Overall results - Child Support and Family Tax Benefit
Under the previous child support system, $2.9 billion was assessed to be paid in child support. The new child support system reduces this by around 7 per cent ($210 million). On the basis of these new assessments, the reduction in child support is offset by an extra $140 million payable in FTB.
The reduction in child support amounts transferred between parents does not mean that these resources are not available for the children. In cases where care is shared, the reduction in child support payable reflects the costs incurred by the non-resident parent and means that these resources remain within the second household for the care of the child. Moreover, where care is shared for less than 35 per cent of the time, the reduction in child support for the resident parent is additionally offset by the transfer of the non-resident parent's share of FTB to the household where the child primarily resides.
Overall results - receiving parents, paying parents
Thirty-seven per cent of payees and around 51 per cent of payers have net increases as a result of the reforms (that is, they receive more overall). Around 49 per cent of payees and 33 per cent of payers have net reductions (that is, they receive less overall).
Table 1: Overall results - net change for receiving and paying parents
| |
Net Gain |
Net Loss |
No Change |
|
No. |
% |
No. |
% |
No. |
% |
| Receiving parents (payees) |
224,600 |
37 |
299,300 |
49 |
81,200 |
13 |
| Paying parents (payers) |
294,100 |
51 |
192,600 |
33 |
94,400 |
16 |
|
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 |
Tables 2 and 3 show the magnitude of change for parents in the child support system. In the majority of cases, for both payees and payers, the changes are for $20 per week or less, and in a large proportion of cases, the changes are less than $10 per week.
Table 2. Receiving parents: net gains and losses by change per week
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 - $10.00 |
67,700 |
117,700 |
- |
185,500 |
| $10.01 - $20.00 |
71,900 |
98,000 |
- |
169,900 |
| $20.01 - $30.00 |
27,200 |
35,200 |
- |
62,400 |
| $30.01-$40.00 |
29,600 |
16,300 |
- |
45,900 |
| $40.01 - $60.00 |
19,700 |
16,100 |
- |
35,800 |
| More than $60.00 |
8,300 |
16,000 |
- |
24,300 |
| Total |
224,600 |
299,300 |
81,200 |
605,100 |
| Overall percentage |
37% |
49% |
13% |
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 3. Paying parents: net gains and losses by change per week
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 - $10.00 |
54,900 |
44,800 |
- |
99,700 |
| $10.01 - $20.00 |
98,500 |
64,800 |
- |
163,300 |
| $20.01 -$30.00 |
52,400 |
23,300 |
- |
75,700 |
| $30.01-$40.00 |
29,000 |
31,900 |
- |
60,900 |
| $40.01 -$60.00 |
30,200 |
20,200 |
- |
50,400 |
| More than $60.00 |
29,100 |
7,600 |
- |
36,700 |
| Total |
294,100 |
192,600 |
94,400 |
581,100 |
| Overall percentage |
51% |
33% |
16% |
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: 'Receiving parent' results
In 92 per cent of cases where payees have net losses, these losses represent 20 per cent or less of their pre-reform entitlement. Even where dollar losses are large, half or more of these parents will still receive most of their previous entitlement. For example, of the 16,000 who have reductions of more than $60 per week, around half still receive 80 per cent or more of their previous entitlement.
In general, larger losses for receiving parents are the result of multiple factors operating to reinforce, rather than offset, a negative outcome. A key factor where payees have losses, however, is whether the payer has 'regular care' of children (52-127 nights per year). Details about this impact are set out below (Tables 6 and 7 - on page seven). Outcomes also depend on the parents' eligibility for FTB. Where they already receive the maximum rate of FTB, reductions in child support will not further increase FTB payments. Conversely, where parents are not eligible to receive more than the minimum rate of FTB, changes to child support payments will not affect FTB entitlement.
Circumstances of receiving parents:
Around 78 per cent (471,100) of all receiving parents in the child support system have a taxable income of $30,000 per year or less. This taxable income does not necessarily represent the actual living standards of payees and their children, as some may have re-partnered and have higher household incomes.
Around 343,400 (57 per cent) of all receiving parents in the child support system receive income support payments (not including family assistance). Almost all of these (91 per cent) are unpartnered. Most of these unpartnered parents (85 per cent) receive Parenting Payment Single (PPS). The next largest categories are those who receive Newstart Allowance (6 per cent) and Disability Support Pension (5 per cent). Around 34 per cent of single parents on income support have taxable incomes above $15,000 indicating that they have earnings as well as income support payments; the average income of these parents is $25,500 a year.
Table 4 shows that around 33 per cent of single parents who receive income support payments and child support have a net gain, and around 51 per cent have a net loss. Of these single parents with a net loss, around 77 per cent lose $20 per week or less.
Table 4. Single parents on income support who receive child support: net gains and losses by change per week
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 -$10.00 |
33,800 |
68,500 |
- |
102,300 |
| $10.01 -$20.00 |
32,000 |
54,400 |
- |
86,400 |
| $20.01 -$30.00 |
11,100 |
17,300 |
- |
28,500 |
| $30.01-$40.00 |
14,100 |
7,300 |
- |
21,400 |
| $40.01 -$60.00 |
9,600 |
6,600 |
- |
16,200 |
| More than $60.00 |
3,900 |
6,100 |
- |
10,000 |
| Total |
104,500 |
160,200 |
49,400 |
314,100 |
| Overall percentage |
33% |
51% |
16% |
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: 'Paying parent' results
The changes experienced by payers are usually due either to increased child support liabilities, or to loss of eligibility to a share of FTB, rather than a combination effect of child support and FTB. Generally, the change is due to an alteration in child support liabilities, because most paying parents usually receive little or no FTB.
Paying parents with larger losses that are due to an increased child support liability are generally those who have low-middle taxable incomes and a new family. These payers are now assessed to pay more to the child support children who previously received very little. Details about this group are set out below (Table 9). As with payee parents with large losses, these 'losses' do not necessarily represent the actual living standards of the affected payers or their children, as their household income may be higher.
Where payers' larger losses are driven mainly by changes in FTB, this is almost always because of the changes in the way FTB is split between parents. For payers who have relatively low incomes, the reduction in their child support liability is not enough to offset the loss of FTB. This mechanism, and its impact, is explained below (Table 7).
Some larger dollar losses may also be caused by the new 'fixed payment' of $21.50 per week per child for payers who report very low incomes, but do not receive income support.
Circumstances of paying parents:
Around 60 per cent (350,000) of all paying parents in the child support system have a taxable income of $30,000 per year or less. This taxable income does not necessarily represent the actual living standards of these parents and their children, as some may have re-partnered and have higher household incomes.
Around 127,400 (22 per cent) of all paying parents in the child support system receive income support payments (not including family assistance). Most of these receive either Newstart Allowance (45 per cent) or Disability Support Pension (29 per cent). Around 18 per cent of paying parents on income support have taxable incomes above $15,000, indicating that they have earnings as well as income support payments; the average income of these parents is $28,000 a year.
Table 5. Paying parents on income support: net gains and losses by change per week
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 - $10.00 |
10,300 |
14,000 |
- |
24,300 |
| $10.01 - $20.00 |
9,100 |
13,100 |
- |
22,100 |
| $20.01 -$30.00 |
3,300 |
4,000 |
- |
7,300 |
| $30.01-$40.00 |
1,300 |
5,900 |
- |
7,200 |
| $40.01 -$60.00 |
1,300 |
4,600 |
- |
5,900 |
| More than $60.00 |
900 |
2,600 |
- |
3,600 |
| Total |
26,200 |
44,200 |
57,100 |
127,400 |
| Overall percentage |
21% |
35% |
45% |
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 |