Remember What Child Support Is For

There are many reasons why families can do much better than relying on the Child Support Agency to decide on their child support payments.

One reason is the fact that most of Australia’s 1.5 million divorced and separated parents who pay or receive child support have no idea how the calculations are worked out, and most of those who claim to know the rules are wrong. It is now the case that the child support scheme is so complex that only a handful of experts can understand the rules. That is also likely to be the case for many lawyers working in this area.

 

Child Support Formula Does Not Work

It has long been recognised that the formula does not work for families. In 2008 significant changes were made. ‘The new scheme (2008) was intended to reflect the complexity of modern families, but it is so complicated that hardly anyone understands it,’ said Bruce Smyth, an associate professor in demography and social research at the Australian National University in 2012.

Under the 2008 rules, instead of child support being based on a non-resident parent’s income, it was based on a calculation of what children cost. But that has again created anomalies. Few parents for example know that one overnight stay could trigger a 24 per cent reduction in child support.

 

One Size Does Not Fit All

Another reason to avoid the formula is that families all make different decisions about how they spend income, on their children or for the whole family or one or both parents. Lifestyles between families vary enormously, according to income and to values. The formula does not take that into account, and after separation it deems all families to have the same values and priorities about children’s expenses. Remember that the formula does not taken into account any income above $170,000 earned by either parent. For wealthy families, the lifestyle of the children will drop dramatically in the time they spend with the less well-off parent, by comparison with the way those children have lived until separation. That usually places an unfair burden on both the children and the parent who can’t support the previous lifestyle.

At MELCA we have long argued for the wisdom of parents working together, with a financial planner to understand the real cost of their children, and to find ways to pay those costs, without even considering the Child Support Agency formula. We have found that this works, and removes the unhelpful presence of the formula from discussions about the time children spend with their parents.