that putting in a principle that said that decisions should ultimately be made based on the welfare of the child was actually contrary to the principles of the bill. Nothing could be more stark in pointing out that, in our view, we lost our way about what this issue is actually about. Within the complexity of the formulas and the potential feuding of parents—because we know that those parents who use this legislation are generally less satisfied with their child support payments than if they set up a payment system outside of this regime—we get so caught up in all of that that our fear was that we were losing sight of what it is all about. I understand the legal reasons, the drafting reasons, that made the paramountcy principle difficult, but that triggered in my mind the thought that the Minister of Revenue should have started with a first-principles review with this legislation, rather than adding layers of complexity to an already complex and ineffective formula. That is the principle of why, surely, we should be discussing this.

The second point that the chair tried to make was that this was about making it fairer. Well, even in the select committee we came up with a different threshold for care than the Minister did. So to try to argue that somehow it was an easy thing to establish fairness is, I think, quite contrary to the experience we had even deliberating on this bill. The notion, though, that you could claim that it is more efficient, I found quite simply laughable. As the Green Party member has pointed out, it will cost $91 million to administer this piece of legislation. That is probably more than what it would cost if we instituted a pass-on mechanism. I am not entirely sure, but it would be a significant chunk of that, anyway.

This is going to be a difficult piece of work to administer. The member is also right to point out that the Inland Revenue Department’s systems are going to struggle with it. I would say this seems even more tricky than Working for Families, and that was probably a test for it in the first instance. I think the fact that the Inland Revenue Department will have—what was it—a 15 percent increase in workload for case managers trying to navigate this, as well, also points out the complexity.

But ultimately I think probably what demonstrates better than anything else the fact that this is not going to make our system more efficient, more effective, or fairer is that you are probably yet to hear any speaker in this Chamber elaborate on how the formula is going to work. We heard the chair say that it will take a modern approach to the care of children in the calculation, whatever that means. Let us be honest, members of the select committee: there were whiteboards brought out to try to explain to us how this calculation was undertaken. It is not a simple formula. This is not about insulting the members of the public; this is about being honest that when trying to establish a regime that reapportions income across a liable parent and a caring parent and that takes into account thresholds of care and different income levels, it is complex. We cannot deny that. Surely that is something that we would agree on. So the first point I wish to make is that Part 1 ultimately should have included the paramountcy principle.

Secondly, if we were going to take a first-principles review of this legislation, we should have looked at using a pass-on mechanism. We are being very honest on this side of the Chamber. No one is denying that pass-on has fiscal implications. But I think most New Zealanders would be shocked to know that childcare payments that are paid from one parent to another parent, who may be on Government support for their income, do not go to their child. I think most New Zealanders would be shocked to know that. Given that we know that the majority of children who are living in poverty are in sole parent households, and that sole parent households from time to time are going to be reliant on Government support, particularly if their children are at an age where they need full-time care responsibilities, we know that roughly 88,000 children, from memory—around that mark—who are living in poverty are going to be reliant on sole parent support in that form. So they are the kids who are not getting child support payments—those kids who need it most.

All that we asked on this side of the Chamber, acknowledging the fiscal cost, was that the Government at least look at it—at least look at it. That is what the Expert Advisory Group on Solutions to Child Poverty recommended. We at least wanted to take a look and to analyse it collectively as to whether or not we should be doing it.

The second big issue that we grappled with as a select committee was, indeed, the funding formula. I am going to have a little go at sharing how the formula is at least elaborated on in the legislation. If you go to Part 1, clause 7, it states in new section 4A(4): “The amount of annual child support payable by a liable parent for a qualifying child is determined under Part 2, and is worked out by deducting the liable parent’s care cost percentage from their income percentage, and then multiplying the result by the appropriate amount set out in the relevant child expenditure table (which identifies, amongst other things, the average annual expenditure on children in New Zealand, by reference to average weekly earnings).” Did everyone follow?

There are three variables in this formula. The first is the proportion of care, and that was something under much debate. When this bill first came in there was a recommendation that we reduce the threshold. So a parent, to reduce the amount of child support they paid, had to care for their child for at least 40 percent of the time. That is where it was. This bill came before us and it said it was 28 percent of the time. Our issue on this side of the Chamber was that in the majority of cases we are talking about women caring for children. You take 28 percent of the care, and that means that you might be picking up just a weekend. Is that impinging on your ability to then be a full-time earner? Probably not. Is the mother able to be a full-time earner when she is caring for the children the rest of the time, 5 days of the week? It is much more difficult. So we felt that that threshold needed to be adjusted, and to a certain degree that has been built into the bill. So that is the threshold element.

The second part states that it is worked out “by deducting the liable parent’s case cost percentage from their income percentage,”. What is the income percentage based on, Mr Chair?

💬 Peseta Sam Lotu-Iiga: Don’t bring him into the debate.

I am talking to the chair of the select committee at this point. The income formula—as the chair will remember, I am sure—is actually based on a core living cost for an adult, which is based on what? I hear silence on that side of the Chamber. It is roughly based on the DPB. We use that to say, well, how much does someone need to earn to survive? Some might question, actually, whether that is enough to earn to survive, when you use the DPB as the base for how much an adult might need to survive. Then we reapportion the leftover income.

I am being very crude in my explanation here, but crudely that is what that formula does. There are lots of variables in it, and there are lots of holes, and you could ask whether or not even the base income threshold that we used to establish it is sufficient for an adult. But that is what we have run with here. To try to claim that all of that is effective, fairer, and more efficient—I still think there are plenty of holes in the argument that was presented from the chair of the select committee in that regard.

I want to come back to the discussion on the threshold of care—the 28 percent versus the 40 percent. Yeah, we agree—40 percent is a high threshold before you start taking into account monetary deductions from your childcare. But we are also making a crude assumption that if you take up the part-time care of your child, you are, therefore, picking up the cost. Are you picking up an equitable cost of doctors’ visits? Are you picking up the costs of their school fees? That is not the kind of thing that is roughly calculated on that threshold.

I rise to take a call in this Committee stage of the Child Support Amendment Bill. We have heard a lot of talk about the things that have gone wrong with this bill; we have not heard about the things that are going well with this bill. The previous speaker, Jacinda Ardern, talked about an aspect of the bill, the injustice, the inequity, that almost seemed to be coming out, and yet what the previous speaker did not talk about was the other aspects of support and care that are provided—for instance, Working for Families and the accommodation supplement. It is a bit unfair to have a sense that this bill alone provides for all the needs of the children, and of the family in particular.

We know that when families break up it is a very complex and a very difficult situation. In this case we know that it is often traumatic, and especially for the children. Financial instability following break-up is all too common, and this is the area that we and the Minister of Revenue have been concerned about: ensuring that we provide the adequate support. All parties have actually agreed that the intent to reform the current scheme is important. In fact, we know that there has been extensive consultation around this. There was the report in 2010. The Government released a discussion document and there has been extensive consultation: 2,270 participants, 834 receiving parents, 753 paying parents, and 685 other parties—30 percent who were included both pay and receive child support.

I note those comments about the consultation, because when we talked about the formula—and there has been a lot of talk about the formula, and how it has been complex. The previous speaker, Jacinda Ardern, was quite correct that at times when we were going through the process at the Social Services Committee it was complex. There were whiteboards, there were papers, and we were trying to work out what this was. It is complex because we know that the circumstances for families are often very complex as well. But in the consultation that was had, 69 percent of those who were surveyed online said this: “It should also be noted that [the] respondents to the online consultation undertaken thought that all the factors should be used to determine child support payments.” In other words, the overwhelming majority said this: “We know it is difficult, we know it is complex, but we don’t want you to remove the opportunity for us to be recognised in our different circumstances.” We have heard people say that it is too complex, it is too difficult. The consultation of submissions has clearly said that they know it is complex but they need those individual factors to be included as well.

The New Zealand Law Society, in fact, talked about this, stating that the “proposed child support formula is too complex and should be simplified …”. So this is the consideration to address those issues, and “taking all those elements into account results in a more cohesive and comprehensive change to the formula that incorporates: estimated average expenditures for raising children; varying levels of care; and the income of both parents.” That is the basis of this formula. That is the basis of the formula that I think that most Kiwis, most parents, would understand and would appreciate in regard to addressing their circumstances and their situation as well.

That said, the proposed child support formula is more complex. I know that the honourable member Holly Walker talked about the fact that people will need accountants, and they will need Inland Revenue Department specialists. Well, that is not true, because here is what has been acknowledged: “However, parents or other affected parties will not be expected to undertake the calculations themselves. Inland Revenue’s systems will undertake all calculations required to determine liabilities and entitlements.” And they may talk over there about the $91 million and all the months of training, but we have heard the wailing and the gnashing of teeth at times when we have been unprepared, it seems, and when we have not got the systems right. And here we are, investing in the system, investing in an approach to ensure that the liabilities and the entitlements for families and for children are in place.

I want to also address this issue of paramountcy. Can I say this: the reason why this is important—that the entitlements will go back to the parents—is because these are the caregivers who will care for their children. Most Kiwis want the ability to care for their own children, want the ability to make their own decisions, hence this Government is not about taking away that control. Instead, it wants to ensure that even they can be entitled. When we lowered the threshold, for instance, we have heard the fact that it is mainly women—and, absolutely, it is mainly women—who are the caregivers, but in circumstances where men, where fathers, are taking their responsibilities, should we not recognise that?

New Zealand First supports the move for improvement to the current system at the moment. We accept that it is difficult to find a new formula for child support that will satisfy everyone. The new formula is not without concerns. However, it is a step in the right direction and a vast improvement on the existing outdated system—shall I say 22 years outdated. Part 1 and clauses 5, 8, and 9 of this bill, the Child Support Amendment Bill, will actually dictate to us or indicate to us some of the changes that are moving towards the right direction.

Recent child studies have shown that it is more beneficial for children to have ongoing contact with both parents rather than one. Therefore, the bill is to be acknowledged for having a new formula that recognises shared care. New Zealand First recognises that it is often difficult for paying parents to have their shared care acknowledged, especially if it does not involve overnight care. Our Social Services Committee has worked really, really hard to try to find a way to close some of the loopholes that the original bill had created.

It is common for paying parents to have daytime care, which can be quite costly too, and I think we all acknowledge that. Therefore, with the proposed system, it is encouraging to see that consideration is given to these parents, as the cost of supporting a child will be apportioned between both parents according to the difference of income adjusted by their share of care. It was a very difficult formula to understand, and, yes, I acknowledge that we ended up with whiteboards to try to understand how it works. Such circumstances, though, when it comes to share of the care, should be considered in order to enable just and equitable outcomes based on the level of financial support to be provided by a paying parent. I think that often we worry about arguments between mum and dad. Last night when I spoke at the second reading of this bill I did mention that we worry about what a child will become tomorrow, yet we forget that he or she is someone today. We often forget that.

New Zealand First believes that confidence must be instilled in our judiciary system, and that parenting orders or agreements to establish the percentage of shared care for child support must be relied on. This will provide an efficient process of child support and reinforce court decisions made in the best interests of the child or children. With such a complex formula, which is very much what Part 1 of this bill is all about, we must rely on the Inland Revenue Department to provide adequate services to parents who may find it difficult to determine their liabilities and entitlements. People change employment and often come in and out of work, but when income changes occur we must ensure that these will be dealt with thoroughly and without confusion.

There has been confusion around self-employment and liable parents who use tax deductions to reduce their child support. The new formula must accommodate these situations. It is often seen that the introduction of a new system with an implementation period that is not transparent can cause a whole heap of stress to the communities affected. I do not believe that this system will avoid this. However, it is imperative for families to have the new system in place to address the many loopholes that currently exist.

This bill recognises the role that grandparents play in the care of children. It is a piece of gratitude that has been long deserved. When grandparents fall under the definition of “carer”, it is often not by choice but is almost always accepted. Grandparents who are on superannuation have been faced with the costs of raising grandchildren. It is pleasing to see that the new system will look into this factor and ensure that not only grandparents but other relatives who take over the responsibility of caring for a child or children are also recognised.

Parents should want to pay child support. I think that is very important. Parents should want to pay child support in order to raise their child or children. It should not be a burden or ignored. The new penalty, or incentive plan, as we call it, attached to this formula enables parents to fulfil this right—the right to pay to support his or her child. The pressures of late payment can sometimes avert parents from supporting their children, so let us hope that this has become more clarified within the outcomes of this bill. Raising children right should be a prerogative of any parent. The new system indicates that the old one made it difficult to do so. Thank you.

I believe there has been no adequate response at all from Government members as to why the Government did not take an opportunity with this bill, the Child Support Amendment Bill, to address child poverty. Government members have sat in this House for 4 years now, denying any reasonable approach to child poverty. Here, there was a chance to do that. The explanation that they have come up with is that this bill is only technical, and it is only looking at some minor arrangements. There are 133,000 solo parents, I say to the chairman of the Social Services Committee, who live in poverty, and here was an opportunity, through the provisions that many, many presenters gave to the select committee—there was an opportunity. The pass-on mechanism was not recommended by just one or two people; it was recommended by the major institutions, the major Crown entities, and the major organisations that know about families. They all came to the select committee and said that here was an opportunity to do it.

Here was a way in which those who form part of the family but are not together could contribute to the care of the children. So here was an opportunity that was not taken—not once. When we did ask what were the reasons, the one reason that came from the Inland Revenue Department people was that they did not have the expertise. So because they did not have the expertise, they wanted to just leave it by the wayside. That opportunity has been missed, and there has been no explanation or any note as to why the pass-on mechanism that was recommended by the Children’s Commissioner ought not to be taken up. All they simply said was that this was technical and this was not the place to do that. The opportunity was lost. Members opposite have stood up and tried to defend this, but it is indefensible. At least they could have shown some understanding of the situation of the families we are talking about, but the members opposite have not done that. They want to defend something, and they deny that the opportunity was not taken.

The other major problem with this particular bill was the thresholds that have been set. We do believe that the 28 percent threshold is too low, and, as has been said, the 40 percent threshold was too high, so there should be some adjustment if the other parent who provides an income is providing some care. But 28 percent is only two nights. It is only two nights out of seven. We do know that it can be gamed as to which nights are picked. The most vulnerable person in this situation is the person caring for the child full-time, who is often the mother. This 28 percent provision has not taken account of the effects of that on the income of the mother looking after the children.

Debate interrupted.