Media Release

Parents for Children

Child Support Act Creates Unjust and Inequitable Situation for Student Loan Borrowers

Parents for Children have been supporting a father, who has a student debt, though the Family Court child support departure order process. The dad was seeking a variation to the rigid child support formula assessment (a Departure Order) to take into account his compulsory student loan repayments when calculating the amount of child support he was assessed to pay. The applicant was a self represented litigant supported by a McKenzie friend from Parents for Children.

The basis of the application for a variation from the rigid child support formula was that compulsory student loan repayments significantly reduced the capacity of this dad to support his son. In his decision, dated July 28 2005 , the Family Court Judge agreed with the fathers position that the student loan repayments were necessary and that the applicants ability to support his son, due to compulsory student loan repayments, was significantly reduced.

[13] Although it was the applicant’s choice to borrow to study, the repayments are required by law. They are an unavoidable expense of the applicant’s. Therefore, I proceed on the basis that the applicant’s compulsory student loan repayments are commitments reasonably needed to support the applicant himself

[14] The applicant’s capacity to provide financial support for C is $5,498.64 less per annum than a person earning the same salary as the applicant but who has no student debt. I find that this significantly reduces the applicant’s ability to support C. The issue I now turn to is whether the significant reduction in the applicant’s ability to support C is, in this particular case, by virtue of special circumstances.

For a variation to the set formula assessment to be granted the applicant was required to show that the reduction in his ability to support his son was the result of “special circumstances” (facts peculiar to his case that set it apart from others). Without showing special circumstances no variation to the rigid formula assessment could be made.

The Family Court Judge found that under the current law no special circumstances exists, commenting that the injustice and inequity relates to the application of the child support formula assessment to student loan borrowers in general.

[23] I have considered the applicant’s monthly budget. His calculations do show that there is a marked difference in actual income between a liable parent with a student loan and one earning the same income without a loan. Other debts also affect his financial resources. However, as above, I am unable to find that application of the formula assessment results in injustice and inequity by virtue of special circumstances. In this case, the injustice and inequity relates to the application of the formula assessment to student loan borrowers in general. The applicant himself recognises this in his submissions dated 4 July 2005: “essentially the CIR [is] viewing the applicant’s world and hundreds of thousand of student loan borrowers, through ‘rose tinted glasses”‘.

The Judge noted that this inequity and injustice inflicted on a student loan borrower who is required to pay child support was considered by Parliament In 2001, but that Parliament choose not to remedy this situation.

[29] The relationship between the child support assessment formula and the student loan system with its compulsory repayments can be seen as unjust and inequitable. However, as noted above, Parliament has commented on this issue but choose not to address it.

The Judge summed up the situation in this explanatory note at the end of the Judgement.

[40] For either ground to be established the Court must be satisfied that there are in fact “special circumstances”. This means there are facts in the particular case that set it apart from other cases. In summary, the Court decided that the father’s compulsory student loan repayments did not, in his particular case, amount to special circumstances as they did not set him apart from other parents who have compulsory student loan repayments and who must pay child support. Although his ability to pay was reduced compared to other parents without student loans on a similar income for this apparent inequity to be addressed, short of proof of special circumstances, a statutory change to the formula assessment under the Act would be required. Parliament considered that in 2001 but declined to do so.

The Judge has allowed publication of this decision subject to the following direction:

[35] The applicant wants to publish this decision. He may do so provided he, the respondent and the child are not identified

A PDF copy of the Judges decision is available by emailing [email protected]

Reflecting on this decision, Mark Shipman, National President of Parents for Children, observed: “It’s appalling! Once again its kiwi kids who will suffer from the application of the inequitable and unjust Child Support Act.”

“While finding that the student debt repayments significantly reduces the fathers ability to support his child, the Judge has ruled that, given the current law, this does not constitute a special circumstance and therefore no variation to the “one size fits all” child support levy can be made. This decision is just another example of the growing litany of decisions that show just how unjust and inequitable the Child Support Act really is”: Observed Mark

“What this decision shows is that the Government have known that this Act is inequitable and unjust to parents who have a student debt and pay child support since 2001 yet they have done nothing to rectify this discrimination. The Court decision is clear on that when the Judge states: “The relationship between the child support formula and the student loan system with its compulsory repayments can be seen as unjust and inequitable. However as noted above, Parliament has commented on this issue and choose not to address it.”’ Responded Mark when asked: “How he would sum up the Court Decision”?

“Current changes proposed by David Cunliffe, the Minister responsible for Child Support, will not change this inequitable and unjust situation.” Observed Mark

“Parents for Children have supported this father throughout the long drawn out Family Court process. This is a dad who pays considerable child support and has a very active role in his son’s life. Why does the Government continue to discriminate against parents like him at the expense of kiwi kids? It’s time for this archaic and discriminatory legislation to go.” Concluded Mark.

For Further Information contact

Mark Shipman (021) 982-222

Jim Nicolle (021) 800-586

Parents for Children is a national organisation seeking legislative change to enable parents who have separated to continue parenting and supporting their children.

This requires:

1) Presumptive shared parenting and

2) A fair and reasonable child support system

Parents for Children advocate the best outcome for children of separated parents is ongoing equal sharing of parental responsibility by both parents.

ENDS