Child Support Amendment Bill (No 4)

I must say that in this debate I have been very disappointed in the Government. I do not believe that any of the Government members on the Social Services Committee who looked at the bill have bothered to take a call. I can say only that the Government is clearly not interested in this legislation. Government members have left it to the Opposition, and to United Future and New Zealand First—who are actually part of the Government, really—to do all the work for them. That is because, of course, the Labour Government does not really support parental responsibility.

One of the things I thought was quite good in the bill when I first saw it—I think it is good to give credit when it is due, because it is not very often I get to do that with Labour—was the promotion of the idea that the Inland Revenue Department can go in and look at situations where, for instance, a liable parent has a lot of assets in his or her control or even owns a lot of assets, or has a lot of income frozen around various companies and trusts. The Inland Revenue Department can ask how much money that man or woman actually has and whether they should be paying more than the minimum amount of about $11 a week. I thought that was quite fair, frankly, because I know of many parents, particularly women, who are sole parents looking after their children, who are working and not on the benefit—they are actually earning and receiving their own money—but who are being ripped off by former partners who are hiding behind various schemes. So I thought that was a good idea, and so did the whole of the National caucus.

Then officials from the Inland Revenue Department turned up to the select committee. We said to them that we had a submission from a woman who had given us full details of every asset her former partner owned and controlled. He had hundreds of thousands of dollars’ worth of classic cars. He had millions of dollars’ worth of property. She provided the officials, and us, with certificates of title references, valuations, addresses—she provided us with everything. We asked the officials from the Inland Revenue Department whether she would be one of those people whom we could help through this bill, because we would love to be able to do that—she is a good person, she is on to it, she is trying to do her best, but she has got that person out there who was a partner, and who is, supposedly, the father—and who needs, frankly, something I cannot say in this Chamber because I would be called unparliamentary, but he certainly needs that done to him, and I think we can all agree. But the officials said: “Oh, maybe … possibly … well, that would depend.” They gave us no undertaking that they would investigate that rotter—because that is what he is. They did not exclaim that that was exactly the sort of situation the bill provided for; they said it would be up to the commissioner.

Well, what is the point of this legislation if on the one hand we are going to write off a whole lot of debt owed by delinquent fathers and mothers and say: “Oh, it does not matter. We will just forgive that—and if you are really good we will not give you any more penalties.”? They are not going to pay. They have skipped off to Australia, anyway, and they are thumbing their noses at us, the taxpayers. According to the Government’s own figures those liable parents just in Australia owe $280 million at the moment, let alone those further afield. Then we had the Inland Revenue Department officials saying they might act—but they might not. They could not give us an undertaking that the properties this chap had—a couple of pages’ worth of them—would be looked into.

💬 Paula Bennett: What’s this going to do?

It will not do a thing. This bill is yet another bandaid to keep people happy. This bill is simply being used to buy votes. That is what is up. The bill is about saying to liable parents that it is OK and that the Government forgives them for being delinquent. It is too bad for the poor old taxpayer, and $280 million—what does that mean? Well, it is only a few billboards, frankly, under Labour. On the other hand, they are saying to custodial parents—parents who are trying to do their best—that they will do something for them. They are not going to do a thing, and that was made absolutely plain to us at the select committee.

We were really hopeful when this bill first came in. We on this side of the Chamber all gave speeches about it. We said that we had some hope for the bill. It was an attempt to deal with the really difficult situation of fathers and mothers who wish to be, basically, sperm and egg donors only, and who are, quite frankly, quite happy for every other parent to pay their way for them.

We are looking now at the final debate in Committee on this bill. I have to say that I was absolutely appalled to hear the Minister in the chair, David Cunliffe, say during earlier parts of the debate that the bill is not perfect. That is an appalling confession for a Minister to make. He has been in Government for 7 years, and this child support bill affects thousands of New Zealand families. For a Minister to stand in this Chamber and say that the Government accepts that it is not perfect but, hey, it is better than nothing is not good enough.

When I look at the history of the legislation, I see that it really has not had a good review since 1994. I know that the Labour Government fiddled with some of the child support income levels in 2002, but when the weight of submissions to the Social Services Committee were arguing about some of the fundamental basics of this bill, and when the Government has done nothing to address those concerns for 7 years, for the Government to bring a bill to the House that the Minister confesses is not perfect is appalling. But perhaps we should not be surprised. In fact, I got the impression at one stage that he was imploring the Opposition to put up some sensible amendments to try to make the bill perfect. Of course, that is not our job, and this Government has had 7 long years to do something.

I want to come to a couple of the points that were made in the select committee that relate specifically to the title of the bill. The first one is about the definition of “parent”. We heard a lot in the select committee about parents. We think of them as being mothers and fathers. Mr Kilkolly brought a petition to Parliament, then came and spoke to the select committee. He talked about the concept of shared parenthood, which seemed to be a novel thing for anyone looking at the bill to consider. He mentioned Australia, which is not too far away, which considers the income of both parents. I think he made some very good points about the definition of what a parent is or should be.

The other point, which was made by many submitters, that relates to parents and their liability to look after their children is the ability to prove whether one should be liable. Many of the men said they would like to be able to take a paternity test, because they disputed that the children were theirs. Under the current legislation, the child’s mother can block the taking of a paternity test. Here we have people who are being held liable and accountable by the State who are not able to prove or disprove that liability.

Finally, there are the exemptions for some parents, which I mentioned earlier—for those who are youngsters and at school, which allows them to finish their schooling, and for victims of sexual assault. There is a great deal left undone around the definition of “parent” and parenting, when we talk about child support, that this bill could have addressed and does not.

The main purpose of this bill is to allow for the write-off of half a billion dollars of debt owed by liable parents of New Zealand children. That is an extraordinary amount of money to wipe off the slate. The premise for doing that, we are told, is to encourage people to start paying their child support. I have discussed that philosophy at length in this Chamber. It completely escapes me how the Government can say to people that if they do not pay their child support, and amass debt, then the Government will write it off.

Thank you, Mr Chairman, for the opportunity to speak on this Child Support Amendment Bill (No 4). This is the final debate in the Committee stage, as my colleague mentioned. The officials sent us a summary of what this bill is about, which stated that it amends the Child Support Act 1991 and that one of the principal changes is to write off penalty debt. We are aware that the fundamental reason for the Child Support Act 1991 was to ensure parental responsibility for the support of their children.

Here we have a Labour Government writing off at least half a billion dollars. There is a certain irony about this. Here, on the one hand, it is writing off half a billion dollars that should have gone to children, and, on the other hand, it is refusing to pay $500,000 that it should have paid for a pledge card. It is absolutely outrageous. Minister Cunliffe said that this was a very hard problem and that his Government was honestly trying to do something about it. “Yeah, right!”, said one of my colleagues.

Mr Cunliffe went on to say that the solution is not perfect. As I pointed out in the debate on Part 2, I keep hearing from submitters and liable parents all over New Zealand that the governance and mechanisms of collecting support in New Zealand are an absolute shambles. I described how one individual was told one day that he owed $270,000, then 24 hours later was told it was $3,000, then 24 hours after that was told that the case manager looking after him had gone on holiday and that he would have someone else allotted to him, but at a different call centre at the other end of the country. I keep hearing this sort of thing all the time. Surely, the Labour Government should put its own house in order before it writes off half a billion dollars of taxpayers’ money.

It was very relevant to me that the technical practitioners who were involved with this bill had grave reservations about it. That included the New Zealand Law Society, Principal Family Court Judge Boshier, and Judge A P Walsh. I will go over again what Judge Walsh had to say with regard to the question of the departure from formula assessment child support initiated by the commissioner: “After reflecting on the whole scheme of Part 6B, I am left with the impression it will be effectively a toothless provision.” That is what he thought about it.

This is a bill that the Labour chairperson of the Social Services Committee, Georgina Beyer, said we ought to rush through, and the Government cannot even get the fundamentals right. A technician like Judge Walsh said that he was left with the impression that the bill would be effectively a toothless provision. He said in that context: “I note that the creation of family trusts and the incorporation of companies are now routine procedures for minimising income tax liability,” etc. He stated: “While there may well be numerous legitimate procedures adopted by a liable parent to achieve those ends, the strategies and devices employed end up benefiting a liable parent when it comes to payment of child support.”

💬 Judith Collins: I raise a point of order, Mr Chairperson. Can I just check whether the Minister’s microphone is live, because during the speech from my colleague Dr Paul Hutchison, which I did not want to interrupt, the Minister was making comments from time to time. They were quite loud, and I am sure they were contrary to the Standing Orders.

The CHAIRPERSON (H V Ross Robertson): I can assure the member that my finger was on the button and that the microphone was not live.

I want to finish off this point, because I think it is very important when professional technicians comment adversely on a very, very important child support bill that is being rushed through in this untimely manner. Judge Walsh went on to state: “If the proposed provisions remain, I can see the whole process being undermined by the court and being effectively hamstrung through a lack of information that is otherwise available to the commissioner.” That is what he said.

Practitioners from the family law section of the New Zealand Law Society said they saw some positive things about the bill. I will not hide from what they said. They said the bill “has a number of positive features including the exemptions in Subpart 2 for hospital patients and prisoners … Other sensible provisions are … the arrangement for offsetting where there is shared custody and the inclusion of priority payment for the qualifying custodian when he or she is not in receipt of a benefit.” But they go on to criticise the bill. They criticise it, in my view, in a very serious way. They say, for instance: “It appears that the new process whereby the Commissioner is able to initiate a review will not be any better, since the qualifying custodian will not be entitled to information about the liable parent unless the Commissioner received that information after the review was commenced.” They further submit a whole raft of concerns that have not been addressed by this Labour Government.

Finally, I will just make a comment on what the Institute of Chartered Accountants of New Zealand had to say about this bill, which is being rushed through by this Labour Government. It is a bill that affects children, and the Government says the primary purpose of the bill is to ensure parental responsibility for the support of their children. What does the institute say? Its submission states: “In any event we have serious misgivings with the proposal as currently drafted in the Bill, both with the law and the practical and administrative implications. It is too wide, provides no objective test, does not clearly specify the purpose, and provides inadequate controls and safeguards.”

This bill, as I have said, is very important. It is a bill National would have liked to support if it could, but it has been rushed through thoughtlessly by a Labour Government that put it up as a bit of an election bribe. The bill has wound up as custard in the faces of Labour members as, on the one hand, they merrily go about waiving $500 million of taxpayers’ money and, on the other hand, refuse to pay $500,000 that they should be paying back for a pledge card.

That was an excellent speech by Dr Hutchison. He made some amazing points and I will not repeat them, because I do not think I can do them justice. I am going to come up with a couple of other points I want to address in regard to the Child Support Amendment Bill (No 4).

We listened to the submissions and looked at this as a case, and a point that National members would like to make is that most parents are good parents. Most parents, whether they are the fathers, the mothers, the caregivers, the grandparents, or whoever they are, actually want to do what is best for their children. Most parents, when they find themselves in the incredibly emotional and distressing time of having a relationship or marriage break-up when children are involved, want to do what is right by the children.

💬 Judith Collins: And most do.

And most of them do, too. We really need to make that point, because tonight we have been hearing a lot about the other kind of parent.

If I were to make a point to the two people who are listening out there in radioland, I would say that if people were to find themselves in the situation of a relationship break-up and having to decide custody, liability, and money, then wherever possible they should try to keep the State out of their affairs. They should try to keep the State out of the decision-making process. If people can make those decisions amicably and come to an agreement that is best for their children, then we certainly support them having that responsibility and being able to do that for themselves. What we have here is a bill for a lot of those people who cannot do that.

In many cases a relationship has broken down even further, and in those cases it is really clear that a few people do not think they should have to pay. Those people may be withholding money as an emotional and financial bribe.

💬 Judith Collins: Or bullying!

And bullying. Financial control is used detrimentally in such situations, there is no shared responsibility, and those people do not believe they should be paying. Why on earth would we be thinking about writing off any penalties for them? How have those people got themselves into that position of debt? Those few people are in that position because they do not believe they should have to pay.

National members believe that, if anything, we should come down harder on those people. About 3,000 liable persons currently owe penalty debt only. We are not asking why they owe that penalty debt. How have those people got themselves into the situation of owing hundreds of thousands of millions of dollars? We should be concerned about that situation, but it is not even addressed in this bill. We do not actually look at the problem. What we are looking at in this amendment bill is a bit of a fix for those who owe too much money so that we might be able to get a few of those dollars back.

There is something fundamentally wrong with the whole philosophy surrounding this issue. There is something wrong when we are letting those few bad ones off and letting them go. Most people do not do that, and that is something we need to remember. National members do not agree with writing off about half a billion dollars in unpaid penalties owed by liable parents. They have that debt for a reason. They have an obligation and a responsibility, and, if anything, we believe that the Government should be getting those people. Is the bill sending the right message? Is that the question we are asking out there? We talk a lot about this being about the children and about it being a cross-party issue that everyone in here cares about. But are we really sending that message when we look at a bill like this?

This bill does not sufficiently protect responsible parents and their children from those liable parents who hide assets and income in order to escape their obligations. It is on that basis that I am appalled, and we certainly will not be supporting this bill. Thank you, Mr Chairperson.

The CHAIRPERSON (H V Ross Robertson): I know the previous speaker is a new member, but I suggest she looks up Speaker’s ruling 45/2. The discussion is directed to the Chair and members in the Chamber, not anybody else.

On behalf of New Zealand First it is my pleasure to take a call in this debate. We believe that this is a very important bill. This bill is essentially about supporting children. We always say that children are our future and they deserve the support of both of their parents. Therefore, it is essential to ensure that liable parents meet their financial obligations towards their children. We want to ensure greater compliance than there currently is. We are very aware that non-payment of child support is a very serious issue and, of course, the State picks up the responsibility for those people who do not pay.

💬 Judith Collins: You mean the taxpayer, Barbara.

The taxpayer picks up that cost and ensures that parents receive some money to look after their children. So really we are saying that measures need to be put in place. We want the taxpayers’ liability reduced. We realise there will always be challenges with any bill that deals with this type of issue and we want to see genuine action taken, as this bill is attempting to do. We want to encourage parents to pay their child support. We note that there is an incentive that includes the writing off of certain debt payments for parents whose payments have lapsed, but parents must still pay the arrears they owe, including some of the penalties. We believe that only limited relief is offered here and we understand too that there is provision for reviewing this if liable parents default on their obligations.

We acknowledge that basically parents are financially responsible for their children. We know that parents are skipping the country and not paying, and this is an attempt to ensure that some of those lapsed parents get back on track. We want to increase the compliance rate of parents who fail to meet their child support responsibilities. We do not want the State to have a greater bill. We know that parents have a collective responsibility for their children. It is always a challenge when parents structure their financial affairs to reduce their personal incomes and their financial liabilities. It is a shame that in these instances the loser is always the children.

I hope that this bill will encourage lapsed parents to re-enter the system. We need to get them back into the system. This may be one way to try to ensure that liable parents re-enter the system. We believe that this is a first measure. It is a genuine attempt to take some action on this issue. New Zealand First will be supporting this bill.

I rise to speak on the title of the Child Support Amendment Bill (No 4), but I actually think it is the wrong title. It should probably be the “Let’s Discourage Good and Responsible Parents and Let’s Support the Irresponsible Parents Bill”.

💬 Judith Collins: That’s it.

That is right. The Minister in the chair prior to the dinner break, the Hon David Cunliffe, spoke and he admitted, as my colleague has just mentioned, that it is not a perfect bill. He was absolutely right; it is very imperfect. As my colleague Paul Hutchison said, it was too rushed, it was not thought through, and it was not well prepared. I was appalled when, before the dinner break, the Minister made veiled threats to my colleagues on this side of the Chamber. I was very disappointed to hear those veiled threats. I thought a Minister would be above such comments, but clearly I am wrong.

💬 Paula Bennett: Not a Labour Minister.

Yes. This bill is a patch-up job. Although I did not have the opportunity to sit on the Social Services Committee, from reading through the bill I was very concerned about the timing. The timing was very interesting. I understand that in 2000 the total debt owed by parents was $400 million, yet by August 2005 it was up to $1 billion. That was a huge jump, and suddenly this Labour Government had to act, and a month or two before the election rushed legislation was introduced into the House. We have to ask why that was the case—why Labour had to rush this legislation through. Was it embarrassed that that debt had grown so hugely over ensuing years? Was it an election bribe, or was it vote-buying?

💬 Judith Collins: I think it was votes for cash, wasn’t it?

It could have been. It could have been a combination of all the above. But I am not making any apologies: I will be saying how disappointed I am that this bill has come to its final reading stage. National has a number of concerns about this bill, and we do not believe that it will do what it says—that is, turn irresponsible parents into responsible parents. I mentioned a number of concerns in my earlier speech, and I will mention them again because they are important.

We believe that this bill is flawed and simplistic because it is not a magic wand that on being waved will make parents who have not been paying child support suddenly become responsible. I say that because half of the parents who owe that debt are living out of New Zealand. If they have left New Zealand, I ask whether they are responsible parents. They have removed themselves geographically from where their children are, and that would tend to suggest they do not want to have the responsibility as parents to bring those children up and be close by. With half the debt being owed by parents living overseas, I do not believe that, because of this bill—which allows parents to have a deal with the Government in order to pay the money back—those parents will suddenly rush over the Tasman, sign up to a contract, and start paying the money back, when they have not done that to date. I think this bill will fall down in that particular area.

This bill sends the wrong signals. With it the Government discourages all the responsible parents, who have been paying their child support upfront, on time, and in full—who have been doing the decent thing by their children, by society, and by themselves—and rewards the irresponsible parents, who do not want to pay their child support, who have moved out of New Zealand, and who do not really show any responsibility. At the end of the day it will not be legislation that changes those parents, or those future parents, who do not want to have responsibility for their children. I agree with all the comments from all my colleagues on all sides of the Chamber that we want strong families and we want parents to nurture and bring up their children, but legislation and nanny State will not do it.

The bill also sends the wrong signal in terms of fairness. This bill is not fair to other groups in the country. This Government is applying retrospective legislation to irresponsible parents who do not want to front up, but what about all the other groups in this country who have been paying up, who have been paying their taxes and GST, and who have been doing the right thing? What about the family that has got behind in its mortgage repayments? Will this Government rush to its aid by passing retrospective legislation, or help pay that family’s bills? I mentioned a health group I have met with, which has struggled. It is a non-governmental organisation in the mental health area that is struggling, and it has got behind in its tax bill for no particular reason.

I rise to speak to clauses 1 and 2. In terms of the naming of this bill, I suspect that the only other title I could suggest is the “Additional Resources for the IRD to Catch Liable Parents Amendment Bill”. It is not too late for the Minister in the chair, Mr Benson-Pope, to take a call on this. The one question I have for him is: with the new role of the commissioner that allows him or her to make determinations regarding an inquiry as to whether a liable parent is paying the right amount, will additional resourcing be given to the Inland Revenue Department? I think all of us in the Social Services Committee were moved by stories of parents who knew full well that items that appeared on business returns as “plant” were often toys for the enjoyment of liable parents—and they were not declared. Those parents, through business mechanisms, were able to conceal their true incomes and pay the absolute minimum rate as liable parents. Those stories were very compelling.

What this bill does—and what I was just referring to when I wanted to rename the title of the bill—is give the Inland Revenue Department the opportunity to investigate when it suspects that parents are short-changing their children on the matter of child support. But for that to work, and for this amendment to be implemented, one would have to assume that the Inland Revenue Department is going to add some additional staff to its current staffing levels in order to be able to police the provision, so that the commissioner has some evidence and is able to instigate an investigation. The legislation will require additional resourcing. So although United Future is supportive of this bill and believes that it is very, very important to create a place where liable parents who have got behind in their payments can approach the department and negotiate a point of return to a place where they are making contributions and dealing with the debt they have—this bill creates that legal opportunity for them to do that, and we support that completely—we do have a concern. I call on the Minister in the chair to answer the question about whether the department plans to add additional staff to, and put resourcing into, the Inland Revenue Department so that the important level of investigation can happen and the commissioner is able to intervene when necessary.

I move, That the question be now put.