Rationale
Child support and family assistance work together to make sure that the costs of children are being met by both parents. The new child support formula takes into account the costs of care. Payers with ‘regular care’ of their children, that is from 14 to less than 35 per cent (between 52-127 nights per year), are considered to be directly meeting 24 per cent of the costs of raising their children through providing this care, with the remainder of their share of the costs being paid as child support. For payers who have 35 per cent or more of care (‘shared care’), this credit for care increases incrementally up to 50 per cent of care.
However, it is recognised that the costs of the resident parent do not correspondingly decrease when the child is with the non-resident parent. Both parents are likely to incur similar infrastructure costs, such as furniture, through providing care, and these costs are essentially duplicated in each household.
Therefore, changes have been made to the way FTB is paid when parents share the care of their children. Prior to 1 July 2008, if parents shared the care of their children for at least 10 per cent of the time, FTB was split proportionately (so, a payer with 10 per cent care was entitled to 10 per cent share of FTB). From 1 July 2008, FTB is not paid to parents who have less than 35 per cent of care. This means that non-resident parents who have care from 10 to less than 35 per cent of the time no longer receive FTB, and the resident parent is entitled to 100 per cent of FTB.
The results below show the outcomes for receiving and paying parents who share ‘regular care’ of their children. It is important to remember, however, that it is not possible to isolate the effect of any one feature independently of others. Outcomes for this group may be the result of a number of measures operating together.
Findings
Table 6. Receiving parents whose payer has ‘regular’ care
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 ‐ $10.00 |
3,200 |
7,000 |
|
10,300 |
| $10.01 ‐ $20.00 |
3,900 |
7,300 |
‐ |
11,200 |
| $20.01 ‐ $30.00 |
2,300 |
5,900 |
‐ |
8,300 |
| $30.01 ‐ $40.00 |
2,200 |
4,100 |
‐ |
6,300 |
| $40.01 ‐ $60.00 |
2,000 |
4,700 |
‐ |
6,600 |
| More than $60.00 |
1,300 |
6,600 |
‐ |
7,900 |
| Total |
14,900 |
35,700 |
300 |
50,900 |
| Overall percentage |
29% |
70% |
<1% |
100% |
|
Numbers and percentages may not add due to rounding
Results are actual child support and modelled FTB
The full list of caveats should be considered when interpreting this data |
Table 7. Paying parents who have ‘regular’ care
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 ‐ $10.00 |
5,600 |
2,100 |
‐ |
7,700 |
| $10.01 ‐ $20.00 |
4,300 |
3,000 |
‐ |
7,300 |
| $20.01 ‐ $30.00 |
4,400 |
1,300 |
‐ |
5,700 |
| $30.01 ‐ $40.00 |
4,300 |
1,600 |
‐ |
5,900 |
| $40.01 ‐ $60.00 |
6,800 |
1,200 |
‐ |
8,000 |
| More than $60.00 |
12,800 |
700 |
‐ |
13,500 |
| Total |
38,200 |
10,000 |
1,200 |
49,400 |
| Overall percentage |
77% |
20% |
2% |
100% |
|
Numbers and percentages may not add due to rounding
Results are actual child support and modelled FTB
The full list of caveats should be considered when interpreting this data |
Discussion
Whether or not a receiving parent has a ‘regular care’ arrangement with the paying parent appears to have a strong influence on their overall outcome, with around 70 per cent of these parents receiving less, and 29 per cent receiving more. Consistent with the findings for payee outcomes overall, for the majority (around 77 per cent) of these parents, the losses represent 20 per cent or less of their previous entitlement.
In some cases, payers’ incomes, (and therefore their child support assessments), are sufficiently high for the 24 per cent credit for care to be worth more than the reduction in FTB. Where payers with low incomes would otherwise be assessed to pay the minimum rate (around $6.50 per week), where they have ‘regular care’, they are not required to make this payment. However, this does not offset the loss of FTB for the non-resident parent.
Most low-income paying parents with ‘regular care’ also have low-income resident parents who bear the majority of costs for the children. In families like this, the fact is that there is not much money to go around and difficult trade-offs are necessary. The underlying policy rationale in such cases is that it is not reasonable for the resident parent who has the majority of care and the majority of the costs, to receive no child support at all and still be expected to share FTB.
In recognition that paying parents will experience difficulties because of their loss of FTB, these payers retain ancillary benefits associated with receipt of FTB, including Rent Assistance, Health Care Card and the lower threshold of the Medicare Safety Net. The Rent Assistance component is particularly important, as the major costs associated with caring for their children are related to infrastructure. In addition, in July 2006 as part of Stage 1 of the reforms, payers on Newstart or related payments who had ‘regular care’ children became eligible for the ‘with child’ rate of payment. This currently provides an additional $17.80 per week for these payers.