Child Support Amendment Bill (No 4)

JUDITH COLLINS (National—Clevedon) Link to this

Not everything in this part of the Child Support Amendment Bill (No 4) is bad. There are some good points about it, and I will let the people who support the bill promote those, because, after all, they are supposed to do something for the salaries they receive—unlike Taito Phillip Field, who is not expected to do anything, which is a bit of a shame, really. But one of the things about this bill that the National Party simply cannot support is the attitude that liable parents, who have an obligation to pay something—not everything, but something, and even, in some cases, as little as $11 a week—towards the upkeep of their children should have penalties just thrown away and dismissed on the basis that that will somehow encourage them to meet their obligations towards their children. It simply does not work. In 2003 the Government’s own figures told us that from those New Zealand liable parents living in Australia, $73 million was owed to New Zealand, either to the Government on behalf of the taxpayer, or to the custodial parent. What has happened under this Labour Government? That figure has ballooned to $281 million. That is over a quarter of a billion dollars.

The Labour Government likes to say that a lot of that is penalties. Actually, a lot of it—more of it—happens to be actual debt. It is the actual amount owed. I am so proud that in my party, the National Party, we can stand up for those custodial parents who look after their children, who pay their way, who have to be both mum and dad, and who have to go and tell their children why they cannot have school trips because they cannot afford it, while the other parent—who has skipped off to Australia—has decided that he or she does not have to have any obligations. Those people are all about the culture of entitlement that so pervades this Labour Government and everything it touches.

I will be interested to see how New Zealand First will vote today. As a member of the new “Poodle Party” for the Government, Mr Woolerton is not sure. How is he going to vote today?

ANNE TOLLEY (National—East Coast) Link to this

Judith Collins put it succinctly—when we take a situation where you have used taxpayers’ money wrongly and you refuse to pay it back—

Hon DAVID CUNLIFFE (Minister of Immigration) Link to this

I want to take a brief opportunity to correct some factual inaccuracies and points made by the previous two speakers. The first of those was a misinterpretation of the purpose of the bill. It is clearly stated that the bill’s purpose is to increase the compliance of parents currently failing to meet their obligations to their children. I do not think there is a member in this Chamber who would not want parents to fulfil their obligations to their children and who would want to weaken those obligations. Certainly, the Government wants to see those obligations met and strengthened. That is why this bill, in part, creates the power to administratively review child support levels where there is reason to believe that parents may be hiding the true level of their assets and income—more on that later.

The second inaccuracy, from the previous speaker but one, was that most of the outstanding debt is in the underlying debt and not the penalties. In fact, there is $1,012 million in outstanding child support, of which $584,000, or a little over half, is currently owed in accumulated penalties.

But, of course, the largest flaw in what the Opposition is saying is the argument that we are somehow letting parents off scot-free by giving away all the penalties. In fact, the substance of the bill is quite different from that, and members know that. The bill allows individuals to enter into a binding scheme of arrangement with the Inland Revenue Department to pay off their arrears. If they do, and only if they do, then a proportion of—that is, some of—their penalties will be remitted as an incentive. If they do not enter into such an arrangement, they will receive no write-down of penalties, but, in any case, the bill provides that they cannot have all of their penalties written off. So, disappointingly, we are seeing a degree of hyperbole and exaggeration creep into the speeches of Opposition members.

That brings me to the final point, which is that the Opposition seems to think this is an opportunity to take the debate into places that are not relevant to it. I ask Opposition members to reflect on the fact that clauses in the bill would allow the Inland Revenue Department to look through income to assets and wealth. There are a number of rich parents—particularly, it has to be said, some rich dads—who are not being frank with people about how many assets they have and where they spend money. Trust funds are often employed to hide that money, and that is not the only circumstance in which those trust fund arrangements are used. One would ask Opposition members whether they really want to go there, because I for one can think of a number of other trust funds that could be drawn into the debate.

PAULA BENNETT (National) Link to this

Thank you for the opportunity to speak on the Child Support Amendment Bill (No 4) and the purpose of it. There are elements of this bill that one would easily agree with, and I look forward to the opportunity to speak on them a bit further on, particularly when we talk about the level of sexual violence and the fact that the bill lets victims off having to pay child support.

The Social Services Committee also heard some good submissions on under-16-year-olds being let off child support payments until they are over 16 and are actually earning an income. That allows those young people the opportunity to get on with, hopefully, some schooling without having to think about gaining an income. Those arguments had a lot of logic, and we are pleased to see this provision coming through, as those arguments make a lot of sense.

I note that there are members from the select committee here who have heard those submissions, but that most of them are from this side only of the Chamber. Of course, I expect that the Minister in the chair, David Cunliffe, would have read every submission in detail. What grabbed me and everyone else on the select committee, no matter what parties members came from, was that this is an extremely emotive issue. What happened with a lot of the submissions was that people went off the subject of this bill, but without a doubt what they had to say related to children, to emotions, and to finances. When we put those three things together what we got was a lot of people who were very hurt and confused, and it was very personal for them. From going through the submission process, I know that there was a lot of discussion at the select committee about stuff that is perhaps outside this bill but is, of course, very relevant to child support issues.

Given that some of the members of the select committee who heard those submissions have not taken the time to come to the Chamber now, I thought I might go through some of the matters that do not come out in this bill but meant a lot to people. A lot of stuff that came out was about parents who care for their children for 40 percent of nights having to pay child support at the full rate, as though they do not care for their children. At that level, they still have to pay full child support. As soon as they go one night over 40 percent, their level of child support starts changing. What really struck me throughout this whole process—and I am sure the advisers will agree with me, because they identified this issue, as well—was that it does not induce people to talk to people.

One thing that really came out is that the power is put in the hands of one parent while the other is marginalised. One has to question how that can possibly be what is best for the children, because at the end of the day that is what it is about. That is what really struck me throughout the whole process of talking to advisers and to submitters, and of doing a lot of reading on the issue myself. I have to tell members that I did not grasp it easily. It is a very in-depth and explicit piece of legislation that has a combination of all the emotional stuff and the technical issues involved. In all honesty, that was not my strength, and it took me quite a bit of sitting down and working through those formulas. I still would not have the courage to stand here now and try to speak on those matters in technical detail.

What really struck me the whole way through was the way in which the bill seems to set people up against each other. There can be little doubt that what we stand for is—and I do not want to agree with the Minister, but there is a level to which we do agree—that parents have to pay for their children. There has to be that level of responsibility. Where I think we will differ is on whether we think this bill takes that far enough, whether it actually accomplishes what we want to do, and the philosophy around writing off penalties. I agree that it is not about writing off the debt.

I took a lot of time to try to understand this bill, because I saw it as being so important to so many people and as deserving the due courtesy of having that kind of detailed consideration. What worries me is not so much the purpose, in that I get that the Government is trying to get some of that money back, and that the way to do it is to reward people for paying that money; it is just the philosophy of it. At the end of the day, people have got themselves into that situation, there is a level of self-responsibility, and someone else should not have to pay.

Dr PAUL HUTCHISON (National—Port Waikato) Link to this

Thank you very much, Mr Chairperson, for the opportunity to speak on the Child Support Amendment Bill (No 4). I note that the purpose of the bill is to improve the level of compliance with financial support obligations, so that more children receive the financial support to which they are entitled, and so that the Government maximises revenue receipts to offset the cost of State provision of financial support. But, as my colleague Judith Collins so aptly pointed out, this bill will waive $500 million that should have gone to children, and that signal is one we would hope would not come from a responsible Government in New Zealand. The Labour Government is clearly encouraging New Zealand parents to be irresponsible. I think my colleague Judith Collins mentioned that in 2003 the debt owed by liable New Zealand parents in Australia amounted to about $80 million, but in 2006 the debt owed has now increased to a whacking $280 million. This Government said that it would increase measures to track down those liable parents. How successful has it been? It has been successful 400 percent—in the diametrically opposite direction.

The fundamental reason for the Child Support Act 1991 was to ensure parental responsibility for the support of children. We in National believe that that sentiment is absolutely appropriate. But we see the dismal record of the Labour Government’s rhetoric; we see that not only have liable parents in Australia increased their debt 400 percent over 2 or 3 years, but the Labour Government is about to waive $500 million that should have gone to children. That is the sort of money that could go to child health, that is the sort of money that could go to child education, and that is the sort of money that could shorten waiting lists for children.

I am deeply concerned about several things in this bill, and they are these. The chairman of the Social Services Committee, Georgina Beyer, has said that the bill should be rushed through, because it is so important to reset the situation and ensure that the collection of that revenue takes place in a much more efficient, effective way. The bill was introduced on 5 August 2005. As my colleague Paula Bennett pointed out, this bill engenders huge emotions amongst submitters, and amongst many, many liable parents throughout New Zealand. The submissions that came in were very critical of the Inland Revenue Department, very critical of the way the Labour Government has arranged collection methodology in New Zealand, and very critical that this bill will not solve the problems.

In fact, an authority, Judge Walsh wrote to Judge Boshier, the Principal Family Court Judge, regarding new Part 6B, inserted by clause 24—the part that allows departure from the formula assessment of child support, and is one of the major areas of the bill. He said: “After reflecting on the whole scheme of Part 6B, I am left with the impression it will be, effectively, a toothless provision.” It is a huge worry that the major part of this bill is judged by one of the practitioners who really know what goes on in courts to be a “toothless provision.” The purpose of inserting new Part 6B is to ensure that parents’ child support liabilities accurately reflect their ability to provide financial assistance for their children. We heard some pretty heart-rending submissions in regard to the way that, under trusts and various other mechanisms, liable parents can hide those funds.

Hon DAVID CUNLIFFE (Minister of Immigration) Link to this

I will take an opportunity to briefly respond to the two previous speakers. Firstly, I express appreciation to the previous speaker but one, Paula Bennett, the list member from my own area of west Auckland, who I think very honestly portrayed her level of interest and concern about the bill. It is an important bill and it really does affect the lives of a lot of children and a lot of families. I thank her for emphasising the common ground across all sides of the House—that we all care about kids, and that we all want to see parents meeting their obligations to kids; that is not in dispute. We are reasonable people but as in all things we can disagree, of course, about whether the mechanism proposed is able to deliver on that objective.

On that, I have two comments. The first is that nobody on our side of the House is suggesting for a moment that we should weaken people’s individual responsibility. However, I am reminded of a constituent who had got so far behind in his—and, yes, it was a he—child support payments that the sum amounted to several hundred thousand dollars’ worth of penalties and base debt, and he was on an income of about $30,000. There was no way, after tax, that he was able to save fast enough to offset the mounting penalties. He was bankrupted, his house was sold in a mortgagee sale, and his kids received nothing. Nobody won. The point is that some people can get themselves so far beyond the pale that there is no way back without the kind of measure proposed in this bill. Let us face it: I think Opposition members know in their heart of hearts that most parents, despite their circumstances, want to do the right thing for their children. There can be no more basic human instinct than that.

I draw attention to a couple of points made by the previous speaker, Dr Hutchison, who noted an apparent increase in debt owed by liable parents in Australia, and he somehow portrayed that as a debt mountain spiralling out of control. The interesting thing, of course, is that the reason the reported debt of liable parents in Australia has gone up is quite simply because we have referred more cases to the authorities in Australia for collection, because we have allocated more resources to that task, and because we recognise that that is a very high priority. I imagine that the Opposition—

JUDY TURNER (Deputy Leader—United Future) Link to this

I want to take just a brief call on this part, but I say first of all that it is important to note the quality of submissions we received. I think a lot of us on the Social Services Committee discovered that aside from what this amendment tries to do, the most interesting thing that came out of the submissions was the distance we in this Parliament need to go at some stage—and I hope that that is in the not too distant future—to relook completely at how we calculate liable-parent payments and the mechanisms we use for payment, to take into consideration some of the concerns raised, by both liable parents and custodial parents, about the system as it currently exists. We need to look to other jurisdictions to see what they are doing, because some really innovative things are happening overseas that we could well learn from. Other countries are further down the track, in terms of the reforms they are bringing in.

However, those things being taken into consideration, we do need to focus on what this amendment bill seeks to do. I agree with the Minister, that although all of us have this nagging sense of injustice when we feel that people have been let off the hook, my understanding from what the officials told us is that something like half of liable parents are currently in arrears. This is a problem that, for some, is getting bigger and bigger. Some of them are in the situation where the debt is just not recoverable. They have got themselves into such a pickle financially that the tendency to walk away from responsibility becomes a great temptation. What this amendment bill is trying to do is to reconnect liable parents with their responsibilities, and with the department, so they can pick up their responsibilities and start paying once again, and to remove the barriers that would stop them doing that.

I share the concern that we are encouraging indebtedness and encouraging a reckless attitude towards being a liable parent. However, at the same time, we have large numbers of parents who are already in big trouble, many of whom would like now to pick up their responsibilities as their situation has changed, but are very nervous and anxious about the amount of debt they will have to service. When the interest they now owe is larger than the principal, we are into a bit of a nonsense. We are happy to support this bill.

I think it is worth noting the changes to Part 1 that the Social Services Committee has put forward. Firstly, we wanted to ensure that the mandatory write-offs of incremental penalties relate to the exact amount. There was this potential, prior to the work of the select committee, that a person who had his or her debt written off could end up in credit in a way that is, obviously, not helpful. We have changed clause 32, and put a new formula in place so that cannot happen. There is also an allowance for the offsetting of child support payments to be automated where both parents are liable for child support and one parent is in receipt of a social security benefit. That new technology is now available to the Inland Revenue Department, it can now start to use it, and I think that is helpful and positive. We have also included an ability to ensure that living allowances are inflation adjusted. Those are some very positive things.

Much of what submitters put before us that also needs addressing did not fall within the framework of this amendment bill, but, as I said earlier, they are fodder for thought. I hope that all social service spokespeople and committees within different caucuses will start to look very seriously at this. I think we all need to be of the mind to see some reforms in this area—certainly, United Future is.

Dr JACKIE BLUE (National) Link to this

I rise to speak on the Child Support Amendment Bill (No 4), and I will deal with Part 1, and clause 32 in particular. I would like to acknowledge my colleagues, many of whom sat on the Social Services Committee. I was not fortunate enough myself to sit on the committee. When we hear the submissions and hear the public speak, I appreciate the emotion and the honesty that come through. I applaud the comments of my colleagues today who have experienced that, together with their knowledge of the committee.

However, I have had a look at this bill and I have to agree with my colleagues. I think this bill is wrong. It is sloppy. It is flawed. I know that it does deal with situations where the commissioner may grant relief in respect of penalties that are payable by a liable person. Certainly, our view is that we do not support the premise that this clause will help by writing off about half a billion dollars of debt. We have to remember that half of that debt is from expatriate parents—people who do not reside in New Zealand. They reside outside New Zealand. They are not paying taxes. They have made the decision, for whatever reason, to isolate themselves geographically from their children, and by virtue of doing that have removed themselves from all responsibility for being a parent. I do not believe that this bill, at the stroke of a pen, will suddenly change these parents into responsible parents who will want to sign up to any type of contract and pay back the money owed. I believe that by their actions, which are loud and clear, they do not want to take responsibility for being a parent. I do believe it is simplistic to think that this bill will suddenly change that, when there is a clear action by these parents, half of whom have gone overseas.

I acknowledge the sentiment behind the bill. I think it is very laudable, and it is hopeful that it will increase the compliance of parents who are not currently meeting their child support obligations. But, again, I think that is being simplistic. Apart from being simplistic, I think it sends the wrong signal, and the legislation is also a little dishonest. I have already alluded to the legislation being flawed and simplistic. I do not believe that the bill will turn irresponsible parents into responsible parents. It is a sad fact of life that some parents, unfortunately, look upon their children as an appendage rather than as children who need to be nurtured and cared for. This clause will not make them into responsible parents. The problem goes much deeper than that, and legislation will not right that particular wrong.

The bill sends the wrong signal. It sends a signal to the parents who have paid their money on time and in full, and without getting behind: why bother? What is the point, when people can delay their payments and then do a deal with the Government and get some money off, and it is sweet? That is wrong. It discourages responsible parents, and rewards irresponsible parents. It sends the completely wrong message, and that is why I think the legislation is wrong and flawed. It says to the irresponsible parents that nanny State will look after their children, and that is wrong. This legislation will not change parents’ personalities or their obligations, at the stroke of a pen. It is simplistic to think it will.

I believe that this clause is not fair. I have a thing about fairness and being fair. This clause is not fair to other groups. I apologise if I deviate from the legislation, but we have to look at the situation of a family that perhaps has got behind in its mortgage payments and is about to lose the family home.

BARBARA STEWART (NZ First) Link to this

Thank you very much for the opportunity to take a call in this debate. New Zealand First believes that the Child Support Amendment Bill (No 4) is an attempt to take some action on this very difficult issue. This issue has needed to be addressed for quite some time, and when we look at what was reported in the Christchurch Press about the $281 million that is owed by Kiwi parents in Australia, I think that tells us that action needs to be taken. We are very aware that there are flaws in this current system, and other speakers have already pointed out many of them. We want to see liable parents encouraged in some way to take responsibility for the problem of child support. It is a big issue. To totally ignore the situation and not even think up any answer to this problem is not providing a solution for anybody. I think that is where we are at at this particular point in time.

I was very pleased to hear from the Minister that action is to be taken against those parents living in Australia. We know that if we leave this particular issue and there is total inaction on this problem, that is being totally irresponsible. We know that all the parties in this House—and I have heard many debates over the past two parliaments—believe that some sort of action is necessary, particularly where half of the liable parents we are talking about are in debt to the Inland Revenue Department.

This bill is some attempt to reconnect parents with their responsibilities. As the Minister has pointed out, this bill provides only limited relief and it is not the total solution for all of those parents. The arrears that responsible parents sometimes find themselves falling into do not mean that those parents are totally irresponsible—and I think that is in contrast to what we have heard from one of the previous speakers from the National Party. Non-payment of child support, which is what we are talking about, is a very serious and important issue. We know, too, when reading the bill, that this provides only very limited relief. I know that parents must still pay some of the arrears they owe, including some of the penalties. There is a provision in the bill for reviewing this particular clause if liable parents default on their obligations.

What we are really attempting to do in this bill is, basically, to acknowledge that liable parents are financially responsible for their children. In this case, it is better to get some money from those liable parents rather than no money. We need to encourage the compliance of parents who fail to meet their child support responsibilities. We know that both parents have a collective responsibility for their children, and it is always a challenge when this particular issue comes up. As previous speakers have said, it is a very emotive issue and a very technical issue. We know that, when it comes down to it, one parent is the loser in many of these cases, and we can only feel very sorry for them—but we definitely feel sorry for those parents’ children. We want the children to benefit from the full payment of the financial obligations of both parents.

So New Zealand First will be supporting this part. We believe that some action is better than no action. This bill might not be the perfect vehicle but it is a start in the right direction, and we can only applaud that.

Hon DAVID CUNLIFFE (Minister of Immigration) Link to this

I will make just a very brief couple of comments. The first is to rebut the contention that this is in any way a dishonest bill that seeks to hide debt. Frankly, I think that was a very unworthy suggestion, made by the previous speaker bar one. Of course, the bill does not hide debt; it does not even reduce debt unless it is repaid by the liable parent. So the only way that debt would go down is—and it is good news—that the kids have received the outstanding money. Neither does the bill hide penalties, because the penalties are not reduced on the Inland Revenue Department’s balance sheet unless and until the underlying debt has been repaid, and then only in keeping with the terms of the binding arrangement. If that arrangement is not met, the full penalties stay on the books.

In contrast, I would like to thank the previous speaker, Barbara Stewart from New Zealand First, who has, I think, stated the issue very plainly. This is a hard problem. It is hard emotionally. We are dealing with families at the most difficult and critical point in their lives—at the time of a relationship break-up. We are dealing with parents in trauma and kids who are displaced. Of course, if it was an easy problem, it would have been solved years ago. But at least, despite the emotional and technical difficulties of the issue, we are honestly trying to do something about it. I am not saying that this solution is perfect. The Social Services Committee did not think it was perfect, but it thought it was worth doing, and we have a solid majority behind getting this legislation passed.

I guess that my challenge to the Opposition is: if not this bill, then what does it propose? The job of an Opposition is not just to oppose but also, occasionally, also to propose a better idea than the Government proposes. Any Opposition that looks as though it may, one day, come into Government should be able to demonstrate to the public that it can think up policy and do policy. So far there has been no evidence at all from a single Opposition speaker that Opposition members have a single positive idea to contribute about how to solve this problem. I challenge them to tell us what those ideas are, if they have any. If not, frankly, they should put up or shut up.

JO GOODHEW (National—Aoraki) Link to this

Well, it is interesting. The Minister has said that this issue is about kids in trauma and that it is a hard issue, and he has admitted that he does not think this solution is a perfect one. Well, that really says it all, does it not? The Child Support Amendment Bill (No 4), which I rise to oppose, brings me to wonder what the main message here is. The purpose is, apparently—I think it is perplexing—to “increase the compliance of parents who are not currently meeting their child support obligations”. I believe that the obligations of a parent should be heartfelt. Personally, I do not believe that this bill will encourage any heartfelt obligations to be met.

How big is the problem? We have half a billion dollars in penalties and nearly as much again in original debt, so it is a big problem. But what message will the bill send? Well, the message being sent to liable parents is to hold off paying long enough and the Government will reward the people who have not paid, and if they ignore their obligations for long enough, the Government will feel sorry for them when they do not pay and send along a reward—a reduction in what those people owe. The message is being heard loud and clear. Retrospectively wiping debt—the liable parents’ debt—seems to be the flavour of the moment. That is how we could describe this bill.

What would happen, I might ask, if I was late in paying my tax and incurred a penalty? What would happen if I was late in paying my GST? Let me tell members that I know what would happen. One day I sent off in the same envelope two cheques for GST. I must have been in a dream when I filled them out, because I filled them out for the right amount, but I put one date on one cheque and another date on the next. I was wrong by 1 day—and I received a penalty. The cheques were in the same envelope and I received a penalty. Maybe I should have waited around a while in the hope that someone would bring in a bill that would mean the debt would be wiped, in order to encourage me to pay properly the next time. Really, the encouragement that I needed was just to pay up what I owed, which was that GST on the correct date. I learnt that lesson the hard way.

Liable parents visit my office, not to ask me how to avoid paying what they owe but mostly to tell me about how hard they are working to pay what they owe. They often talk about the fact that they feel they are paying much more than what they owe, and that it is not being credited to them. They are the very responsible liable parents who are forgotten about. They are not the ones who have almost a billion dollars’ worth of debt—half of that in actual debt and half in penalties. We have heard from my esteemed colleague Judith Collins about that $281 million worth of debt owed by overseas-based liable parents, and it is important that that money be recovered. We have heard from Paula Bennett that there are agreeable elements in the bill, and the Minister has praised her for bringing those forward.

But what evidence does this Government have that wiping the half billion dollars’ worth of penalties will, in fact, send any message other than “Get out of jail free”? That is the message this bill will send. If people doubt my use of the “Get out of jail free” phrase, I refer them to the fact that our jails are increasingly becoming more full of fine defaulters. That is what we do with other fine defaulters, yet these people will escape the responsibility of their debt. If they had paid their debt from day one, or whenever they could have arranged to pay it in the early days, it would not have become so insurmountable.

This bill was an election year creation, and the cynic in me says that it was to show that the Government was willing to tackle the enormous debt that had been identified by organisations other than the Government. I note that my colleagues have expressed some disappointment in the mechanism of this bill. I was not present in the select committee to hear the submissions, but I have heard, disappointingly, that the bill does not address many of the concerns that were raised by submitters to the Social Services Committee. I agree that supporting children is a parent’s primary responsibility, but I do not believe that this bill will necessarily bring that about.

NICKY WAGNER (National) Link to this

As members have heard, National opposes the Child Support Amendment Bill (No 4). Although in theory the bill is designed to make sure that parents meet their obligations in terms of child support, we do not believe it sends that message. The whole issue of child support is extremely emotive and complex. It probably involves the most important and emotional flashpoints in one’s life: children, broken relationships, money, love, hurt, and being alone. Within that heady cocktail it is not easy to conclude what is fair and what is not fair when it comes to child support. But I do not believe that this bill is much help.

I believe that one of the most difficult things Parliament has to do when creating legislation is to identify the behaviour that it is trying to encourage. In this case it is straightforward: Parliament wants to encourage the conscientious payment of child support by liable parents. So, logically, we should reward those parents who pay consistently and penalise those parents who do not pay. That is plain common sense, and we all understand it. But in this legislation Labour is suggesting that we write off half a billion dollars’ worth of penalties for parents who have not met their responsibilities. Let us get this clear. The bill does not suggest that people who have paid consistently and well should get a discount for doing the right thing—absolutely not. Labour is suggesting that if someone does the wrong thing, then he or she should get the reward.

The fact that this Government needs to write off this debt at all reflects incredibly badly on its financial management and its slack attitude to the control of money. Every small business knows just how hard one has to work to collect debt, because however well intentioned people are there are always competing demands on their money, and unless debts are really closely monitored and consistently collected, they grow. Many small businesses have gone bankrupt because they have not collected their debts. In this case the Government has stood idly by as the child support debt has ballooned, as we have already heard, from $400 million to $1 billion over the last 5 years.

Now the Government’s strategy in collecting that debt is to write off $500 million. As many of us have already said, we struggle to understand the logic of that argument. I am not alone in that. The Rt Hon Winston Peters, in puzzling over this issue, has already asked why, if someone is not penalised for failing to pay his or her debts, that person would bother to pay them.

SUE MORONEY (Labour) Link to this

I move, That the question be now put.

JUDITH COLLINS (National—Clevedon) Link to this

This is a particularly interesting part of the Child Support Amendment Bill (No 4), because many people have wondered just how many people it was meant to assist. Part 2 is really about stopping people from having to pay the liable parent contribution if they have been the victims of sex abuse, rape, or things like that. It is also about getting information through about sex offenders for the purposes of those child support exemptions. So it is about providing exemptions.

Many of us on the Social Services Committee wondered just how many people we were talking about here—how many people who had been the victims of sex abuse would end up being liable parents. If a woman who has been a rape victim is now a liable parent, that implies to me that the rapist or the rapist’s family has custody of the child. For the life of me, I could not quite understand why we in this country would be letting rapists and their families have custody of a child.

Hon DAVID CUNLIFFE (Minister of Immigration) Link to this

I rise to speak very briefly. A question has been raised by members opposite about the clauses surrounding victims of sexual abuse. In part, this arose from the gender-neutralisation provisions that are now in the Crimes Act. Most frequently, this would arise when a young male could be abused, potentially by an older woman who subsequently has a child. It could also arise when the child of a female victim of abuse is placed with foster parents.

Beyond that, I comment briefly that Judith Collins, the member who has just resumed her seat, has had a very expensive speech—expensive in terms of votes, I imagine, for the Opposition—because I cannot imagine that too many separated fathers would be likely to vote for National after having been impugned by her in such a sad way. If her best argument against this bill is that anybody who has got himself or herself into a separation situation is liable to continue to default and treat this as an incentive, then I think that simply does not accord with the reality of the situations people find themselves in. I say to Ms Collins that she might pause to reflect on her colleague who took the debate to the area of GST repayment—of itself a fascinating subject, but one that we would leave for another day.

ANNE TOLLEY (National—East Coast) Link to this

I thank the Minister in the chair, David Cunliffe, for explaining that point to us. In fact, Part 2 is a very small part of the bill. It is very technical and quite specific. One of the submissions to the Social Services Committee raised the issue of sexual abuse. It states—and this backs up what the Minister has just said—“The Act is so fundamentally flawed that no amount of tinkering can fix its many anomalies. Having said that, there are some positive improvements in this bill. Most notable is the exclusion of liability of young boys who have been sexually abused. The time it has taken for this change demonstrates how sexist this legislation is. Can anyone imagine a girl who is sexually abused having to pay money to her abuser?”. In fact, the bill also makes provision for that second example, when—as I understand from the Minister—the subsequent child is then placed in a foster home.

Part 2 makes amendments to the Tax Administration Act and does things like requiring secrecy about the information that is shared, making sure that the information is shared with the right people only, and allowing for the transfer of information between the New Zealand Police and the Ministry of Justice in order to confirm the information regarding those sex offences and the victims. I think it would be fair to say that this permanent exemption in the bill for victims of sex offences was something all of us on the select committee agreed was timely and was something we wanted to see happen—notwithstanding that the National Party is opposing the majority of the bill. The concept of someone who had gone through the trauma of being abused sexually then having to take financial responsibility for the upkeep of the child resulting from the rape—whether or not the victim of the rape was male or female—is quite abhorrent and not one we would want to see continued in legislation.

Mr Chairperson, I am sorry you curtailed the debate on the earlier part, because Part 1 is the substantial part of the bill, and here we are left debating Part 2, which is very narrow in terms of what can be discussed. It relates entirely to provisions that make this exemption for victims of sexual offences not liable to financial contributions for ongoing child support. The new exemptions are included in a new Part 5A of the Child Support Act 1991, and that restructures those provisions that relate to the exemptions, making some remedial changes to them. It also contains provisions that allow hospital patients a period of 3 months after discharge in which to apply for an exemption.

Another provision in the legislation grants an exemption where a young person who is liable to pay child support attends school. The select committee agreed that the focus of that young person should be on attaining some educational achievements and qualifications rather than on having to leave school in order to provide an income to support the child. So there were exemptions for young people under the age of 16 in order that they could remain at school and attain some educational qualifications. In making that sort of decision we are balancing the needs of the child to have a reasonable amount of support from his or her parents with the responsibility, I guess, that falls upon the State to ensure that young people have the opportunity to create options in their lives. In that instance, the State then accepts the responsibility of looking after the child.

Dr PAUL HUTCHISON (National—Port Waikato) Link to this

Thank you, Mr Chairman, for the opportunity to speak on Part 2 of the Child Support Amendment Bill (No 4). This is the part that deals with amendments to the Tax Administration Act 1994 and also where information regarding sex offences for purposes of child support exemptions is dealt with.

I must say that I, too, was deeply disappointed that the Labour Government chose to cut off the important debate on Part 1, because it does relate, very much, to Part 2. I see the Government member Sue Moroney is shaking her head and saying that this was not important. Can I tell her that Part 1 was the substance of this bill, and it is very interesting that the Labour Government has chosen to cut off the debate abruptly so that it is not embarrassed by it any further. The Government should be embarrassed by it.

As I said, Part 2 is confined to amendments to the Tax Administration Act and the area of providing information concerning sex offences. I think it is really important that the Minister said the Government has a very hard problem with this bill and that it honestly wants to do something about it.

Hon DAVID CUNLIFFE (Minister of Immigration) Link to this

Some time ago I had the privilege of being the Associate Minister of Revenue, and back in those days I was involved in the Cabinet process around the early design of this Child Support Amendment Bill (No 4). I raise that because it was indeed several years ago. It is a pleasure to see the bill before the House today, but I think that nobody in the House would call that process rushed through. Rather, we commend the Social Services Committee for its thorough consideration of the submissions, and commend its report to the House. It contains a strong majority recommendation that the bill be passed forthwith.

Perhaps I could repeat my offer to the Opposition that if its members have any constructive suggestions to add as to how the problems might be resolved, then I am sure the public of New Zealand would be very interested. At the moment, the Opposition gives every impression of being a tired, hopeless Opposition, which has consigned itself to those benches opposite for many, many years to come.

JUDY TURNER (Deputy Leader—United Future) Link to this

I want to refer to a couple of submissions that relate to Part 2 of the Child Support Amendment Bill (No 4). One was a submission—I think it was submission No. 3—from Robert Kilkolly who talked about the fact that the contribution made by liable parents should entail a fair and equal share of child-related expenses from both parents, by taking into account the income of both parents.

This is one of those issues that fell outside the framework of this amendment bill, but in the notes that members of the Social Services Committee got from the officials, there was a very encouraging note made on the submission to say that the very excellent Minister of Revenue has already instructed officials to consider whether recognition should be given to lower levels of shared care than the current threshold of 40 percent of nights. That is a very encouraging thing. I think it is good to note that while we are dealing right now with some recognised issues, the ongoing work on this matter is being done.

The other thing I want to talk about is the area of exemptions, which is clarified in this legislation, particularly the area of exemptions for victims of sexual offences.

PAULA BENNETT (National) Link to this

I am very keen to talk about Part 2, and must admit that I too felt a bit confused about the issue of sexual victims not being liable, and that side of things, but having had the officials explain it a bit more, I find it quite necessary in many respects and see the understanding around sex offences, for the purposes of exemptions from child support payments.

I suppose that brings up the whole exemptions thing, and it is something I have been quite surprised about in the debate. Minister Cunliffe mentioned it many times, and that is the huge amount of debt. At times the Minister was talking about $270,000, I heard him throw out. I heard similar calls about the level of debt, and I wonder why we do not ask how and why that level of debt is accumulating. That is the big question. The Minister gave the example of someone earning $30,000 who has accumulated a debt of $270,000, and in the Minister’s words that is “penalties and debt” in all fairness, and the person was in a situation of not being able to repay the debt because it was too big. But how did someone get into that situation in the first place?

I am pleased to hear that United Future is looking at addressing some of the other things in the bill, because nothing else gets to us more than just how wrong so much of it is. I cannot stand here and come up with all the answers, although Minister Cunliffe kept asking us to come up with the answers, because he seemed incapable himself. We cannot come up with all of the answers in this case, but there are far more questions raised. What came out of the submission process was a lot of extremely upset people, and one wonders how they accumulate all of that debt. A degree of them must be getting into that level of debt purely because they do not think they should pay.

The National Party wholeheartedly and vehemently believes that the department should be coming down hard on those people. In no way should they be looking at having anything written off—whether it is penalties or debt for repayment. If they believe they should not be paying, then if anything we should be coming down harder on them.

But that is not the whole picture, and that is very much how it has been painted—that everybody gets themselves into a bit of debt, and everybody who has got themselves into a bit of trouble is the bad person. We hear a bit about angry men but I can say there are some angry women out there, as well. It is across the board.

DIANNE YATES (Labour) Link to this

I move, That the question be now put.

PAULA BENNETT (National) Link to this

As I was saying, I was quite disturbed to hear the Minister mention “trust accounts and the National Party” and what that would mean in respect of the use of information provision. I say that is absolutely appalling, because the bill talks about any information via the Inland Revenue Department. The Minister in the chair before dinner—[ Interruption] Minister Benson-Pope obviously was not listening, so let me remind him. Minister Cunliffe took a call and we were talking about privacy and people’s information being safe. That is extremely important to us. Those sex offenders, those people who are sex victims, and those sorts of people—we were very concerned about their information being private, and their privacy. However, the Minister in the chair, the Hon David Cunliffe, felt that that was an appropriate time to make a crack and a bit of a joke about trust accounts and the Inland Revenue Department. I would like to say that I found it absolutely appalling, given the Act and the amendments to it in this bill that are looking after these important issues, that he should be entering into that sort of debate. It is certainly not an issue that we take lightly and we find it so important that people have their information treated accordingly, as it deserves to be treated under Part 2. Thank you very much, Mr Chairman.

Hon MARIAN HOBBS (Labour—Wellington Central) Link to this

I move, That the question be now put.

JUDITH COLLINS (National—Clevedon) Link to this

I must say that in this debate I have been very disappointed in the Government. I do not believe that any of the Government members on the Social Services Committee who looked at the bill have bothered to take a call. I can say only that the Government is clearly not interested in this legislation. Government members have left it to the Opposition, and to United Future and New Zealand First—who are actually part of the Government, really—to do all the work for them. That is because, of course, the Labour Government does not really support parental responsibility.

One of the things I thought was quite good in the bill when I first saw it—I think it is good to give credit when it is due, because it is not very often I get to do that with Labour—was the promotion of the idea that the Inland Revenue Department can go in and look at situations where, for instance, a liable parent has a lot of assets in his or her control or even owns a lot of assets, or has a lot of income frozen around various companies and trusts. The Inland Revenue Department can ask how much money that man or woman actually has and whether they should be paying more than the minimum amount of about $11 a week. I thought that was quite fair, frankly, because I know of many parents, particularly women, who are sole parents looking after their children, who are working and not on the benefit—they are actually earning and receiving their own money—but who are being ripped off by former partners who are hiding behind various schemes. So I thought that was a good idea, and so did the whole of the National caucus.

Then officials from the Inland Revenue Department turned up to the select committee. We said to them that we had a submission from a woman who had given us full details of every asset her former partner owned and controlled. He had hundreds of thousands of dollars’ worth of classic cars. He had millions of dollars’ worth of property. She provided the officials, and us, with certificates of title references, valuations, addresses—she provided us with everything. We asked the officials from the Inland Revenue Department whether she would be one of those people whom we could help through this bill, because we would love to be able to do that—she is a good person, she is on to it, she is trying to do her best, but she has got that person out there who was a partner, and who is, supposedly, the father—and who needs, frankly, something I cannot say in this Chamber because I would be called unparliamentary, but he certainly needs that done to him, and I think we can all agree. But the officials said: “Oh, maybe … possibly … well, that would depend.” They gave us no undertaking that they would investigate that rotter—because that is what he is. They did not exclaim that that was exactly the sort of situation the bill provided for; they said it would be up to the commissioner.

Well, what is the point of this legislation if on the one hand we are going to write off a whole lot of debt owed by delinquent fathers and mothers and say: “Oh, it does not matter. We will just forgive that—and if you are really good we will not give you any more penalties.”? They are not going to pay. They have skipped off to Australia, anyway, and they are thumbing their noses at us, the taxpayers. According to the Government’s own figures those liable parents just in Australia owe $280 million at the moment, let alone those further afield. Then we had the Inland Revenue Department officials saying they might act—but they might not. They could not give us an undertaking that the properties this chap had—a couple of pages’ worth of them—would be looked into.

ANNE TOLLEY (National—East Coast) Link to this

We are looking now at the final debate in Committee on this bill. I have to say that I was absolutely appalled to hear the Minister in the chair, David Cunliffe, say during earlier parts of the debate that the bill is not perfect. That is an appalling confession for a Minister to make. He has been in Government for 7 years, and this child support bill affects thousands of New Zealand families. For a Minister to stand in this Chamber and say that the Government accepts that it is not perfect but, hey, it is better than nothing is not good enough.

When I look at the history of the legislation, I see that it really has not had a good review since 1994. I know that the Labour Government fiddled with some of the child support income levels in 2002, but when the weight of submissions to the Social Services Committee were arguing about some of the fundamental basics of this bill, and when the Government has done nothing to address those concerns for 7 years, for the Government to bring a bill to the House that the Minister confesses is not perfect is appalling. But perhaps we should not be surprised. In fact, I got the impression at one stage that he was imploring the Opposition to put up some sensible amendments to try to make the bill perfect. Of course, that is not our job, and this Government has had 7 long years to do something.

I want to come to a couple of the points that were made in the select committee that relate specifically to the title of the bill. The first one is about the definition of “parent”. We heard a lot in the select committee about parents. We think of them as being mothers and fathers. Mr Kilkolly brought a petition to Parliament, then came and spoke to the select committee. He talked about the concept of shared parenthood, which seemed to be a novel thing for anyone looking at the bill to consider. He mentioned Australia, which is not too far away, which considers the income of both parents. I think he made some very good points about the definition of what a parent is or should be.

The other point, which was made by many submitters, that relates to parents and their liability to look after their children is the ability to prove whether one should be liable. Many of the men said they would like to be able to take a paternity test, because they disputed that the children were theirs. Under the current legislation, the child’s mother can block the taking of a paternity test. Here we have people who are being held liable and accountable by the State who are not able to prove or disprove that liability.

Finally, there are the exemptions for some parents, which I mentioned earlier—for those who are youngsters and at school, which allows them to finish their schooling, and for victims of sexual assault. There is a great deal left undone around the definition of “parent” and parenting, when we talk about child support, that this bill could have addressed and does not.

The main purpose of this bill is to allow for the write-off of half a billion dollars of debt owed by liable parents of New Zealand children. That is an extraordinary amount of money to wipe off the slate. The premise for doing that, we are told, is to encourage people to start paying their child support. I have discussed that philosophy at length in this Chamber. It completely escapes me how the Government can say to people that if they do not pay their child support, and amass debt, then the Government will write it off.

Dr PAUL HUTCHISON (National—Port Waikato) Link to this

Thank you, Mr Chairman, for the opportunity to speak on this Child Support Amendment Bill (No 4). This is the final debate in the Committee stage, as my colleague mentioned. The officials sent us a summary of what this bill is about, which stated that it amends the Child Support Act 1991 and that one of the principal changes is to write off penalty debt. We are aware that the fundamental reason for the Child Support Act 1991 was to ensure parental responsibility for the support of their children.

Here we have a Labour Government writing off at least half a billion dollars. There is a certain irony about this. Here, on the one hand, it is writing off half a billion dollars that should have gone to children, and, on the other hand, it is refusing to pay $500,000 that it should have paid for a pledge card. It is absolutely outrageous. Minister Cunliffe said that this was a very hard problem and that his Government was honestly trying to do something about it. “Yeah, right!”, said one of my colleagues.

Mr Cunliffe went on to say that the solution is not perfect. As I pointed out in the debate on Part 2, I keep hearing from submitters and liable parents all over New Zealand that the governance and mechanisms of collecting support in New Zealand are an absolute shambles. I described how one individual was told one day that he owed $270,000, then 24 hours later was told it was $3,000, then 24 hours after that was told that the case manager looking after him had gone on holiday and that he would have someone else allotted to him, but at a different call centre at the other end of the country. I keep hearing this sort of thing all the time. Surely, the Labour Government should put its own house in order before it writes off half a billion dollars of taxpayers’ money.

It was very relevant to me that the technical practitioners who were involved with this bill had grave reservations about it. That included the New Zealand Law Society, Principal Family Court Judge Boshier, and Judge A P Walsh. I will go over again what Judge Walsh had to say with regard to the question of the departure from formula assessment child support initiated by the commissioner: “After reflecting on the whole scheme of Part 6B, I am left with the impression it will be effectively a toothless provision.” That is what he thought about it.

This is a bill that the Labour chairperson of the Social Services Committee, Georgina Beyer, said we ought to rush through, and the Government cannot even get the fundamentals right. A technician like Judge Walsh said that he was left with the impression that the bill would be effectively a toothless provision. He said in that context: “I note that the creation of family trusts and the incorporation of companies are now routine procedures for minimising income tax liability,” etc. He stated: “While there may well be numerous legitimate procedures adopted by a liable parent to achieve those ends, the strategies and devices employed end up benefiting a liable parent when it comes to payment of child support.”

PAULA BENNETT (National) Link to this

That was an excellent speech by Dr Hutchison. He made some amazing points and I will not repeat them, because I do not think I can do them justice. I am going to come up with a couple of other points I want to address in regard to the Child Support Amendment Bill (No 4).

We listened to the submissions and looked at this as a case, and a point that National members would like to make is that most parents are good parents. Most parents, whether they are the fathers, the mothers, the caregivers, the grandparents, or whoever they are, actually want to do what is best for their children. Most parents, when they find themselves in the incredibly emotional and distressing time of having a relationship or marriage break-up when children are involved, want to do what is right by the children.

BARBARA STEWART (NZ First) Link to this

On behalf of New Zealand First it is my pleasure to take a call in this debate. We believe that this is a very important bill. This bill is essentially about supporting children. We always say that children are our future and they deserve the support of both of their parents. Therefore, it is essential to ensure that liable parents meet their financial obligations towards their children. We want to ensure greater compliance than there currently is. We are very aware that non-payment of child support is a very serious issue and, of course, the State picks up the responsibility for those people who do not pay.

Dr JACKIE BLUE (National) Link to this

I rise to speak on the title of the Child Support Amendment Bill (No 4), but I actually think it is the wrong title. It should probably be the “Let’s Discourage Good and Responsible Parents and Let’s Support the Irresponsible Parents Bill”.

JUDY TURNER (Deputy Leader—United Future) Link to this

I rise to speak to clauses 1 and 2. In terms of the naming of this bill, I suspect that the only other title I could suggest is the “Additional Resources for the IRD to Catch Liable Parents Amendment Bill”. It is not too late for the Minister in the chair, Mr Benson-Pope, to take a call on this. The one question I have for him is: with the new role of the commissioner that allows him or her to make determinations regarding an inquiry as to whether a liable parent is paying the right amount, will additional resourcing be given to the Inland Revenue Department? I think all of us in the Social Services Committee were moved by stories of parents who knew full well that items that appeared on business returns as “plant” were often toys for the enjoyment of liable parents—and they were not declared. Those parents, through business mechanisms, were able to conceal their true incomes and pay the absolute minimum rate as liable parents. Those stories were very compelling.

What this bill does—and what I was just referring to when I wanted to rename the title of the bill—is give the Inland Revenue Department the opportunity to investigate when it suspects that parents are short-changing their children on the matter of child support. But for that to work, and for this amendment to be implemented, one would have to assume that the Inland Revenue Department is going to add some additional staff to its current staffing levels in order to be able to police the provision, so that the commissioner has some evidence and is able to instigate an investigation. The legislation will require additional resourcing. So although United Future is supportive of this bill and believes that it is very, very important to create a place where liable parents who have got behind in their payments can approach the department and negotiate a point of return to a place where they are making contributions and dealing with the debt they have—this bill creates that legal opportunity for them to do that, and we support that completely—we do have a concern. I call on the Minister in the chair to answer the question about whether the department plans to add additional staff to, and put resourcing into, the Inland Revenue Department so that the important level of investigation can happen and the commissioner is able to intervene when necessary.

DIANNE YATES (Labour) Link to this

I move, That the question be now put.