A Look at a Flat Rate Child Support System – Discussion

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
Image: Flickr

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:.

  1. Ensuring children, and those caring for them, receive the support they need
  2. Encourage shared care and remove any financial incentives that might fuel parental alienation
  3. 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.

They need:

  • Food and shelter
  • Education
  • Good health
  • 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 %.

  • Healthcare/Medical expenses
  • School costs for the average public school
  • Food
  • Clothing/hygiene

Accommodation

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.

Fortnight/Care Percentage

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.

Example:

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.

Payments

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?

References:

Child support in Norway and here.

School Fees in NZ

Comments

comments

2 Comments

  1. I believe this would be a great way to go forward, I especially like the part on parental alienation. I know so many people who alienate mum/dad so they are able to get more money, People have to remember it’s about the KIDS and what’s best for them, regardless of how they feel about their x.

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