Demography

Lone parent families account for around one in six households with children in Australia. Australia is similar to the UK in having a high marriage and divorce rate. Around a quarter of births are to unmarried women; this places it in the middle rank, below the USA and the UK, but higher than any other Western European country except Austria. Rates of teenage birth are also similar to Austria, at 22 per thousand.

Provision for Lone Parents

The main benefit for lone parents in Australia is Parental Allowance, which pays a basic amount to any lone parent with at least one child under 16. It is set at the same level as the old-age pension, with extra entitlements for children. Help with housing costs, medical and pharmaceutical costs may also be available. About 72% of lone parents receive this benefit and up to 22% of those on benefit also have some earnings. Somewhat over 40% of lone action to obtain child support. The JET (Jobs, Education and Training) scheme introduced in 1989 helps lone parents with education and training, finding work, and childcare placements.

Calculation for Child Support

The Child Support Act was passed in 1988 with the aim of increasing maintenance payments, as part of a wider package of schemes directed at lone-parent families which were themselves part of a wider review of the nature and structure of social security benefits.

The system evolved gradually over a period: although the idea of an Agency was first mooted in 1980, this did not come into force until 1988. Following extensive public consultation, it was decided that the scheme should not be retrospective and that it would be introduced in two stages, the first involving the enforcement of existing maintenance (from 1988) whilst the involvement of the Agency in assessing maintenance did not begin until 1989.

Maintenance is assessed as a percentage of taxable income, net of standard deductions (based on benefit levels) for the non-resident parent and any partner or children in the household. The percentages are:

• 18% for 1 child
• 27% for 2 children
• 32% for 3 children
• 36% for 5 or more children

The Agency uses a variant of the formula to deal with the situation of divided custody (where each parent has resident children of the relationship) and shared custody (where a child spends roughly equal amounts of time with each parent she or his is counted as 0.5). Hence the percentages are as follows:

• · 12% for 0.5 children
• 18% for 1 child
• 24% for 1.5 children
• 27% for 2 children
• 30% for 2.5 children

and so on, rising to a maximum of 36 per cent for five or more children. A maintenance bill is worked out for each parent, and the one with the highest bill pays the amount of the difference to the other parent. Significant amounts are therefore payable only if there are large disparities in taxable income.

There is a total disregard of maintenance of up to £1,700 per year for a lone parent and one child, with around £500 extra per child per year. Above this level there is a 50% taper for benefits.

Minimum Amount

Since 1997 the non-resident parent is required to pay a minimum payment of £10 per week, regardless of their financial circumstances.

Guaranteed Payments

There is no guaranteed maintenance in Australia.

Current Issues

Following an Inquiry in late 1993, set up as a direct result of the numbers of complaints made to the Ombudsman and to senators and MPs, which made over 150 recommendations for the future development of child support policy, changes have been introduced. From 1997, all non-resident parents are required to pay a minimum amount of maintenance. Some loopholes which allowed the manipulation of taxable income to reduce liability have been closed. Liability is reduced where the non-resident parent has a second family of where the resident parent is earning significantly more than average wages. Average levels of maintenance have increased, and the Agency enjoys a 2/3 compliance rate. Parents are encouraged (and even required) to move off the scheme once payment has become reliable.

The inquiry received over 6,000 submissions (the largest ever received by a Parliamentary Inquiry in Australia): a quarter of all submissions argued that the formula was too harsh. However, not everyone is convinced of the need for reform. A dissenting report was presented to the Inquiry by Senator Belinda Neal, who argued for the extension of child support legislation to those currently excluded from its scope, and against the capping of non-resident parents' assessable incomes and the reduction of the custodial parent's disregard. It has been argued that these changes, in response to lobbying on behalf of non-resident parents, seriously undermine the original intentions of the scheme. It is argued that by responding to the 'squeaky wheels' of people who complain, instead of satisfied customers, policy-makers may be neglecting the real needs of children.

*Source: Helen Barnes, Patricia Day and Natalie Cronin (1998). Trial and Error: A review of UK child support policy. , Occasional Paper 24. London: Family Policy Studies Centre.