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Thu 18th October 2012

The framing and econometrics of child support

Filed under: Child Support — Scrap_The_CSA @ 7:45 pm

This paper: The framing and econometrics of child support by Stuart Birks is well worth a read.

Paper for the New Zealand Association of Economists Conference
Wellington, 29 June – 1 July 2011
Abstract
The approach taken to child support in New Zealand has shaped perceptions and outcomes. Despite ongoing dissatisfaction, substantial changes to the legislation have yet to be made. The current Government is considering changes which address some of the major issues: costs of children; incomes of parties; and shared care. IRD analysis replicates an Australian approach to derive a proposed alternative formula. This paper focuses on the importance of framing for shaping perceptions and outcomes, and the way econometrics is playing a part in this process. The analysis may have a wider relevance for the use of economics research.

19 Responses to “The framing and econometrics of child support”

  1. Down Under says:

    The child support act as a raid of superannuation.

    We all know New Zealand has a bad baby boomer population bubble but who would see the child support act as a surreptitious way of dealing with it.

    The current rules around debt recovery allow for a maximum of 40% of net income to be deducted at source, obviously leaving the recipient with the remaining 60%

    There is a list of priority as to which gets paid first and yes child support is right at the top when it comes to apportioning the 40%.

    You will notice three things about this bill before parliament

    1. Mother’s are now more likely to become defaulters.
    2. By extending the definition of parent it will likely increase the number of defaulters.
    3. The inclusion of the superannuation as a source for deduction.

    I always said this would happen and now it here in writing for all to see.

    Initially the new class of poor will be mostly men. As time progresses it will include an increasing number of women. If you have a child support debt happily brewing away expect to live in poverty when you get to 65 or XY years whichever is the greater.

    One other thing – if you have a child support debt you be charged an extra $5 on the 1st April 2014 just for fun and I calculate the interest rate on that for the first year at 26.8% give but more likely take depending on rounding and 1% incrementally per month thereafter.

    And so will ever new defaulter who comes along so I am picking there will be a surge in errors by the IRD and some people will regularly be paying that the extra $5 and a bit of interest. Watch out for that one. This will also be collected if you have any sort of tax refund or possible reduce a tax credit.

    So if you are already in some sort of agreement with the state and that falls over for any reason you will have another little debt bubbling quietly away in the back ground.

    You didn’t really think they were serious about reforming the penalty scheme did you?

  2. Exotic Ant Hills says:

    I guess we all fool ourselves if we ever believe the government doesn’t increase its’ tax take with every reform. It’ll give some scraps to a few high-profile lobbyists; but they’ll hit us quiet down-and-outers, coz we don’t have a voice.
    Oh well. might as well crawl off and die somewhere; although I hear they’re planning on taxing that too …

  3. Nickstar says:

    My current partner has 2 children he pays child support for. They have different mothers. One of his exs review his child support, they decided that he should be court ordered on the grounds that he has more or an obligation to pay for his biological children than his step daughter (my 11yr old). He applied for his own review after our baby was born, they said the living allowance they allocated was sufficent.
    My confusion comes where he pays 1 mother X amount as he is classed as Single/married with 2 dependent children (my 11yr old and our newborn son), yet the other mother who got granted her review gets more child support by $100 and on this statement he is classed as Single/married with 1 dependant child (our new born son) as the review officer removed my 11yr old from his living allowance.
    How can the same man (my partner) have 2 dependants for 1 mother and 1 dependant for the other????? Two different allocated living allowances????

  4. Hans Laven says:

    Nickstar (#3): Interesting case thanks. I think it highlights one of the many problems with so-called ‘child support’, this one being that the decisions of review officers cannot be challenged and the only option left is to ask the Family Court to make a ruling on the amount. Such Family Court proceedings do not involve any actual scrutiny of the review officer’s decision or behaviour, and of course paying fathers will generally understand that they are most unlikely to be treated fairly if they do resort to the Court. When administrators are given unaccountable power, all manner of inconsistent and unjust decisions will be made on their whim and we have seen a large number of examples of this exposed on MENZ Issues through the years.

  5. Dan says:

    This paper is spot on but as we all know nothing will be done, despite the stated objectives the child support act achieves what it was really designed for – revenge.

  6. Vman says:

    Another excellent paper by Birks!

    …child support debt has ballooned and currently stands at over $2 billion, of which $1.6 billion is penalty payments. It is clear that the current scheme is not working…

    – David Clark Labour (of all parties!) May 2012

    The fundamental problem with so called ‘child support’ in New Zealand is that it is in fact a child tax.
    The fundamental problem with proposed reform is that it is governed by ideology rather than outcomes.
    There is a fundamental flaw in this ideology.

    It is impossible to create a working law that defines what is good parenting. Not least because every single family situation is unique and varies through time.
    The reforms to ‘child support’ assume that it is the government’s role to define good parenting. This is NOT the government’s role.
    The government can seek to protect the majority of people from the worst outcomes.
    That is all it can do.
    The government can create laws to try and force people to provide a minimum level of maintenance so that the child’s basic needs are meet. That is as far as the law can hope to achieve.
    I am sorry if you had a child with some delinquent parent who rode off into the sunset. We all make bad choices every now and then. The law can not protect your child from your bad choices except to make sure the child has his basic needs covered.
    If you want your child to have a future with the standard of living you used to enjoy then it is up to you to choose wisely.
    If you make a mistake and choose poorly then the child’s basic needs will still be met. In addition you can try to reason with the other parent and create some solution that will be better than basic for the child. However that is up to you. Just like every single other decision you made in life.

    Everywhere in the world communism have proven to fail. Why do we suddenly assume that communism would magically work if we re-name it Child Support? It doesn’t work. By every measure it is a failure. The whole basis of child support is the same ideology as communism. The idea that the government can force all people to divide their money based on their income is deeply and fundamentally flawed and will always fail.
    What the government can do is say the basic cost of living for a child is $xx this must be covered as your parental responsibility.
    It is then up to the parents to decide what addition money and choices they will make for their child’s interests. The government can not define what is a ‘good’ parent or how much a ‘good’ parent will pay. This is never going to be a successful model for many compelling reasons. Not least because every family is unique and every situation changes over time.
    What we need is a two part system.
    Part A is the compulsory child support. This is the bare minimum a child needs. The same as the government provides for a child of unemployed parents. It is supposed to be only a basic level.
    Part B is purely voluntary. In this part the government can suggest what it thinks would be a typical additional payment. This voluntary part is up to the parents to negotiate. It is also up to the parents to arrange. There can be no liability or pressure to pay this part. This is simply a guideline suggested by the government with the acknowledgement that every family is different.

    A well paid parent that does not care for their child and only pays part A is a bad parent. The government does not deny they are making a poor decision. I’m sorry about that. Someone should have told you that there are people in the world who are irresponsible. That’s life. Sucks for the child I am sure. However the government is not there to force every parent to make the same parenting decisions that a bunch of politicians in Wellington decades ago decided was best for everyone. Mostly because it simply is unenforable.

    All the government can do is increase awareness of the importance of providing children with the best start. The government can also do a lot to increase both parent’s participation in caring for the child. This has proven to be the most effective way to see that the child get the best monetary support in any case.

    I wish I knew how to at least steer public awareness of this.
    I am not saying it is fair.
    life is not fair.
    I am saying it is realistic and it can give us a system that is at least workable and can be maintained.

    If we have learnt anything from our experiments with child tax it is that the government can not force parents to provide more than the basic needs of children.
    It can encourage people to make arrangements that are better than basic. However it can not force them.

    It is not just the current law that is a failure. It is the ideology behind the law.

    “The IRD has so little confidence that it will collect these outstanding penalties that its bad debt provisions in respect of penalties were more than 99%.” So this Government is allowing the IRD to continue with over a billion dollars of debts against these child support schemes, with the prospect of 99 percent of them not being recoverable.

    This situation also has had, in the past, the effect of driving people offshore, to run away from their debts. In particular, they go to Australia and other places, and further afield, to get away from their child maintenance debts. Again, a little bit like the student loan scheme, we seem to be very good in this country at sending people offshore, exporting our people who basically cannot afford to maintain their payments. Perhaps we have to be a bit more creative. Perhaps when this bill goes to the select committee this has to be investigated further. Perhaps there has to be more consideration given to a real solution to this problem and to coming up with some solutions to make it more affordable and more easily obtainable for those who owe these moneys to get on top of the situation they are in.

    It was very sad that in recent weeks, as I understand from the news media, one individual in Australia took his own life as a result of being hounded in Australia for child payment debts he owed in New Zealand. He simply could not face the situation. It is very sad when it gets to that situation. Certainly, I hope the Social Services Committee will look at this bill closely, because we do want a fair and equitable scheme for all.
    – ANDREW WILLIAMS (NZ First)

    Just before I get into the content of my speech, there is something that the Minister of Revenue said in introducing this bill, the Child Support Amendment Bill, that I wanted to comment on. I do agree with him when he says that the child support system is a separate system from childcare, access issues, and other parenting issues. He is absolutely right, and those issues, when contest arises, are dealt with in the Family Court. However, there is a linkage. I have seen many cases where conflicts arise between parents who have separated that are linked to their child support arrangements. The child support arrangements themselves, because they have not been responsive to their contemporary situation, have caused a lot of conflict. That affects their parenting. That affects access. That affects the whole relationship. And, that, surely, must have a negative impact on the development of children themselves, and the life and happiness of a family. So there is a linkage between the child support system and how families live, and the stress that families can experience from time to time.

    Dr RAJEN PRASAD (Labour)

    It is sad to say that, unfortunately, many parents, when separated, do not fulfil their obligations with their children. I think to some extent it is a long bow to draw to suggest that the amount of child support that they are paying, or the fact that they are paying, is going to have any effect on how that money is ultimately used by the recipient. There are many other ways in which we need to be addressing this, in my view. The Child Support Act, I believe, has become a very blunt instrument. The formula itself provides for disproportionate variances that negatively impact, and in many ways actually create problems with, the relationship shared by parents who are genuinely trying to do their best.

    The formula also better recognises the amount of debt that has been amassed over some period of time-and previous speakers have alluded to it-of some $2 billion, 60 percent of which really amounts to penalties. So you get an unintended consequence in many regards, in my view, which is that parents will turn and run because of the implications of the penalties and the wall that they find themselves up against. I think it is very important that there has to be some reality in how that is addressed.

    The other, third, important part of the formula, in my view, is that the formula uses a new scale of costs, which is more up to date with the costs of raising children and how those costs vary. It addresses the anomaly, in my view, that results from some parents whose income rises, creating a situation where there is more disposable income, and that is not necessarily reflected in the costs of bringing up that child.

    MIKE SABIN (National-Northland)

    A party vote was called for on the question, That the Child Support Amendment Bill be now read a first time.
    Ayes 106 New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Māori Party 3; ACT New Zealand 1; United Future 1.
    Noes 15 Green Party 14; Mana 1.
    Bill read a first time.

    Bill referred to the Social Services Committee.

  7. hornet says:

    And what is now WORSE for all paying parents is this – we have a country with HUGE DEBT – in fact our CASH position is such that we have a cash deficit of $40 BILLION – which the GOVT has to borrow $$$$ internationally to keep this place alive.

    Anyone who has run a business knows what happens when you have NO CASH FLOW – you go out of business really quickly ……..

    To add further insult to all effected parents – GOVT is leveraging the COUNTRIES $$$ BORROWING against the CHILD SUPPORT DEBT – so there is NO INCENTIVE for a GOVT to reduce this or get rid of it, if they are borrowing money against it – in fact its better for them to keep the amounts owed as HIGH as possible – so they can borrow more money against it – LEVERAGING GOVT LOANS AGAINST OUR CHILDREN AND GOOD PARENTS – this sickens me to the core.

    And then you can see why there is NO Incentive to base CHILD SUPPORT payments on FACTS – no it suits the system to DICTATE OBSCENE payments for excessively HIGH amounts – regardless of your actual INCOME, and make it IMPOSSIBLE for you to DISPUTE the calculations – which in turn manifests itself into this HUGE DEBT – Because NO SANE person would agree to PAYING what they ask.

    Then use this horrendous process and base all investigations and collection orders on this SHAM.

    This entire system needs to be exposed for what it is – and NO PARENT – MAN OR WOMAN – who actually cares for their children should accept this – or the proposed changes which are just looking to take more $$$$$ in the future – from BOTH PARENTS.

  8. Scott B says:

    Hi Hornet, you and I seem to have very very similar situations, and often I think, boy, I could have written that word for word. Can you please post the link that shows the government is leveraging loans against our kids? Thanks.

  9. shafted says:

    Yup Ditto Hornet and Scott.
    Have now repetitively written to IRD concerning ex’s falsehoods in admin review-not even the courtesey of a repsonse. It has been assigned to a “case officer’ who will now doubt treat me like some absconding loser to be punished. i am crippled by child support and admin review and see no light at the end of the tunnel.
    I am like every other bloke on here-beaten by this corrupt and evil system that reduces me, a taxpayer, to the realms of the impoverished.

  10. hornet says:

    Scott – check out this link – http://www.elocal.co.nz/view_Article~id~617~title~The_Care_of_Children.html

    This is no different than why they FORCED us all sign into that other sham – kiwisaver – so they can leverage huge fking loans against our superanuation / retirement funds – savings / money, knowing we will never get our hands on it in the future…..

    Look, ive been around, worked in many different fields of employment, created many jobs for NEW Zealanders – travelled extensively – and I have NEVER – NEVER EVER come up against such a CORRUPT, SHAM as the Family court and the Child Support REGIME.

    It is designed to be difficult – it is designed to NOT EVER address the concerns which cause all the CONFLICT between parents and causes unnecessary harm to kids.

    What other Service Industry do you know of – where the SERVICE PROVIDER sits back protecting PROCESS – while its watching its client be deliberately HARMED – this is the FAMILY COURT – its all BULLSHIT – total and utter BULLSHIT, and the sooner it is unmasked for what it is – an EASY INCOME STREAM FOR THE CORRUPT LEGAL PROFESSION, and for GOVTS – who have run out of ideas as to how to CREATE a real income – by GROWING AN ECONOMY – not by CRIPPLING it as they are currently doing – MORE and MORE compliance costs, more and more penalties – thats all they can come up with.

    And if you read the fine print – they have created a system whereby there is NO ACCOUNTABILITY – so they are allowed to DISCRIMINATE and OPPRESS with impunity – and we the people have NO WAY to challenge this. That is not justice.

    Ill say it again – if you have GOVT prepared to allow HUGE debt to amass using CHILD SUPPORT penalties – which they then use to FACTOR against BORROWING the countries against to pay DEBT = THEN there is and never will be any incentive for them to STOP THIS SHAM. WHo in there right mind would allow a system to amass PENTALTIES to the tune of 1.6 BILLION unless they were only interested in keeping it there to borrow money against = that is totally unacceptable for me in any shape or form.

    I have proven time and time again – this SYSTEM DELIBERATELY STOPPED ME seeing my child – time I WILL NEVER GET BACK.
    There was NO Justifiable reason for this.

    They DELIBERATELY allowed a child to be harmed by the MOTHERS bad BEHAVIOR = which was witnessed by FAMILY COURT Lawyers and allowed to continue – NOT our JOB they said – we are only here to protect PROCESS – wankers.

    The Care of Children Act – the United Nations Conventions on Child = all State – the FIRST PRIORITY is to ensure the BEST INTERESTS OF THE CHILD is PROTECTED – ABOVE ALL ELSE.

    CARE OF CHILDREN – extends in my mind to all CHILDREN within a FAMILY – not just those subjected to CHILD SUPPORT – and yet there is NO CONSIDERATION of the other family or children.

    NO its OK for the state to march into a FAMILIES HOME AND STEAL PROPERTY – ILLEGALLY as I have since discovered – and DISTRESS all other children in the family. Heavy handed gestapo like tactics I never thought I would ever see in New Zealand – but I guess when they are DESPERATE to collect income, this is what we can ALL Expect in the future.

    So all my ten year experience has taught me – is that this system DOES NOT in any way adhere to this SPECIFIC requirement – to ACT IN THE BEST INTEREST OF THE CHILD – if it did, the system would not allow children to be used to leverage property, used to leverage child support taxes, used by corrupt family court lawyers to ENFLAME conflicts and keep them in $$$$$$

    Yes I can see why so many fathers have had a guts full – I now fully understand why there are so many parents disgusted by this SHAM.

    Shafted – dont waste your time – the system is designed to destroy you, and bankrupt you.

  11. Vman says:

    The IRD have indicated that ((5 of the penalities will never be collected. The penalities scheme is an unmitigated failure. The penalties aspect needs to be scraped immediately. It is nothing but counter productive.

  12. hornet says:

    That may well be the case – but what if you CANT SCRAP IT, because you just mortgaged the country against it??????? And what if it suits you to keep pressing for MORE from parents – knowing they dont actually EARN that amount – thats my experience, it has nothing to do with INCOME as I was always led to believe – the reality is – its got nothing to do with income at all – its about what you own, and how much they can force you to sell off to pay them more…..thats the reality.

  13. Scott B says:

    Thanks Hornet, again we seem to have parallel experiences, even the same amount of time. I haven’t read the link yet as I am too busy but will get to it, thanks.

    Another reason child tax is a scam… If parents are together, and they spend less on their children than they did the previous month, do they suffer penalties? No, so why should we? You know the answer!

  14. hornet says:

    This must be exposed – and the many parents effected need to stand up to this crap – Politicians who defend it need to be held accountable. Currently they ridicule any father who protests – using the BIG WHIP – he is not paying his fair share – thats bullshit, they are demanding excessive amounts out of parents, with penalties – and its not helping the children in any way at all – in fact its just driving parents away – fathers are doing a runner – who would not. As for these review people – they must be the lowest of the low – enjoying life on there little power trip.

  15. PB says:

    Yes, those wonderful review scalpers.
    How could we do something like this…..

    2 men apply for an admin review…
    Each man has exactly the same circumstances and submits identical docs…
    Then the (have to have friendly ones!) ex’s submit a defence using the same docs each. (Obviously they would have to be in on this).
    Then….compare the outcomes! Keep doing this and exposing the different outcomes from the same arguments!!!!!

  16. Vman says:

    Yes I think that is a fantastic idea. Also have the female make completely false claims and comapre the outcomes. Then publisht he whole lot.

  17. PB says:

    But my problem is how? It’s almost like we would need a few couples to stage and separation and apply for child support then go through these motions?
    I can’t think of anyone I know that would go through this though.

  18. Gofred says:

    How safe are these forums? Not entirely convinced that my writing will invoke responses from the “wrong” people, and then used as evidence in court. cheers Paranoid

  19. Hans Laven says:

    Godfred (#18): This is an open forum and not at all confidential. It is monitored by various state agents. Do not write anything here that could be used against you. Even if you use a nom de plume it’s generally quite easy to determine your identity.

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