Child Support Changes

September 3rd, 2010 at 1:00 pm by David Farrar

Peter Dunne has released some options for change. A summary document is here. There seem to be two major changes proposed:

  1. That child support payments should take account the income of the parent with majority custody, not just the parent who has to pay.
  2. That there should be more recognition of the amount of time non custodial parents spend with the kids. AT present if it is under 40% you get no credit – they propose that if the kid/s spend more than 14% of the time with you, this should be reflected in how much child support you pay.

Some non custodial parents get a raw deal at the moment. They split with their partner. The partner gets custody against their wishes, so they lose their partner and their kids. They are earning say $35,000 a year. The partner is earning $100,000 a year, and getting child support payments from the non custodial partner on $35,000 a year. And even if the $35,000 a year partner looks after the kids every weekend, they get no credit for that.

Now many custodial parents also get a raw deal, where the other parent disappears overseas, and pays nothing. That is a harder problem to fix.

A new blogger at Gotcha, Blondie, has some issues with the proposed changes:

Sec­ondly, under the pro­posed for­mula, if the cus­to­dial parent’s income increases, the child sup­port lia­bil­ity decreases.  Thus, if the cus­to­dial par­ent works harder to get a payrise, their ex – not them­selves, not the child, but their ex – ben­e­fits.  This just doesn’t seem right.  It would reduce the incen­tive for cus­to­dial par­ents to be pro­duc­tive – after all, why strive for a payrise if you won’t ben­e­fit from it?

I presume the abatement rate will be fairly low, so that any payrise for the custodial parent will mean they still receive benefit from it.

It will grate some that their payrise means their ex will benefit, but this is already what happens with the non custodial parent. They get a payrise and the ex gets more money. What this change will mean is that if either ex-partner gets a payrise, both they and the ex will benefit (but not to the same degree).

The Herald editorial is supportive:

Reform along some of the lines suggested in a Government discussion document is overdue. Eighteen years have passed since the system was last overhauled. Much has happened subsequently to warrant change.

The document, Supporting Children, has an array of options. One of the most eye-catching is that the income of both parents should be taken into account when childcare payments are set.

That seems a reasonable notion given more women are now in the workforce, especially in part-time jobs. Additionally, it is right in principle that parents should provide financial support according to their capacity to do so, whether or not they are living with their children.

Indeed, such a change would echo the situation if the parents were still together.

You can share your views direct with IRD at their dedicated website. The online survey is well done, as it makes it far easier to complete than sending in a formal submission.

Tags: , ,