Do you struggle to understand how exactly the NZ Government came up with the current child support system? Are you a paying parent that works your ass off yet you are completely broke? Are you a receiving parent that works your ass off and yet you are completely broke?
Try to imagine anything worse than being tasked with creating a child support formula that actually worked fairly.
Much of the time the system is required to enforce a type of contract between two people that intensely dislike each other.
You have 6 main groups of humans directly or indirectly affected by child support, 5 of which are very outspoken.
- Paying parents
- Receiving parents
- Partners of paying and receiving parents
- Parents that should receive but don’t
- Parents that should pay but don’t
(some people cross multiple groups – yes we realize that but are trying to keep the explanation as straightforward as possible)
The only group that doesn’t complain if things do not appear to be fair is of course the most important group – the kids themselves.
Each group has different priorities and views of the world. In many cases a paying parent has no idea of what life is like as a receiving parent, and vice versa.
The system as it stands now actually makes one person financially accountable for the actions and life choices of the other, this is despite them being no longer in a relationship.
- Example 1: If the receiving parent has another child in a new relationship the paying parent will likely have to pay more due to circumstances entirely out of their control.
- Example 2: If the main paying parent has another child then the receiving parent will normally receive less.
- Example 3: If one parent works less hours or quits their job the other will have to pay more money.
Parents ARE accountable for providing for their kids, they should NOT be accountable for the personal life choices of the other parent.
Child support is like being forced into a marriage with your worst enemy. It is rare to find parents that can form an agreement that doesn’t involve a gun to the head (aka IRD) of one or both parties.
The loopholes within the current child support system
There are currently (at least) three glaring and gaping loopholes that can be used to either get more, or pay less child support – these are important to address because they directly affect the lives of the most important group that this whole system is meant to be based around (remember those little humans we mentioned earlier on).
The Glaring Loopholes:
- Quit ones job and go on the dole
- Go into business and cover up true income
- Find a country to live in where you can hide from the NZ IRD
The first two loopholes work well for either receiving or paying parents. The third is usually only an option for paying parents.
Those are the loopholes that enable people to get out of paying what they should be paying, or to receive more than what they should be getting (child support is now based on the incomes of both parents).
And as if these loopholes were not enough of a problem in themselves, we then have the issues….
Issues with the child support system
When looking at the issues within the child support system it is easy to see that we are looking at an enormous Pandora’s box of icky problems.
Time and time again, these and other issues have been brought up to our members of parliament as well as the IRD.
IRD even came onto our website a couple of months ago in order to answer everyone’s questions. If we were lucky enough to get an explanation, it was at best a brush off.
It is clear to see that the powers that be wish to hide from these difficult, and hard to solve, problems.
Unless a huge fuss is made we are allowing our Government representatives to continue to hide their heads in the sand, like a herd of petrified ostriches.
1./ Living allowance Issue
To understand the true significance of this issue, we need to look at a study done every year, by the government around the average living costs of private households in NZ.
The study is called the Household Economic Survey.
From one of these studies the IRD created a guide called the AD694 which is to be used by lenders to ensure that borrowers are correctly reporting their expenses.
In other words if you are trying to borrow a large sum of money, and you state your household expenses are $480 a week and you live in Auckland they would probably not believe you as the average household living expenses for Auckland are reported (as per the IRD guide) to be $750 a week.
The point of all this (in case you were wondering!) is that IRD know full and well approximately how much it costs to live, on average, around the different towns and cities in NZ – YET when calculating the living expenses for a child support paying parent the amount is calculated at only $17,687 per year – $340 a week (update now in 2017 it is $19,359 per year).
When asked why the amount is calculated at such a low amount the IRD could not directly answer how the figure was arrived at. They told our community that it is based on a sole parent support amount, which is a pointless answer as a benefit allows the person receiving it to also apply for an accommodation supplement – the child support living allowance does not include an accommodation supplement.
We have covered this more fully in a previous article.
Suffice to say the amount is ridiculous and not only out of date, but completely different to what the IRD’s own research is telling them.
Sidenote: In Australia the living allowance is approximately 50% greater at NZD $26101.58 (AUD $23,610)!
2./ How is Child Support calculated?
You would think that such a question would be easily answered by the organization that is responsible for doing the calculation however the fact is they simply cannot tell us. The IRD, it is fair to say, cannot explain why or how our child support is calculated at the rate that it is.
As part of the calculation used a “basket of goods” approach was implemented – unfortunately neither IRD, nor the department of statistics (who apparently supplied IRD with the information) can tell us what was in that basket of goods despite a request under the official information act.
Statistics NZ does not hold the exact list of goods that was used by the study’s authors to estimate the costs of raising children.
Please refer to our article on this for more information.
3./ Private agreements?
We are also concerned that private agreements were meant to be the default – the IRD governed child support system was to be a backstop, yet that is not the reality.
Private agreements are very rare, an exception you could say.
Surprisingly if the receiving parent is on a benefit there is no option to even have a private agreement.
Is it even lawful to state that private agreements should be the overriding way to go, and then not allow them?
Check out around 2:30 into PD’s speech.
4./ Wild extremes of the formula show that it is NOT based on the cost of a child
Why when we are told that child support is worked out on the cost of a child, can one child be worth so much more or less than another?
E.g (Actual real world examples):
- Jonathan pays $1587 for one child per month.
- Apryl receives $62.80 a month for her child.
- Tracey receives $0 a month for her child.
Please refer to our article on the worth of a child for more information.
5./ Different rules for similar scenarios
In the Working for families entitlement calculation both partners incomes are included despite the lack of biological linkage. Why then is it not the same when calculating child support living allowance and why is the paying parent treated as single when they are a in a relationship?
For more discussion on this check out our article.
How can it be this wrong?
The NZ Government doesn’t appear to need to justify or explain anything. (Any serious questions or doubt cast on the system can, from what we have experienced, be completely ignored.)
The majority of the NZ public seem to think that issues with child support should be avoided like the plague.
With such a deeply entrenched system it is very hard to break through the status quo. But even though it may be nearly impossible, or at least incredibly hard to evoke change, that doesn’t mean that we should all throw it in the too hard basket and give up.
What happened to our millions of dollars?
The first $163 million spent on our upgraded system was, from what we can tell, used to copy some parts of an already broken Australian system.
Sweeping reforms to the 27-year-old child support program will be recommended by the bipartisan committee, which is due to table its report in federal parliament today after assessing more than 11,000 public responses during a 16-month inquiry – The Australian July 17th, 2015
Copying other parts of the Australian system, like the living allowance, would have cost the country even more money – so just got left out of the equation.
Imagine if the NZ government actually wanted to make a fairer and better system, wouldn’t they want to work with those that were struggling?
Can the government and IRD not admit the current system is extremely flawed in many ways?
Wouldn’t the children that are losing out on not only money, but time with (both) their parents be considered more important than trying to sweep all these issues under the carpet?
What is best for the kids clearly doesn’t come into it. If it did we would not hear about cases where the government took money away from parents and their kids and put it into it’s own coffers.
From what we can see the only real way out of this spiral of destructive money sucking policy is not by trying to convince everyone how right everything is, but actually accepting how broken it is.
How refreshing it would be to have a government party that took ownership of these issues.
What Do We Propose?
What we propose is to approach the issues starting with the child’s best interests:
That every child under the Child Support system gets a “fair” amount of $$ support (we know the government has failed here with some kids getting very little or nothing).
Remove the WRONG incentives from the system, including.
- Reducing/increasing access (nights) to increase/decrease the amount of CS received/paid.
- People not working to increase/decrease the amount of CS receive/paid.
- Having another child to avoid working and alter CS/Benefits.
Note: Not everyone abuses the system but those that do cause a lot of hardship for the rest.
The government by default should pay the CS where the paying parent isn’t/cant:
- The government chases the money up (Norway model?).
- This would allow them to get at people hiding their income
- This is such an easy win…if you are the parent…you will be billed for your children.
Remove the income based model:
- It’s not fair and drives the wrong incentives.
- There is no proof on what the government say about the more money, the better the kids are off AFTER separation so this should be questioned.
- Flat rate for a child (based on age and maybe sex) that BOTH parents are responsible for 50% of as a starting point.
- Nights of contact still come into it, but one parent cannot deny access to the other (without good reason).
- If one parent can’t survive, they apply for a extra benefit, NOT an increase in CS from the other parent.
- Separate Child support from any other benefits and make it transparent to both parents.
We Need YOUR Support!
Our aim is to:
- Define a clear and better path forward.
- Petition the NZ Government. Once it’s tabled, it will go to a select committee to be looked at more closely.
We don’t want your money, but we would eventually like to call on you for your signature as we head down this path.
Please leave us a comment to let us know your ideas on what we are proposing.
Also please join our mailing list so we can contact you later:
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