Child Support Amendment Bill

Part 2 of the Child Support Amendment Bill is around the nature of the formula and the departures from that formula. Part 1, sorry, covered the formula in detail, so we actually debated the merits of the more complex formula that has been introduced and the disadvantages of transparency and so forth around that, and the way in which children are not put at the heart of the legislation. Part 2 focuses more nearly on exemptions, on departures from the formula, and how they should be treated. One of the things that particularly concerned me in the select committee process was around the automatic deduction provisions that were introduced quite late in the piece in the select committee process, whereby employers could be asked by the Inland Revenue Department to deduct from wages money owed in child support payments. I should say from the outset that the Labour Party absolutely supports collecting the debts that are rightly owed. We believe that liable parents have a responsibility to care for the children whom they are responsible for. So we support in principle the strengthening of a regime for collection.

However, in this case, what we see, or what we saw, at least, in the Social Services Committee was that the department had not yet worked through quite how this would work. It had not thought through the natural justice processes in terms of notifying the person who was likely to have their salary deducted. Nor had it thought through perhaps some of the cultural implications where, perhaps for whatever reason best known to those who had their child support debt, those parents had chosen not to tell their employer that they had a debt, probably for fear of discrimination of one kind or another, or perhaps they had not even told their employer that they had children for whom they were responsible, possibly for fear of discrimination of one kind or another.

We felt that although the State has an obligation to collect that debt, there ought to at least be a process of warning the person that that was going to be put in place, that there should be a means for letting them know that the State was about to take this action and, should they wish to cough up, that they could at that point do it, or make arrangements, or contact the Commissioner of Inland Revenue and ask for some other kind of arrangement. I have every faith after some of the discussions with those officials that they will attempt to address these natural justice concerns. We were very fortunate, I have to say, to have some excellent officials briefing the committee, who listened well, and who came back with suggestions around our concerns, and I believe that we were very well served as a committee.

What I do not think is that the Government itself and the Minister in charge, the Minister of Revenue, had thought that matter through fully. So we felt on the Labour Party side that it was very important to keep a close eye on how this is implemented. We are very hopeful that the Minister will take this on board in terms of the practical arrangements for pursuing this debt. But it is one of the areas where one can end up, if these things are not taken special care around, with some unintended consequences.

Another potential unintended consequence of this, which it became clear that the Government had not considered, was in terms of the additional compliance costs on business. This is something of a pattern we have seen with this Government, whereby additional costs are heaped upon business, which is not a big deal if you are a large-business owner and you have got automated systems, but for many small-business owners there is additional compliance—we think back to the paper boy tax and the cleaners, who now are required to report their earnings through the system, and the extra overheads on schools and others who manage these people in part-time work, and we see a pattern where the National Government does not consult business. It talks about business a lot; that is true. It talks about business a lot, but it always seems to favour big business. There is nothing wrong with big business, in my view, but little business, in the National Government, is often ignored and trampled upon without concern about the additional overheads that a piece of legislation like this could have.

We know that when an employer collects this extra money off their employee, they suddenly become responsible for some personal information, which, if a grievance suddenly takes place in the workplace, they may be accused of having used improperly. We have a whole lot of complexities introduced to the workplace that were not there before. These things are things that businesses were not consulted on. So there are, again, some natural justice issues here, on top of the additional overheads that have been put on business and the additional compliance costs for business that are introduced in this legislation. So these are some of the potential unintended consequences. I was surprised that measures could be introduced so late in the piece, without having been through the proper consultation process that I would expect for a piece of legislation that had been proposed for several years. The bill seemed to be not a priority for the Government, but suddenly it has become a priority for the Government. We see a somewhat unfluid—unfluid—production of the legislation.

The other thing that I think is important to comment on at this stage of my second call—and if I get further calls, I will have some more that I want to say—is around the penalties for late payment of debts. I think that the Government is taking a sensible step here, in making the obligations more likely to be met. We have a trade-off here, because in one sense what is going on is that liable fathers will now be liable for a whole lot less. So there is a question about personal responsibility. That National Government is effectively saying that those who have many children have now less liability and less personal responsibility for the children whom they have produced. That is an interesting position for the National Government to take, yet in some ways I think it is right. If this provision leads to us collecting more of the debt and to the debt not spiralling out of control, then surely that is a good thing. There is $2 billion—$2 billion—outstanding in child support payments. That is something that this Government has needed to address. For some reason, it has not been a priority for the last 4 years that there is $2 billion worth of child support debt outstanding, but it is good that it appears that will be addressed in some way in this legislation. Again, it will be very interesting to keep a close eye on the way that is implemented, and that is around the discretion of the Commissioner of Inland Revenue and so on.

The other issue in this legislation that comes out of these additional compliance costs that National is putting on business and that comes out of the natural justice concerns is the additional cost of administering the formula and, with it, the exemptions. We know that this formula will cost more to administer. Inland Revenue Department officials have told us that the child support legislation is already the most expensive piece of legislation that they have to administer on a per case basis. So we know that this is a cost on Government. Because it relates to people in difficult circumstances, of course we think it reasonable that there should be a cost, but we are concerned about the additional costs introduced by a complex formula and, coming out of it, one can imagine, some more additionally complex exemptions. The commissioner’s discretion will in some ways, I am sure, deal with some of those things, but on a day-to-day basis there are going to be more staff involved in working out how the formula is applied and also when it is not applied. The staff time taken to implement the formula is expected to be more. That is what the officials said. It is reasonable to expect that working out when it does not apply and how you work around the new formula is also going to take more time. So there is more overhead involved for the Government, and, effectively, that means increased bureaucracy. So there is increased bureaucracy that comes from having a more complex formula and also from the exemptions that fall from that formula.

I will end my contribution to this particular part right at the moment, because I am sure other members are very keen to speak. However, I hope to take some more calls on this part of the legislation, because there are a couple more separate areas that I wish to speak to. Thank you.

I am pleased to take a call on Part 2 of the Child Support Amendment Bill, which deals largely with matters related to penalties. One of the challenges when talking about the complexity of the formula is that what it is trying to achieve is to better reflect modern-day society, and that is really a case where I do not think people can have their cake and eat it too, in that respect. The second part deals with rules, related payments, penalties, and write-offs. A perverse incentive develops where people feel that their payments and their obligations get beyond them, and they stop making them. One of the implications of that is spelt out in the over $2 billion worth of debt that we see, 70 percent of which is penalties. The second part of this bill really is dealing with ways in which we can try to change the levers in order to encourage parents to make those payments and to meet their responsibilities.

If we come back to the premise or the reason for child support in the very first place, it is because sometimes parents cannot agree and do not have an amicable platform or relationship on which they can ensure that the needs of their children are being met, at least in a financial sense. We hear from the other side of the Chamber that this bill is about vulnerable children in this context, and that this is about child poverty. I am bemused by this. What we are dealing with here in this bill—is this dealing with child poverty? Is this a welfare bill? Is the Ministry of Social Development dealing with this? I believe that it is actually the Minister of Revenue. This is administration—

💬 Dr David Clark: I raise a point of order, Mr Chairperson. I thought we were debating Part 2 of the bill. So far the member has discussed the formula and aspects that have been in the Part 1 debate, in terms of vulnerable children and whether children are at the centre of the legislation. Or is it acceptable to have a wider debate?

The CHAIRPERSON (Eric Roy): No, it is not acceptable. I have probably shown a little tolerance, as I did in the debate on Part 1 when some members strayed. I hold myself responsible for allowing that leniency, and I would ask the member to continue.

I was under the impression that this was a very important aspect of debate for the other side. Obviously, those members have moved on. With regard to the penalties, what we are talking with this legislation, what we are talking about in this part of the bill, is the ability to ensure that the payments are reaching their intended target and not being drowned out in administration, in penalties, and in disincentivising parents from ultimately making the payments, which will then be spent on the children. The point I was trying to make is that this is very much at the heart of what this legislation is setting out to achieve. The complex formula the Opposition is talking about is a means of trying to ensure some efficiencies, so that the administration of the moneys from the respective parents means that they find the end user, being the children.

I want to run through just a couple of specific points with regard to the penalties. This bill allows for compulsory deductions of child support from employment income payments to parents. In many cases this will take a load off, a liability off, and will ensure that payments are streamlined. That, in itself, will take care of some of the issues. The bill introduces a two-stage initial penalty, with the current full 10 percent being charged only if the debt remains unpaid after 7 days. Again, that is providing incentives to try to encourage payment. It reduces the incremental monthly penalty from 2 percent to 1 percent after a year of non-compliance, complemented by intensive case management from the Inland Revenue Department. It goes on. It relaxes the circumstances in which penalties can be written off, including when a paying parent enters into an instalment arrangement or something of that manner.

The point is that there is over $2 billion worth of debt, 70 percent of it as a result of penalties. Something is not working here, and that something ultimately denies the children. In my submission, this is nothing to do with vulnerable children. This is to do with parents who cannot agree, and the administration process that is required to find agreement. This is not about a need for any implicit or explicit direction in legislation as to children being at the heart of it. This is about administration, and penalties are such an important part of getting the levers under control so that the money that parents are paying into the scheme is ultimately being spent by those parents for the benefit of the children. Thank you.

Part 2 relates to a number of important provisions in this bill, the Child Support Amendment Bill, most notably the ability of the Commissioner of Inland Revenue to depart from formula assessment collection penalties and relief. It takes us through automatic deductions and it sets out the grounds for penalties. It does, as our colleagues have just noted, reduce the maximum rate of penalties after a period of time in an effort to prevent people becoming locked out of the system, and it provides more discretionary relief from penalties. What I wish to do is to, firstly, take the Committee through some of those penalty provisions, and to then turn to several of the more operational matters that follow from that and go to the heart of the Inland Revenue Department’s capacity to deliver on this bill, such as it is.

The bill does allow the commissioner the ability to write off penalties. That is important, because during my last call I noted that the accumulation of child support debt has now grown to a colossal $2.3 billion. About $1.6 billion of that is accumulated penalties. The tragedy is that the penalty regime really, really has needed an overhaul for some time. In practical terms, what happens is that liable parents—usually dads who are estranged from the family—can get behind, particularly if they are on a low income or unemployed. They then incur penalties, which makes the problem worse. They get to the point where they cannot afford to catch up, but there has been no provision in the law for the department to write those penalties off or down in order to bring parents back into the system. I know of constituency cases where those parents have fled the country because they have seen themselves, and have been seen, as outlaws, because they have been unable to get square with the ledger of their child support arrears and the penalties have mounted up too fast.

So although the Labour Opposition votes against this bill—we do not support the bill, as it has got some fatal flaws, it does not put the children first, and it is a missed opportunity—we do agree with these provisions that provide more flexibility in the penalties, such as clause 36, which allows the commissioner to write off incurred incremental penalties when a payment agreement has been completed. So there is a positive incentive to bring people together to reach a voluntary agreement on catch up, and it gives the commissioner the ability to support that by a reduction of historic penalties.

Secondly, the penalties incurred by receiving carers, or the charging of penalties due to overpayment of child support—i.e., irregular payments. You might pay too early or too late. Somebody might pay a double amount one month, but then they incur a penalty because they are late the next month. This bill gives the commissioner the ability to smooth that through and avoid an unintended consequence.

It also provides an ability to include the provision for the commissioner to write off some or all child support payable to the Crown where the receiving carer is a social security beneficiary, or where recovery would place the liable parent or the children in serious hardship or would represent an inefficient use of the department’s resources. I will come back to that matter in a second.

In general, much as we do not agree with the bill as a whole, we do agree that these penalty provisions make sense and will go some way to providing positive incentives for people to get together and act in the interests of the children. That has been the core theme of our opposition to the bill the whole way through.

Now here are a couple of things buried within that part that we do not think are constructive. The first is the reversal of the onus of proof on automatic deductions. Currently, somebody has to opt in to say that they want a direct deduction or an automatic payment of their child support liabilities. This bill changes that. It says that they have to opt out, and that throws up some very serious privacy and natural justice issues.

As my colleague Dr Clark has said, just suppose somebody does not want their employer to know their family circumstances. Perhaps jobs are under threat and they do not want their employer to know that their family is split and that their partner has moved away because that might make their employment situation more vulnerable. Maybe it is more complicated than that. People lead complicated lives sometimes, and they are entitled to make judgments about what is in the best interests of themselves, their families, and their children, including whether they disclose those circumstances to their employer. To be fair, there is an opt-out provision, but we believe that the reversal of this burden of proof is flying in the face of natural justice processes and creates a whole swag of additional red tape.

That then raises the next issue, which is the cost of administration. The Inland Revenue Department reports, I understand, that it is expecting a 15 percent increase in the workload associated with administering what is already “Inland Revenue’s most expensive product to administer on a per person basis.”, because, necessarily, it is bespoke. It is fairly customised. The complexity of the formula and the ability for more variation in the payment systems—which I have just said we think is a reasonable thing—will inevitably increase the cost burden on the department.

And here is the kicker: it will put more burden on the adequacy of the department’s computer systems. For those who are perhaps like the Attorney-General, who is getting a little bit of after-dinner shut-eye, they may not have noticed—Minister—that the department’s computer system is creaking. It is good to see that the Attorney-General, after a hard day watching the Supreme Court, is now leaping to his feet in defence of the department, because it may be that his department, Crown Law, will be called upon to adjudicate matters that arise—

💬 Hon Christopher Finlayson: We won.

Oh, “we” won, did we, Minister? “We” won? Well, what about New Zealand winning? Because I am afraid, Minister, that if you flog off our energy system—

The CHAIRPERSON (Eric Roy): Order!

💬 Peseta Sam Lotu-Iiga: Point of order.

The CHAIRPERSON (Eric Roy): I think I can anticipate the point of order. [Interruption] No, I am on my feet. Let me just say that I know that the member responded to an interjection and we all need to be above that. Let us come back to the bill.

Mr Chairperson, you provide an excellent example and I shall earnestly try to follow it.

The department recommends that it needs a rebuild of its computer system and that the price tag thereof would be about $1.2 billion—in fact, as much as half the accumulated child support debt, which is a lot of money. I do not know how any person or entity could actually spend $1.2 billion on a computer system, because that sounds like an awful lot of money to a MP from west Auckland. But what I do know is that if you have a computer system that is—[Interruption] I thought that would get the itinerant member for Mt Albert—she wishes. The casualty of “The Maestro” in Mt Albert—this is getting her excited. A price tag of $1.2 billion for a computer system makes one wonder how long the Inland Revenue Department’s mainframe is going to stand up at all and whether it can cope with the additional burden of more customised child support.

So, just wrapping that bit up, let us first concur that the increased flexibility on penalty payments is a good thing. The additional customisation costs, the additional work around automatic deductions, the reversal of the onus of proof, the increased costs of administration, and the grave danger that it will not, in any case, be able to be implemented by the department’s creaking computer systems all adds weight to the Labour Opposition’s conclusion that we cannot support the passage of this bill in its current form.

Concluding my remarks, one must come back to the point that this really is a missed opportunity. It has been common ground across the House for a number of years now that the child support regime needed a fix. The Labour Opposition supported this bill’s referral to the Social Services Committee. We were ready for the debate and for the calling of submissions. We worked earnestly with the Government to try to find a way through this. We regret that we are unable to support the bill at this stage, but the issues of transparency, of accountability, of cost, of the burden of proof, and of the lack of the primacy of the interests of the child have all driven us to that conclusion.

It is a pleasure to rise to follow that member from New Lynn—

💬 Scott Simpson: No, Herne Bay.

Sorry, Herne Bay. No, Herne Bay is not in New Lynn. Oh, but he lives in Herne Bay. It is a pleasure to rise to speak after that member. I do not ever remember actually seeing him on the Social Services Committee, though.

I rise to make a very short contribution on Part 2 of the Child Support Amendment Bill, which deals with departures from formula assessment, collection, penalties, and relief. In particular, I want to focus on new section 135GA inserted by clause 34, which talks about discretionary relief for residual penalty-only debt. There are, of course, other provisions, but this is specifically dealing with debt. I know that other members have actually talked previously about unpaid child support, which is in excess of $2 billion in this country, and more than 70 percent of it is from overdue penalty payments. I know that the member David Clark talked about the compulsory deductions earlier. I am actually very pleased to note that this bill allows for compulsory deduction of child support from employment incomes of paying parents.

However, during the select committee process we heard about some members of the public who might have issues in terms of their cultural needs and their privacy needs, where knowledge of their child support payment could jeopardise their jobs and put their jobs at risk. It might even put a black mark on their names, among their ethnic communities. It was a very, very difficult position that they were in. I am very glad to have had great advice from our officials, and now this bill makes it possible that the issue be dealt with. The Commissioner of Inland Revenue will have the discretion to allow alternative methods of payment so that people’s child support payment automatic deductions would not be known by their employers or the community, which might actually put them in jeopardy. Some talked about physical harm as a result of it.

Even in my own culture, in the Korean culture, if you are divorced and you are a child support payer, you might actually—sorry, not you, Mr Speaker—be blacklisted among Korean society members, and might not even be elected to Korean society officialdom if you happen to be in that situation. I personally know as a divorced woman that being a divorced woman has a certain stigma within certain ethnic communities—mine included. I think this element of this bill actually deals with that, I guess, social element very well.

That will be my only contribution on this part, because yesterday we dealt with it in the second reading of the bill, where I actually also talked about other bits of the bill. This is a great bill. I commend it to the Committee.

At the outset of my contribution on Part 2 of the Child Support Amendment Bill, can I just place on record the bizarre bureaucracy-speak that pervades throughout this bill, including in Part 2, where, strangely, the person whom I would call the primary parent, who actually is providing the main parenting role, is described as a “carer”, and the person who does the paying and not so much of the parenting gets the word “parent” attached to them—“liable parent”—as opposed to the primary carer. It is something that I would like to see in future actually resolved through this bill, because it does seem to me that we attach the word “parent” in quite the wrong situation there. I would much prefer to see the word “parent” actually applied to the person who is providing the role of parenting, not to the person who simply pays the money for the role of parenting. I think we have got that round the wrong way. Primarily, Part 2 is actually about when it all goes pear-shaped. I guess in some ways you can say that it has probably all gone pear-shaped before families are even dealing with this bill, but this is when after the relationship has broken down there is a problem with the liable parent—the payer—actually paying what they ought to pay. This is the part that actually attempts to deal with that.

I was not on the Social Services Committee. I did attend briefly to hear a bit of the conversation that was going on around this bill, but I am not a permanent member on the select committee. I was surprised to learn that the Government would not contemplate looking at one of the most effective ways of dealing with liable parent debt and contributions by considering the idea of a pass-on mechanism, because there is international evidence that one of the best ways to actually improve liable parent payments is to ensure that they know that the money they are paying is not getting lost in some black hole of a huge administrative system, but, in fact, is finding its way to their child or their children and supporting their upbringing. I am just surprised that the Government was not prepared to at least look at that, particularly given that we have this huge debt of $2.3 billion outstanding. And, as I think previous contributors to this part of the debate have pointed out, that has revved up significantly under this Government’s watch.

When this party in Government was in Opposition, it cried crocodile tears over half a billion dollars’ worth of debt in this regard, and now that it is at $2.3 billion, well, it is not even really concerned enough about it to look at one of the most effective ways that happens internationally of making sure that that debt does not continue to accumulate. However, in fairness, roughly $1.6 billion of that $2.3 billion of debt is actually incurred in penalty payments. Clearly, the current system of penalty payments is not working. It is certainly not working, because what obviously happens, it would appear, is that once the liable parent accumulates a debt and they start incurring penalties, it becomes even more unaffordable for them, and so they just continue to ignore it and ignore it and ignore it and hope that it goes away. In fact, it does not go away; it just keeps going into an accounting exercise that blows out to be $2.3 billion.

But in behind that $2.3 billion is actually a story that the Government does not want to talk about, and that is the problem of child poverty. Yes, even this part of the bill, which is all about how we can try to get payments happening and a range of issues around penalties and relief and formula assessment and debt collection, really does again underline the issue that is at the heart of this, which is about how we get those resources to the children who need them. I am really disappointed to hear Government members opposite say that this bill has got nothing to do with children—that it is all about parents and it is all about administration and it is all about payments. What do they think this is all about? Where do they think this is all ending up? If it is not about the children, if it is just about some bureaucratic exchange of money and it is an accounting exercise, what on earth are we here debating child support legislation for?

It is as if they are completely divorced from the real world. It is as if they are completely divorced from what really goes on in these families, because if they do not understand the link between what this bill does, the exchange of finances, and the proportions in which it is moving that finance, then they really need to get out there, start talking to their community, and hear what is really going on. I know that some of the members opposite think that because of their personal experiences they have got this nailed. They think they know all about it because they may have personally taken on a new family and personally been responsible for paying for them, but this is about a whole range of families’ experiences; it is not about them. It is not about those members opposite and their personal situations; this is about a whole range of situations.

I do want to ask some questions of the Minister in the chair, Mr Woodhouse, because we see in clause 26 of this bill that we are giving the courts some discretion to actually change the formula assessment in the situation where a re-establishment cost exists. I was very interested to understand what “re-establishment cost” actually refers to. What it refers to is two situations, it would appear to me. I just want to check with the Minister that I have got this right. The first instance that it applies to is that the court may change the assessment criteria and formula if in the first 3 years after the relationship has split up, the financial situation of the liable parent changes in a way where the contribution that they are required to make would be 30 percent or more of their income. That is what I understand that that part means, and I would like some clarification that I have got that right.

That does not bother me so much, but the next bit I am not so sure about. I think it then goes on to say that this re-establishment cost could include the court being given the ability to change the formula assessment because the liable parent has got responsibilities for a new family now. I would really like some clarification on that, because that is actually quite a departure, I think, from where we have been, and I think that that has some real implications with it. Are we giving the court the right to change the formula assessment based on the liable parent, who often seems to be the parent who has made the decision to leave the initial family unit, setting up a new family within 3 years? That could actually often mean that they have left that family for another family, because it is quite soon after the relationship splitting up. Does that mean that they get some sort of financial benefit for that? Because that is how it reads to me. I think that raises some real questions. It raises some real questions.

Watching the members opposite who have been on the select committee, either they do not know whether I am correct or not, or they are feeling a bit embarrassed by what I am raising. I am not sure. They do not seem to be responding at all about the issue I am raising here. But I would like a response—

💬 Mike Sabin: Because you’re not making any sense.

Well, the member Mike Sabin says it is not making any sense. If I am wrong, I would like to know that, but the way I am reading it, Mr Sabin—and you might tell me whether I am right or wrong—is that, correct me if I am wrong, within 3 years, if the liable parent has a whole new family that they are establishing and that they are financially responsible for, the court has got discretion to change the formula assessment for their commitments to their original children—to the children whom this bill is trying to address. Am I correct in that?

💬 Mike Sabin: Oh, you’ve confused me.

I am confused—so I have got it wrong? I would really like that member, please, to take the next call and explain it to me. Maybe I have got it wrong. I am putting my hand up and saying I could potentially have that quite wrong, but that is the way I am reading this bill. I would like some clarification on that because it is quite—[Interruption]

💬 Hon Annette King: I wouldn’t take notice of what he says.

Well, I really am looking for direction on it, because that is how it reads to me. And if I have got it wrong, then I will feel quite relieved. But if I have got it right, then I would be really quite concerned about what analysis we have had and what official advice the select committee has had that tells us what the impact would be on the original family and their children. That is quite a significant departure.

There were quite a lot of interjections from the other side of the Chamber during Sue Moroney’s contribution on this bill, the Child Support Amendment Bill, and I would really welcome Mr Sabin, or perhaps the chair of the Social Services Committee, standing up and taking a call. If you have got some evidence to refute what Ms Moroney was rightfully querying, I think, using the Committee stage, which is what it is intended for, then I would really welcome Mr Sabin doing that. But I have to say that my previous experience of Mr Sabin has been that his interventions are often slightly antagonistic—I am going to be honest. And I think it was probably quite fair of Sue Moroney to instead just say: “I am asking a legitimate question. If you have alternative evidence”—

💬 Peseta Sam Lotu-Iiga: You called me a scab.

I am happy to clarify our comments previously in the select committee; I do not think now is the place. Now is not the place, Mr Lotu-Iiga, to discuss scabs. This is the debating chamber.

I want to talk about the discretion that is granted in the bill to the commissioner around the deduction of individual payments, and I do think that discretion is important in a bill like this. In terms of the kind of discretion, though, that Sue Moroney has referred to—I think it is only fair that she seek clarification on that matter. I have to admit that I am dragging back into the recesses of my mind. I remember the debates that were had around new families. Where new families are formed by liable parents in particular, what then is their responsibility on an ongoing basis to their new family versus their existing biological family, no matter how many years of separation or, importantly, the amount of income that is brought into the home by a new parent, where the non-liable parent is no longer in their place?

I think what was an important principle discussed by the select committee, though, was that regardless of whether or not a custodial parent re-partners with someone with all the wealth in the world, it is still ultimately the responsibility of a biological parent to contribute to the upbringing of their child. I think that is a principle we should stand absolutely firm on. That means that even if a mother re-partners with a very well-to-do individual, or a father re-partners in that same kind of scenario—it does not matter which gender; it does not matter who the liable parent is or who the custodial parent is—the principle is that the responsibility follows the biological parents wherever they may be, and the calculation applies to those parents.

I think that is right and fair regardless of how many years they have been separated. That is certainly what I think this Committee would intend to be on the record—that when it comes to discretionary provisions our intent is that the responsibility lies with those parties. But when it comes to the deduction regime, there is some importance to a certain degree of discretion, particularly—and this is one of the things I remember discussing—when you are involving individuals who have limited income. They might be beneficiaries, including the liable parent, who might be a beneficiary. We do need to take into account the ability to factor in their income levels, and whether automatic deductions would cause someone to dip below what would be considered a fair and reasonable ability to financially survive.

One of the points we also wanted to make, though, concerns the change of the regime so that it is an opt-out system. Until now, of course, automatic deductions from employees’ wages have been permitted only on an opt-in basis, and we are reversing that onus now. That is quite a significant change. That means that the Inland Revenue Department’s guidelines for notifying liable parents of intent to disclose personal information to an employer has not yet been developed—that is my understanding. But it is our view that if we apply natural justice to these situations, liable parents should, of course, have the ability to object to the disclosure of information.

We have had examples before the select committee, which we heard and agreed with, that said that under certain circumstances you would not necessarily want your employer being aware of a deduction for a child that they may not even know that you have. It is up to that individual’s own conscience as to how they manage that. So we wanted to take into account the ability of discretion there. But we have not really thought more broadly about whether or not this automatic deduction regime does allow discretion in other circumstances.

Equally, there are certainly going to be examples where there will be potentially unfortunate and unjust disclosures of personal information by the State, because we have seen them in the past. Inappropriate disclosures by the State have, unfortunately, become quite a common occurrence. The State has proven itself—be it Work and Income, be it ACC—to be a poor manager of people’s individual information. What protections will we have in place to ensure that this information, the opt-out regime, is dealt with with the due care that it needs? That is something I would put to the Minister in the chair. If he at some point were able to speak to some of these concerns, then that would be worthwhile, I think, to the Committee.

One of the other concerns we raised, though, is that when it comes to employers, they will be bearing the brunt of the administrative cost over this now opt-out regime. This was something we wanted to flag, particularly where small-business owners might be impacted by a deduction regime. There did not seem to be any regulatory impact assessment of what costs small businesses—or large businesses—would incur through deduction policies like this, and I would have been really interested to see what impacts that would have. But I also want to point out that when it comes to things like deduction regimes, debt reduction—which is another significant part of this bill—and the idea of trying to reduce down penalties, for us, the principle we were relying on is, what we can do to ensure that on an ongoing basis we try to encourage more parents to ensure fulfilment of their responsibilities under this legislation?

If we have evidence to suggest that the high burden of debt that an individual might be carrying might be reducing the likelihood of their coming back into the system and doing what is right and paying their way, then we should look at how to reduce that. That is a reasonable thing to do and certainly we accept that. Judith Collins, however, did not seem to accept that, and I think it is only fair to point out that in 2005, in her ongoing way of taking an approach that seems to be purely punitive without taking into account the evidence base or what impact it might have on a child, she said: “Writing off debt sends the worst possible message to absent liable parents. The Government is telling them that if they dodge their responsibilities for long enough they will get a discount. That is the wrong message to send.”

We know that the evidence actually says otherwise and that it is penalty payments that seem to be accruing in a lot of cases. If we can do something to ensure that we engage parents back into the regime, then that is what we should be doing whilst, of course, making them responsible. But in 2007 Judith Collins went further than that. She wanted to ensure that action was being taken at the border against parents who default on their child support payments. And I have to say that if we are picking up traffic infringements at the border, why are we not picking non-paid child support payments?

In 2008, in fact, Judith Collins supported making avoiding child support an arrestable offence. Where is it now? Where is it now? Where is that hard line that the Government wants to take on parents who are not paying their way? It was easy in Opposition, was not it, to make all of those statements. Well, where are the provisions now? Only within the past 2 weeks I have had a case of an individual from Australia who has not been paying their way. They are in New Zealand, we know where they are, and what is the Inland Revenue Department doing? Unfortunately, very little, and that must be enormously frustrating for the individuals in this case who are not even biological parents but just want the parent of this child to do the right thing and pay their way.

If the Inland Revenue Department had come to the Government and said: “We think we need these powers.”, then I would hope that the Government would act. Now we are saying that there is a case for the Government to be looking into these powers. Judith Collins seemed to see it before. Why now has it suddenly escaped the Government’s view? The Government seems happy to be focusing on welfare fraud. Well, we already invest $39 million chasing that each and every single year. What about investing a little bit more and chasing some of the debt that has been taken away from our kids as well? I would ask the Minister whether that was explored. I would be quite interested to hear the rationale for why it was not a part of this bill.

I move, That the question be now put.

There are just a few final points I want to make on this part of the Child Support Amendment Bill. There is one element of this Part 2 that does please me, and I think it is a good set of provisions. In my observation over the years I have been involved in social provision, it is easy to see how child support, or the lack of payment of child support, has received bad press and a bad name. That has happened quite consistently over the years where people have quoted the amount that is owing to the State. Many people outside do not realise that much of that is by way of penalties—not the base amount, but penalties—and they grow very, very quickly. This has given child support a bad name, and this bill does address that quite well.

It has a much more appropriate penalty regime: it is graded and there is an incentive, if you like, for people not to let it get out of hand. I want to commend the designers of this bill for those particular provisions. I think it is quite a good set of provisions. They are quite well graded, and lots of checks and balances are built into there. So that is a good provision in this part, and I think it will have an effect on the press, if you like, about child support. I think that is a positive aspect of it.

The other aspect that I want to talk briefly about is the automatic deductions regime. I know that others have spoken about this, and I note that Melissa Lee in her comments was singing the praises of this particular provision. It is a complete switch-round. Instead of being an opt-in provision, it is now an opt-out one. It is really up to people to say that they want to opt out of this particular provision. I know that there are some additional provisions that we worked on in the Social Services Committee to say that for particular reasons—and cultural reasons have been mentioned, but it is not just cultural reasons; it is for a whole bunch of reasons—you would not want your employer to have that information. That provision is still an opt-out provision. People have got to go and do something about it themselves, not the other way round. We are worried about that, and I think we will have to watch this, because, as the last speaker, Jacinda Ardern, said, there is no history on the Government benches of respecting privacy of information in recent times. The burden, then, is on members opposite to actually ensure that provisions are built in in such a way that that kind of abuse that has taken place does not occur. I think that is quite an important provision in this particular bill, which we will be watching, and we are not certain that this is the best way to go.

The next point I want to make actually links into that point. It is that in order to ensure that with this system, which is now quite a complex system that has been designed, there is a real possibility of the Inland Revenue Department actually delivering on it. We think the jury is out. It is already being pushed out another year. The computer program that others have talked about is now really struggling under the current demands, and yet we have this new set of provisions that will demand much more of that system going forward. This should not be introduced unless it is guaranteed that the $1.5 billion—that is the figure to be spent on a computer system—will actually deliver on this. There are many more computer systems that the State has invested multimillion dollars in that have failed than have been successful. This is a major one. So here there is a risk for these provisions that have been added into the current system. We just wanted to signal that we have major concerns about that. We think that the system that is designed here is now quite complex. The formula is complex, the system is complex, and there are reviews being built in as well. In order for all of that to operate well, that computer system has got to be bedded in, not like some others that all of us could talk about that are producing all kinds of perverse effects. Unless that is done, the risk will be realised. That also then addresses the question, or the risk, or the problem, really, of the huge expenditure.

I move, That the question be now put.

The question is that the question be now put. As many of that opinion will please say Aye, to the contrary No. The Ayes have it?

💬 Chris Hipkins: A party vote is called for.

The CHAIRPERSON (H V Ross Robertson): A party vote is being called for. Will the Clerk please conduct a party vote for Mr Hipkins.

💬 Chris Hipkins: No, for democracy.

The CHAIRPERSON (H V Ross Robertson): For democracy, OK. Let us carry it out for democracy.

Can I ask the honourable member Brendan Horan whether he wishes to vote. We have just called him to vote.

💬 Brendan Horan: Yes. One vote opposed.

The CHAIRPERSON (H V Ross Robertson): One vote opposed. [Interruption] Order! Can I just remind members that during the course of a vote there is supposed to be silence. In fact, any conversations across the Chamber can be seen as intimidation and could well lead to a breach of privilege. I call the honourable member Brendan Horan, just to explain to him that what the vote was on was that Part 2 as amended stand part.

💬 Brendan Horan: Yes, thank you. I was watching on television and was rushing to get here, so I was aware, despite the squawking of those—

The CHAIRPERSON (H V Ross Robertson): Order! I can just tell the member that when that happens it is effectively a point of order, and he should be terse and to the point. Thank you.