Release of report on child support reforms

The Australian Government today released an analysis of the third stage of the child support reforms introduced by the previous government, including the new child support formula.

An analysis of 691,000 child support cases shows that most parents will see a change of less than $20 per week as a result of the reforms, and in a large proportion of cases, the changes are less than $10 per week.

The child support changes aim to create a more balanced approach to calculating child support taking into account both parents’ income and the actual cost of raising children.

The changes respond to trends towards increased shared parenting and recognise that when care of a child is shared, the costs are also shared.

The new scheme recognises Australian society has changed remarkably since the original child support formula was developed 20 years ago.

The Child Support Scheme reforms were a key recommendation of a 2005 independent Howard Government ministerial taskforce on child support, established as a result of the House of Representatives inquiry (Every Picture Tells a Story). The reforms were made by the Parliament in 2006, and implemented in three stages, with final implementation of the new child support formula from 1 July 2008.

Based on the analysis of the 691,000 cases, around 37 per cent of payees and 51 per cent of payers have net increases in household income as a result of the reforms (i.e. they receive more overall). Around 49 per cent of payees and 33 per cent of payers have net reductions (i.e. they receive less overall). Around 13 per cent of payees and 16 per cent of payers had no change to their child support or Family Tax Benefit as a result of the reforms.

These figures are based on obligations under the new formula, and may not represent what is actually paid or received. Full details on levels of compliance with the new formula will not be available until payments under the new scheme are made and analysed.

The first payments under the new child support formula are due to be paid from today.

The analysis has taken into account actual changes in child support assessments and modelled changes to Family Tax Benefit.

These reforms ensure that payments within the child support system are based on evidence about the cost of raising children. We understand that the changes will concern some people. The government will continue to monitor the ongoing impact of the reforms to ensure the best interests of children are protected.

An important part of the reform package was the introduction of a range of measures to improve compliance, resulting in an extra $104 million child support being paid over the past two years.

The government is backing up the reforms to child support with tough new enforcement measures, which came into effect from 1 July 2008, to make sure parents who have child support obligations pay in full and on time.

This third and last stage introduces a new formula for calculating child support payments and new rules for payment of Family Tax Benefit (FTB).

A copy of the full analysis is available at Stage Three of the Child Support Scheme Reforms