The mothers struggling to feed their babies while the state keeps all their child support

Friday, 1 October 2021

A quarter of a million kids live in families with a child support arrangement. But many never see any money.

Covid-19 is forcing thousands more women onto the benefit, where any child support payments will be kept by the Government. Why? National Correspondent Michelle Duff investigates.

Child support collection does nothing to help the country’s poorest families, as the state keeps more than $150m each year to balance its books instead of passing it on to mothers and children.

A Stuff investigation has found more than a third of child support paid by parents to Inland Revenue, totalling more than $900m in the past five years, has been intercepted before it gets to kids.

That’s because of a law that says if a primary caregiver is on a benefit, the Government is entitled to take the child’s support money to recoup the cost of welfare.

As tens of thousands of women are pushed out of employment by Covid-19, more mothers are being affected by this. An additional 120 women each week applied for the sole parent support benefit in the year to October 2020 alone – a 10 per cent increase.

For these women, as their wages disappear, so does their child support.

And for the fathers who pay out, it's just another tax.

The child support system was meant to be simpler. But many kids are missing out.

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A tax on the poor

Critics say the decades-old rule is illogical and unfair, and works to drive families further into poverty and punish low-income parents, who are more likely to be Māori and Pasifika.

Children’s Commissioner Judge Andrew Becroft: “The current law creates at least two classes of children.”

And they say it creates a nonsensical two-tier system where kids whose mums are in paid work are allowed to keep the money, while the kids of beneficiaries are penalised.

“It’s a flawed and misconceived adult-centric mechanism that is bad for children,” says Children’s Commissioner Judge Andrew Becroft.

“The current law creates at least two classes of children. It fails the most basic fairness test, and because Māori and Pacific and disabled children are more often in families living in poverty, it’s also, subconsciously or not, racist.

“It’s almost like the state decides there are deserving families, and undeserving families.”

It doesn’t have to be this way, and change would be quick and effective, Becroft says.

“The fiscal costs wouldn’t be enormous, but the impacts on children would be. It’s a way of really attacking and making a significant dent in child poverty.”

It gets worse for many sole parent beneficiaries. Making them apply for child support can exacerbate family tensions and place domestic violence victims in greater danger, as they are forced to ask their abusers for money. Advocates say this represents a human rights violation.

Ministry of Social Development client experience and design manager Karen Bishop said when people applied for a benefit, Inland Revenue calculated how much child support was owed through a process called a formula assessment.

However, exemptions were allowed, including where the primary carer was at risk of violence. ”To be very clear; if you tell us your former partner was abusive, our policy is we take that seriously and treat it as grounds to exempt you from the child support payment assessment.”

‘I had to do it, and I didn't even get the money’

When she split with the man who abused her and tried to strangle her children, Samantha was mostly afraid. Of him, but also of how she would afford to survive.

She couldn’t work around the kids’ schedules, so had to quit. When she applied for the sole parent benefit, she was told she wouldn’t qualify unless she made the children’s father pay child support through Inland Revenue.

She didn’t want to do that; she knew how her ex-partner would react. She says she had no choice.

“He wanted to pay me cash, and I explained it had to go through IRD, and he just wouldn’t accept that,” she says. “But I had to do it, and then I didn’t even get the money.

“He was really, really angry about that, and he was determined to punish me.”

Stay-at-home mum Nikki and her two preschool-aged children were thrown into poverty when she split with her ex-partner. He paid child support of around $300 a week, which the kids didn't receive, while she struggled to find a rental she could afford on the sole parent benefit.

“That money would have made my kids’ lives so much better, and it could have helped me to get back up on my feet faster,” she says. “They used to be able to have clothes … I can’t tell you how many meals I just didn’t eat so the kids could have a slightly nicer dinner, with vegetables.

“I was really lucky because I was offered a state house. I don’t even know what other people do. We lived in poverty because of it, and that doesn’t seem right.”

Victoria University’s Dr Michael Fletcher, who studies child support and taxation.

Samantha and Nikki, who asked not to be named to protect their families, are among the single parents trapped in a child support system advocates say is dysfunctional, acting to push children further into poverty and tear families apart.

More than half of primary caregivers in the child support system, which impacts around 185,000 children, are on a benefit.

More than 92 per cent of sole parent beneficiaries are mothers, and almost half are Māori.

Analysis by Stuff using data obtained from Inland Revenue through the Official Information Act has found 38 per cent of child support paid, mainly by fathers, in the past five years has gone straight into Government coffers.

The figures suggest this represents an average of $1000 per year per child.

“It’s utterly unjust – illogical and unjust – and we are out of step with the rest of the world,” says Victoria University economist Dr Michael Fletcher.

“If I’m paying child support for my child and it doesn’t go to that child, it’s just a tax. If we were living together, that money would go to the child.”

Many fathers in the scheme assessed as having to pay are also low-income, or on benefits, he says. They're essentially penalised for having kids.

28092021 Photo: CHRIS MCKEEN/STUFFFamily lawyer Mark Henaghan is a professor of law at Auckland University.

“It’s ridiculous and cruel, and it’s a tax on the poor.”

New Zealand is the only country out of the United Kingdom, the United States and Australia that does not have some form of child support pass-on. In Australia and the UK, where child support is used as a tool to reduce poverty, all of it is passed on.

Do we care about children's welfare?

A main aim in the Child Support Act when it was enacted in 1991, along with ensuring parents pay for the financial upkeep of their children, was to recoup the costs of welfare. But critics say this is a fundamental flaw.

Family law expert and Auckland University Professor Mark Henaghan says the act has never centred children’s wellbeing.

“If you cared about the welfare of the children, you wouldn’t do it. At the moment it just sends the signal that the government wants to take the money for itself.

“Passing on the money would make a hell of a difference to the children, and it would be an incentive for the fathers to pay. Even if it’s $20 a week, that’s a lot for families.

The benefit has not kept up with rising costs, says advocate Kay Brereton.

“We’ve always, in this country, punished beneficiaries. We charge them with benefit fraud, we do all sorts of things to them. Raising children is the hardest thing in the world and I don’t know how they do it, with little resources.”

Multiple studies have found child support pass-on could help lift children out of poverty. In 2012, the Children’s Commissioner’s Expert Advisory Group on Solutions to Child Poverty found passing on child support was a “practical, cost-effective and relatively inexpensive measure that will mitigate some of the worst consequences of child poverty.”

A 2019 research brief, authored by Oranga Tamariki and the Ministry of Social Development, found passing on child support could incentivise payment, reduce child abuse and neglect and improve children’s wellbeing.

It suggested trials of a possible pass-on policy, while monitoring parent’s feedback.

That same year, the Welfare Expert Advisory Group (WEAG) said pass-on was a necessary step towards income adequacy. “The main benefit system is about providing for the cost of the adults, and money intended for children should not be withheld by the Government to offset those costs,” its report reads.

The child support system was meant to be simpler, fairer, and alleviate stress. Those owed money say it is toxic.

Beneficiary advocate Kay Brereton, a member of the WEAG panel, said it also considered the emotional wellbeing of children in making the recommendation. The current law discriminates against solo mums while exacerbating toxic stress and tension, as fathers don't see their money going to the kids.

“How is the state facilitating a happy, ongoing relationship between the parents? They’re not.

“Should it be about the money, or about the child?”

The Green Party tried to include child support pass-on in recent tweaks to the Child Support Act, but it was rejected.

In a statement, Minister for Social Development Carmel Sepuloni said she agreed the current policy was discriminatory and needed to change, and that child support should be passed on to beneficiaries.

It was on the Government’s “medium-term” work programme, but had been delayed because of Covid-19, she said. Work had resumed, but she indicated it would not be a quick fix.

“What has struck me has been how complicated this particular area of work is and the time it will take to progress.

“As Child Support is collected by Inland Revenue, any proposed changes need to be carefully considered by both IR and MSD on the effect and implementation of the policy … However, the mahi on it is underway.”

But Green spokesman for social development and employment Ricardo Menéndez March said urgency was needed. “The current regime compounds poverty and disadvantage, and it needs to be fixed. The child ends up being the loser in all of this.”

How does it work?

The state makes sole mothers apply for a “formula assessment” for child support through the formal Inland Revenue system if they want to get the sole parent support benefit or the unsupported child benefit.

The latter is often used by grandparents looking after grandchildren.

The money paid by the liable parent goes to the Government. If it’s more than the sole parent support rate of $406.78 per week, the child gets the difference.

As soon as the primary caregiver is in paid work, their child gets all the money from the liable parent.

Sole parents who refused to name the father and apply for child support used to have benefits cut. This Section 70a sanction was scrapped at the advice of WEAG in April 2020.