Gaping Loopholes and Issues With the Child Support System In NZ

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
  • Kids

(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:

  1. Quit ones job and go on the dole
  2. Go into business and cover up true income
  3. 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.

head in sand
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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

The Australian Institute of Family Studies report released this week shows seven out of every 10 parents who pay or receive child support are completely bewildered as to how child support payments are calculated while another 20 per cent of parents thought they knew the rules but were wrong. – The Nationals Australia

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..the desire to align the child support system with that of Australia – Hon Todd McClay

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The $163 million cost of changing the child support rules will increase further when the Inland Revenue Department implements a completely new computer system in the next few years. – NZ Herald March 2015

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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:

KEY drivers

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:

  1. Define a clear and better path forward.
  2. 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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Comments

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19 Comments

  1. Hi, I’m new.. I just wanted to ask how do I go about my situation. I’m on the Sole parent benefit and my youngest is 9.. 3 and a half months ago I had a fling and ended up pregnant. The guy offered to pay child support through private agreement. But I have 2 others that belong to my ex partner. The ex is paying through work and income due to our break up. How will this affect my Sole Parent benefit for my other two that don’t belong to my fling and how will me having another baby to someone else affect my ex partner. Im considering all sides not just my corner. I don’t want others to struggle even though I’m struggling pretty bad with my kids already.

    1. Hi I don’t know enough about the sole parent benefit to be able to answer the question. Are you on Facebook at all? If so and you join our closed group for receiving parents they should have plenty of answers for you. Sorry I couldn’t help more.

  2. I can’t believe that fathers are paying so much to receiving mothers that also have a partner. If the child is with the mother for more than 40% of the time and the mothers partner/husband is equally sharing the support of raising the child for the same amount if time. Shouldn’t the partner/husband step up and just take on the responsibility of supporting his family?? I have spent four years of paying for my family to which two children are not biologically mine and the father of them gets to see them whenever he wants without paying any child support whatsoever. My wife, is his ex says that he just doesn’t make enough to pay which is not his fault but still gets all the benefits of seeing his kids because my wife thinks that”they should be able to see their father” when ever they like. She needs to step up and get him paying and he needs to step up and get a better paying job. The dole is not a job though thousands are employed. It must be the biggest body of insobordinate leeches in this country. I find it absolutely disgusting that both men and woman can just sit around and exsist as though our (working class) life’s depend on them. I want to see mothers especially , getting out and working for a living showing their kids that’s there’s more to life than ” keeping up with the Kardashians”. Lastly, Paula Bennett – “don’t forget your roots my friend” we all know where you came from.

  3. My partner(now husband)is paying over $500/month for a child he doesn’t even see because she wont allow it and supposedly got a court order based on lies. He has spent thousands on legal fees and got know where. He even had to pay her a property settlement (for something she never contributed to)which resulted in him having to sell his home which he paid for himself before meeting her. The relationship was an on/off thing lasting 2-3 years with her moving out several times, then sadly he was stupid enough to let her back in when she came begging back. She has a well paying job and its not fair that her earnings don’t appear to come into it, when my poor man works his ass off to make ends meet and gets penalised for any increases or overtime. He acknowledges that he needs to pay something but the amount ird seem to have calculated is nuts. Really he’s be better of going on the dole and not working, but then my earnings too are not enough to pay our mortgage and living costs here in Auckland or anywhere in the country I suspect. So the only one winning here is her. Also, Id like to know why the receiving parent is not made accountable for their spending or what the money is used on. She always seems to have rather expensive looking clothing, hair & make up, not to mention a 2016 car.

    1. Actually, her earnings are taken into account, Karlene. The law changed a couple of years ago. If she’s in a high earning job, as you say, then actually your husband is the one benefitting as it will be deemed she can cover the shortfall. Not sure how you think she’s winning anything with $100-120 a week towards raising a child.

  4. The level of care is not the same between us. My ex got to stay in the family home on a benefit so doenst have to work and spends a lot of time with the kids. Meanwhile due to criminally high CS (1500pm) I can’t even afford to rent my own place so have to find flatting situations that are suitable for a bit and girl to come into which is very hard and have to sleep in the same room. My girl (8) get anxious about the other strangers in the house.
    How is that equal level of care?
    Plus their mum threatens to not let me have them if she doesn’t like the place or people in it.
    So now I see them f*&%all.
    If I didn’t have to pay so much CS I could see them a lot more in my own surroundings which would mean better environments for the kids which ever parent has them.
    By the time i don’t have to pay it the kids will be off and i would have paid with my relationship with them.

  5. Great proposal to put forward. Sadly, the fact people use any unfair advantage to wizzle out of their parental responsibilities is not a nice reflection about New Zealand society! Its nice too know that there are people around who will try and give us a voice. Awesome job Rob, totally support this.

    1. Thanks Belinda, yes it is very sad. Everyday it seems, someone new calls me to tell me about their horrible situation. Thanks so much for your support.

  6. It would be nice to see exactly where our 10-13,000 goes (changes every year) As the ex doesn’t receive all that. She’s made that very clear, and even the two children my husband pays for thinks he’s useless apparently never doing anything for them. The relationship there is completely ruined. And we are every year without fail also being charged arrears, that bill alone is upto 18,000 even though we pay an extra amount on top of cs to pay it off. I’m over it I love my husband and our three children have missed out on so much because of cs. I work have since my youngest was 3 mths old not by choice so we make over the threshold for any subsidies and also family assistance is laughable. Those two do not go without by any means as she has also had a partner for 12 years. But man does she get upset about the little she receives! She also needs to be shown exactly how much we’ve paid that she’s missed out on! Then maybe she would allow my husband to see his children and hopefully they will get the misinformed chip of their shoulders. I RD have ruin a lot of relationships they have a lot of explaining to Do!

    1. We are in similar shoes. And when we did an admin review it was a “court tactic” we wernt even told she would see all in review. Even when we were paying it was “I never see a cent” tells SD that we never pay either. And we had proof she was receiving it. Now Grandparents are receiving Orphans benefit. She’s not an orphan!!! But now our CS goes back to the government. So that to us is double taxes!!! And all of it bases on net. We also have similar debt. They stuff up all the time. Half of ours is interest. The other is fees they won’t wipe after employer keeps paying a little late! IRD child support needs to change a lot.

    2. Not sure how she doesn’t receive the full amount you pay, it’s been like that for years. if they receive a benefit they are paid the difference if any on top. If she means she doesn’t get the full amount and every benefit under the sun then yeah that’s how it works and it’s not the payers fault.

  7. There used to be a living allowance if you had a partner, now that’s gone on the assumption that your partner is working.

    The Child Support System needs to be flexible.

    For example:

    Does your partner work – Yes / No
    Yes = You do not qualify for a partner living allowance.
    No = You qualify for a partner living allowance.
    There should be aide note that you must tell IRD if your partner starts or stops work at anytime.
    This will recalculate your child support based on this information.

    Some relationships end because of the other person, yet that other person keeps day to day care, even if they were the one who was wrong.
    So I disagree in some circumstances that its unfair that they paying parent gets a living allowance for their new child, when in some cases this is fair like my situation.

    I pay $90 per month extra on the same salary because of the new child support formula.
    My Ex is still on the benefit, yet her benefit doesn’t go up.
    So basically I’m paying more and my child see’s NONE OF IT!!!!!!!!!!!

    1. Good points, however we would like to separate child support away from who has a partner and who doesn’t if that makes sense. Also to have it removed from benefits, so in your case what you pay should be for your kids, not paid to the government to claw back the benefit they are paying the other parent. At the moment child support is too dependent on the lifestyle choices of the parents, whereas we believe there is a different, and fairer, way to look at it. Thanks so much for reading the article, and letting us know your thoughts.

  8. I reckon those dads who want their children 50% to 100% and the other parent is refusing access (for no terrible reasons) shouldn’t even have to cough up. Fighting in the courts and paying current high c support because a mother/father/grandparent has taken child and refused the other to see it is crippling. Also currently theirs a maximum amount of dependents allowed on your assesment….I guess then other kids are not worthy of their parents income 😮

    1. I owe $15,000 in legal aid, was interest free till they changed the law. I pay a lot on this.
      If I don’t go to court I’d never see my eldest child, a debt my Ex will never have to pay because she had hers wipes as she a beneficiary and doesn’t have to pay a cent back!
      The repayments are crippling I agree!

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