Hi Everyone here is the first episode of our Child Support Podcast.
Make sure you stay tuned in the weeks ahead.
Welcome to the Child Support NZ Podcast.
This is the introductory episode of the podcast where I will outline some of the major issues with the New Zealand Child Support system.
Over the next few weeks we will take these issues one at a time and do a deep dive into them.
This is what I plan to cover.
How we got to where we are today. I will talk about how our system is essentially a copy of the Australian Child Support system and includes many of that systems flaws.
The child support formula. How it is worked out and how it does not reflect the actual cost of a child.
The living allowance and how out of touch that is with reality.
Working for Families Tax credits. The confusion around what is considered a family, and what isn’t.
How Child Support payments often end up going directly to the Government when one parent is on a benefit. Also how the sometimes life choices of one parent, affect the amount of Child Support paid or received by the other parent.
Parental Alienation – What parental alienation is and how our Child Support system encourages some parents to use children as bargaining chips
A flat rate Child Support system. Our proposal for a flat rate child support system and how that would look.
We look forward to talking to you in the weeks ahead.
Recently we have talked about a flat rate child support system. This article explores that proposal in greater depth and any comments, suggestions would be appreciated.
The primary aims of a flat rate system would be to:
Encourage shared care in the majority of situations so both parents engage in the responsibility of looking after their children
Ensure parents with sole responsibility of paying for their children receive a consistent amount of child support
Stop the practice of valuing children at different amounts of money
Arguably one of the best Child Support systems in the world is in Norway. Our proposal includes many ideas from this globally forward thinking country.
Our Current Child Support System
Currently one of the biggest issues with the incumbent system is the way it treats different children at different values. For more detail on this you can read our article on the worth of a child.
High end paying parents pay well in excess of the actual cost of raising their children and the bottom end fail to contribute enough for half the necessities of life
IRD states this is because studies have shown that the cost of a child is related to the income of the parents.
This may sound reasonable in theory however in practice it doesn’t add up.
Let’s compare the cost of a child to the government pension. Imagine if those elderly who had lived a lower income lifestyle received a lower pension than those that had enjoyed a more wealthy lifestyle.
The premise that a child had very little to begin with so doesn’t deserve as much as another child is not a sound concept.
This creates conflict and devalues the children of New Zealand.
One of the biggest problems with any child support system is when the liable parent cannot pay or evades the system. Norway managed to solve this problem by ensuring that every child receives child support no matter what.
In New Zealand we have modelled our child support system after the Australian child support system. The issues and problems that are experienced in Australia we are also experiencing here which is no surprise really.
A Flat Rate Child Support System
There are three current issues that a flat rate system would help to solve. The way we would do this is by:.
Ensuring children, and those caring for them, receive the support they need
Encourage shared care and remove any financial incentives that might fuel parental alienation
Stop parents having to pay for other parents sometimes life choices. I say sometimes because things do sometimes happen in life that are unexpected and out of a person’s control
Arguably the most important factor in this is the children. Although the government has tried to implement a system that was fair in my opinion it hasn’t worked for many of the outlier cases.
There has not been much done to encourage shared parenting and there are no incentives to work.
When looking at a flat rate model we would need to work out how much the average child needs to maintain an average lifestyle.
Food and shelter
The love of two parents
We need to remove any financial incentive to keep a child away from a parent. Parent alienation laws should be implemented along the lines of Mexico, Italy and other forward-thinking countries. In Mexico if you alienate a child against the other parent you can be imprisoned. In Italy you can be fined thousands of dollars.
NZ is an amazing country and we punch above our weight in sport and technology.
Let’s look at best practice around the world and also become a world leader in the area of child support for the sake of generations to come.
Example of a Flat Rate Child Support System
For a childs expenses we would include the four pillars below to be shared between both parents as determined by the shared care %.
School costs for the average public school
For shared care situations, which would be encouraged to be the norm rather than the exception, Child Support would not include any amount for accommodation because both parents face this issue (of having space for the children) and one should not have to pay for their own and then the other parents as well.
A parent that is not working may be entitled to benefit allowances related accommodation but this would not be connected to Child Support.
We must stop the practice of child support money bypassing the children and going straight to IRD.
Ages and Shared Care
Depending on the results of costing analysis/studies there would likely be an increase in costs around the age of 13.
In our model of a flat rate, in any situation where the care was in the %40 to %60 range there would be no CS at all and it would be up to the parents to share the costs.
In a shared care scenario each parent covers the expenses when at their house. Necessary school and medical costs would be split. I say necessary because if one parent demands that a child goes to a private school, and the other disagrees, then that is on the one parent to fund.
When child support could not be agreed upon in a private arrangement, care would be worked on number of days over a fortnight.
2 days 14.3%
3 days 21.4%
4 days 28.6%
5 days 35.7%
6 days – No child support applies, classed as equal care
Let’s say that it was worked out that the average child, going to the average school, with average medical costs, eating the average foods and wearing average clothes cost $175 a week.
In this case a the amount received/paid where the paying parent had 2 days a week would be worked out around the total CS amount which would start with a pool of 175 x 2 = $350.
Initially this is split into 2 because both parents are responsible for paying for their children.
Parent A is a parent that has them 2 days a fortnight. This is how it works.
Each day that Parent A has the kids, Parent B pays them half the daily value less the school, medical, clothing costs.
Parent B has them for 12 days of the fortnight so Parent A pays them half the rate for this time including the medical, school and clothing costs.
Parent A pays Parent B ( 12.5 * 14 ) – (2 * 7.5) = $160 a fortnight in CS payments.
$12.5 is half of the daily rate that Parent A pays when they don’t have the child. $7.5 is half the daily rate less the medical, school and clothing costs.
(Edit the above formula was corrected on 4th August 2017 after I realized I had made an error in the calculation)
Amounts given are just an example. A proper study would need to be done to accurately work out what the average child cost across the age groups included.
Depending on their income and circumstances Parent A can get working for families and other benefits as well.
Parent B is responsible for paying the school, medical and clothing costs as they get all the money for this. Parent A is responsible for paying for their food when the kids are with them, and any other reasonable expenses not under the four primary areas would be shared by mutual arrangement.
If only one parent wants them to do a sport or activity then unfortunately if they cannot get agreement to split the cost then that is on them.
Special needs/circumstances would be catered for under something similar to the Admin Review process.
The more kids you have the more expensive it will be until it reaches the maximum amount which is 25% of your gross salary. Studies may prove that the costs of children come down a certain percentage e.g if you have 3 kids the average cost per child may be lower than just having 1. If so this would be factored into the formula.
The best way to avoid paying child support through the IRD will be to get involved in the share and care of the children involved, or have a private agreement.
As mentioned before, like in Norway, any paying parent would not pay more than 25% of their gross salary towards child support. Any amounts over that would be topped up by the government. A decision would be made as to whether or not this would need to be repaid at a later date much like a student loan.
Disputes and resolutions
If there is a dispute about parenthood a DNA test would be done which if it proves parent hood will be paid by disagreeing party, and vice versa.
Parental alienation would be a crime punishable by fines and/or jail. No child support would ever be paid to a parent that had been convicted of parental alienation except by private arrangement.
Domestic violence and other situations would be looked at on a case by case basis to determine an outcome that was in the best interests of the child.
We need your Feedback
What do you think we have got right?
What are we missing?
Do you agree that we are on the right track, or do you think we are miles off and why?
If you are struggling to handle things on your own and need more help above and beyond what is available through our closed Facebook groups for receiving and paying parents then there are other options besides expensive lawyers.
Child Support Advocates have gone out of the way to help out our community with free advice, and we would like to help them spread the word about their services.
Information about Child Support Advocates
Child Support Advocates are the new avenue of help for child support parents. Their service was started in response to the growing need for independent assistance for parents who are experiencing difficulty with their child support.
There are too many parents and families struggling unnecessarily because they don’t get the help they need through IRD.
Child Support Advocates will help you achieve the best possible solution to fit your circumstances with the least amount of stress for you, they’ll do this by putting their experience with IRD and knowledge of New Zealand’s Child Support Acts to work for you. They can deal with IRD on your behalf and help with preparation of applications.
Karen Bevan is the founder of Child Support Advocates and she has a wealth of experience in the field. She’s a Kiwi temporarily living in Sydney, however location doesn’t affect the provision of services as most are completed online or by phone.
Karen’s expertise is in New Zealand child support and if a New Zealand case is referred to the Australian Child Support Agency (ACSA) for collection she can also represent you with the ACSA.
Karen’s experience comes from 15 years of personal inter-jurisdictional child support experience with New Zealand and Australian assessments, her own experience includes multiple successful Departure Hearings, Administrative Reviews, Objections, debt and other aspects. Karen holds a Degree in Law and her area of expertise is Family Law.
In addition, Karen’s experience within the child support arena of IRD spanned 9 years and included all aspects of child support administration. She has good knowledge of their systems and can obtain exactly what is needed from someone’s account to help resolve problems. Some of her time with IRD was spent working as a Technical & Service Adviser, and she is experienced in preparing submissions for write offs, debt reduction, ex gratia payments where appropriate, and all other aspects of assessment technicalities, administrative reviews, objections, debt and recognised care just to name a few.
If you have child support issues you can contact Child Support Advocates on +61 481 396 814 or inquire through their website www.csadvocates.co.nz and they’ll contact you.
In one of the examples on the IRD website there is a father earning $45092. He has two children to his ex and also has a new child with his new partner. By having a dependent child he gets a raise to his living allowance of $4,642.53 a year. This is around 10.3% of his total income.
For the original two kids the calculation of how much they cost is different:
The annual cost of raising Thomas and Ben based on Cameron and Holly’s combined child support income and using the child expenditure table is $16,505.26.
According to the Child Support formula the two original kids have an annual cost of around $8250 a year each. That is almost double what the new kids cost of living was estimated at.
Our own formula based example
In this example we have a man earning 65k a year. His ex and him have 1 child together and she earns 45k a year. She has the majority of the care so he doesn’t reach any of the thresholds to trigger shared care.
This results in him paying $592.80 a month for his first child.
Lets say he then has new kid with his new partner. Now he can add a dependent child into the formula.
He will get a living allowance for the new kid. The formula changes a bit to $508.30 a month. Basically out of his income he has $84.50 extra per month to spend on his second child.
What if he split from the new partner as well, and the new partner went on a sole parent benefit with full care of the baby?
If that happened he would then need to pay $464.40 to the first ex, and $464.40 to the second ex.
By the relationship splitting the children suddenly become worth the same amount of money.
This is wrong in so many ways it is hard to know where to begin but think about this:
The first child/ex get a substantial reduction in child support if our guy here splits with his new partner. One could argue that a flat rate from the beginning here would be the best way to go based on actual costs of a child that was unaffected by what life choices either partner made.
The second child is seen as not needing to be supported as much as the first child if the relationship stays intact, as soon as the split occurs then they suddenly become worth exactly the same amount.
A logical, fact based, and realistic flat rate of child support would seem to be fairer for all parties.
The Child Support formula in NZ, in it’s current state, is inconsistent when it comes to the cost of raising a child.
In a recent letter to one of our community Hon Michael Woodhouse (National Minister of Revenue) stated the following:
I refer to your further letter of 13 September 2016 about the child support scheme.
Governments around the world endeavour to create laws that best serve all their people. Internationally New Zealand’s state child support system is seen as one of the best when parents cannot, or are unable to come to a private financial arrangement over the care of their children themselves.
He appears to specifically point out that the NZ Child support system is seen as a world leading solution.
Our correspondent then asked (under the Official Information Act) for references to the reports and studies that Hon Michael Woodhouse had referred to when making this statement.
The reply has come through and is below:
My letter of 13 October 2016 made no reference to reports and studies. Your request for this information is refused in accordance with the provisions contained in section 18(g) of the OIA as the information requested is not held by me and I have no grounds for believing that the information is either held by another department or Minister of the Crown or connected more closely with the functions of another department or Minister of the Crown.
My comment was expressed as an opinion. I acknowledge that the current child support scheme is not perfect and does not account for every situation but I believe it is a vast improvement on the previous scheme.
If you find these kind of updates useful please let us know so we can share more with you.