The Proper Determination of Child Maintenance

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Preamble

This article contains facts and mechanisms which may be used by a person, stage 1 or 2, to apply to the family court (or magistrates court?) for proper maintenance for their children. It is not intended to ultimately tie up the courts with a multitude of applications though such may be unavoidable initially.

The ultimate aim is to blend child maintenance into the whole safety net structure of social security via DSS and ATO by replacing percentage of income based formulae with cost of children related formulae (as used in this article), and using the same basis for cost of children as the DSS and ATO.

It is the author's contention that such an ultimate change to legislation will produce proper child maintenance, not only for the families concerned but for the public purse. It is also the contention that the soon to be released cost of children data from the UNSW will provide the opportunity for these reforms.

Background to child maintenance

By way of the Family Law Act (FLA) when initiated in 1975, child maintenance was "lumped" into Part VIII of the act under "property, spouse maintenance and child maintenance" and it was pointed out by overseas authorities that "separated" children in Australia were denied what was considered to be "natural rights" in most other countries to be supported by both parents.

Coupled with this oversight was the situation that emerged by 1985 which is best explained by Jan Bowen in her book Child Support a Practitioner's Guide where she said at p 50 ;

"Essentially all children of parents who had separated were being supported by the taxpayer."

Ten years later, Nicholson CJ chose Hobart of all places, shortly after the Bryant atrocities to announce the results of the family law industry atrocities of the previous 10 years ;

"The vast majority of children of separated parents are being supported only by social security"

In other words, the same situation which existed prior to the 1987 amendments to Part VII of the FLA to give children rights, the Child Support Registration and Collection Act (1988) (CSRCA), the Child Support Assessment Act (1989) (CSAA), and not forgetting the amendments to the Social Security Act (SSA) in 1993.

Opponents of Nicholson CJ will maintain that all had failed, and indeed it had, but this "announcement" of failure will be seen by the more astute observer as being the start of the reform which is promoted in this article. Indeed the chief justice is such an astute man that one needs to read between the lines to see the very reason for his announcement in the first place.

Officially the announcement of failure had already been given via the Joint Select Committee into Certain Aspects of Family Law (JSC94) in its November 1994 report where at p 509 it stated ;

"This is an area where some of the legal profession have dismally failed ... etc"

The JSC94 were referring specifically to double dipping as they defined the term by reference to submissions to the committee. However it is not necessary to go beyond the results of the author's software modules, examples from which are set out in these articles, to see why the situation developed along the same lines as that described by CCH commentators in reference to spouse maintenance in the 1980's where "it was quickly realised" that it was preferable to be on the dole.

A possible better term would be "killing the golden goose". The scenario posed in 1989 was that the H would pay an amount in child maintenance (and termed child support) which was "substantial". From the W's point of view, her pension/benefit/allowance (whatever "testing" mechanism one wishes to quote based on the prevailing legislation) was only reduced by 50 c in the dollar (and had a "test free area"). So the W was coaxed into getting her full "entitlement" via CSA. However, in most cases this maintenance income testing reduced the Family Payment (after 1993) well below the level to which the similar intact family was fully entitled - and the H was doing this to the tune of one dollar to him for every 50 c reduction.

In other words the situation changed to one where "all the children in Australia were being supported by separated fathers".

So, as mentioned above, the H became well aware that he could be better off "unemployed" and that his children were just as well off anyway.

To return to Mr Wright but having zero income (on the dole) instead of $35,000, the W's benefit goes from the previous 164% of the actual cost of her children to her to 194%, still well over $20,000 pa (and it must be remembered the court has already provided virtually nil cost accommodation).

For Mr Wright to also get $20,000 pa as disposable income he needs to work full time (with all the costs and implications) and earn $40,000 pa.

On the other hand he can be on the dole of $10,000 with all the concessions, live in a cheap location and (legally) perform a few services to bring his income to the equivalent of the $20,000. It is no wonder the chief justice found it necessary to make his announcement in Hobart, the fact is that 90% of H's faced with this scenario choose the "self-unemployed" course.

So it has nothing to do with being "dead beat dads", the vast majority of Hs are concerned with their children's welfare but are equally concerned as to the excesses of the system envisaged by the "CSA untested" scenario.

What the law says

The section of the FLA which instructs as to the proper course of action is s 66 E. The history of this section is that the various algorithms used herein to determine proper child maintenance were enshrined in s 66 via the amendments of the 1987 Amendment Act. At that stage there was no CSA, collection nor assessment wise.

When the CSAA came to be, there was an obvious choice for the legislators to specify that the recently enacted s 66 was only applicable to people who did not come under the CSAA. They did not do this but what they did was to insert s 66BA (2 years later) to state that this section was not be used if a CSA assessment was "proper".

The family law industry took the convenient course of assigning the word "proper" to be the definition under the CS acts, ignoring the fact that the word "proper" was in the FLA, requiring the investigation suggested by CCH commentators.

The result was that not one application was made by a stage 2 participant in the CS scheme under the FLA and indeed there was an impediment there via the fact that a payer could not of his own accord make application to pay child maintenance but rather have to wait to seek relief as the respondent should the W decide to play her hand and seek an increase in "her" child maintenance.

This impediment was removed by the "who may apply" s 66 F of 1996. However it is strange that none of the commentators have made reference to this most important amendment, particularly as it is the open door to the applications Nicholson CJ (in the author's submission) is seeking to remove the stigma of the "dismal failure" tag.

It should also be pointed out that the wording of s 66 BA was slightly changed in the "musical chairs" of 1996 when it then became s 66 E. In this case it is left as 'homework" to the reader to investigate and form an opinion as to what was intended by such a change. Was this one more incentive to take the course of action suggested by this article?

However this is all academic as s 66E (2) states that sub (1) applies whether or not an application for administrative assessment has been made. So we see the test of properness is nothing to do with a "CSA proper" but is clearly the comparison suggested by CCH commentators, the very same exercise which the reader is about to see below.

The only difference between a practitioner/judiciary doing the exercise and the treatment below is that the family law industry is only required to "do all things" in relation to family law matters (while of course ignoring a party's entitlement to an income tested benefit or pension). The author does the same but also includes the DSS and ATO issues which result.

Therefore it will be clear to the reader why when the Chairman of the JSC the Hon Roger Price MP wrote to the author to suggest ;

"I envisage that your system may be utilised by legal practitioners along with the other expert witnesses or consultants currently providing evidence in family law cases",

the practitioners and the court were less than willing by then in 1995 to see the result (especially via DSS) of their handiwork, preferring all to remain nebulous, especially s 75(2) "maintenance" awards which had already lost the tag "maintenance" for professional liability reasons and had become "just nebulous adjustments".

Enter the Snag family

However to better understand how all this works it is time to introduce Family Snag, the family used in this example. This family is an actual family law family recently going to court as one of the less than 5% that do, but with name changed under s 121 (to protect the practitioners?).

However the author has been astute enough to use the example of a separated family. To a normal person this may seem self evident but the Australian Institute of Family Studies, we are to assume under its functions as specified in s 114B, commissioned Donald Lee to do a "cost of children" survey, as we will see a little later, based on an intact family (and therefore irrelevant).

Further, the author has "added a couple of kids" in the finest Vanstonian traditions to the original one child Snag family, in fact using the same 3 children specified for the Wright family in the preliminary example.

The Snag family is so named (apart from s 121) because H was a normal sensitive Husband and Father in the current dogma of the SNAG, loving, sensitive and hard working but nevertheless fully expecting to become one of the 50% victims of family law once Mrs Snag found out what was on offer. Mrs Snag (sensitive new age GAL) true to her own gender dogma was not to be confined to the kitchen as was Mrs Wright but was awarded $1,000 in her settlement in order to retrain in "Office 97" (whatever that may mean) and had entered the workforce on $24,000 pa. Mr Snag makes $50,000 as an engineer at a construction site.

The other important piece of information is that Mrs Snag's solicitor was after a 35% Dench adjustment (of the $300,000 pool of assets), to which the Registrar in conciliation agreed, but the H, by going to court, was able to reduce this double dip to 25% (for one child). Therefore, even though her Honour was put on notice in the H's opening that he was wise to double dipping she still awarded 25%. This fact will become important in the next article when Mr Snag inevitably loses his job.

But you have waited too long already to see how the Snags fared. Please take a quick look at the details of Snag family and BACK to here.

The first detail to observe is the yellow cost of children of $166 pw to W and $44 pw to H (during his 21% of time access) - all this based on $70 pw per child, the preliminary figure to be discussed in much more detail later. This is the all important cost which the whole exercise is pointed towards "meeting" and although the SSAct does not define what percentage it is trying to cover, the FLA is quite explicit in its general and particular objects (which most curiously are repeated in the CSAA, even though the formulae "do no such thing"), that it is the parents who have the primary responsibility to share equitably (rather than equally) as far as they can, but "without more".

We see that using the CSA assessment, H pays 120% of the total cost while W pays zero. Moreover, the government still chips in 66%, within which W's Family Payment of $95 pw was reduced from $206 (still untouched by income testing at $24,000). However the situation for the intact Snag family look alike is that the government only provides $12 pw (by way of ATO Family Tax Payment Part A).

So many questions should be asked quite apart from Mr Snag, totally indignant that he is paying more than double his equitable share of supporting his children, asking why he is not simply paying his equitable share (to later quantification). And then we see the W's huge residual (black) but no responsibility by assessment standards to contribute a cent to her children, one more nail in the coffin via the test of properness as per the objects of either act.

Also, if H is paying at least his share of the cost of his children, why does W get any more than the look alike married wife would get?

Then, even if the foregoing can somehow be explained, if H is paying for the cost of his children, be is under, equitable or over paying, should it not be the case that the taxpayer gets relief on a dollar for dollar basis? In this case the H's $252 pw in child support is met with a decrease of $111 in Family Payment, ie 44%. It is suggested by Jan Bowen et al that this is the incentive for the W to seek child support rather than just DSS, however that requirement is legislated so why should she need incentive to comply with the law?

And then, if the H is paying double his equitable share of child maintenance and such causes the W's Family Payment to be reduced (at whatever rate) below that reduction commensurate with an equitable payment of child maintenance, is it not the case that the H is subsidising government revenue, in this case to the tune of some $76 pw?

Then to set the scene for later analysis, let's look at the same overall graph we saw in the preliminary Wright family example. Summary of Snag family options

Mrs Snag has a separate income of $24,000 and gets a total of $40,000 in hand (almost double her earnings) which is $20,000 more than the normal taxpayer earning $24,000, all this to "assist" her cost of children of $8,632 (of which she is supposed to share in equitably).

Mr Snag has a separate (and only) income of $50,000 and retains $22,000 (less than half). And of course he will also have superannuation (like it or not) which the court will have "mortgaged" against him.

As such, as we will see in the next article, not only does redundancy come as a sweet blessing from above but the whole fabric of the "fathers supporting the nation" notion falls apart. As seen, Nicholson CJ's announcement as such in Hobart was the official end to the notion that the golden goose would simply keep laying forever.

Other scenarios of gloom

Obviously, apart from the Snag's situation, there are millions of scenarios of incomes, number of children, ages of children etc which can be fed into the computer model to demonstrate why the divorce level is at an all time high or, in other words, why divorce (with residence "rights" - ie with custody in the old terms) is by far the best and most assured investment available on the market today

However, if it were the case that Nicholson CJ's "hints from on high" (or should that be "full") were acted upon and child maintenance was determined as he is "hinting" by either the path the author is suggesting via the FLA or via the CSAA in light of his (and others in the case of Lightfoot and Hanson) full court judgements, it is submitted that at least the family court side would become more equitable.

It is then submitted that this would have a snowball effect by lessening the investment opportunities, thus the number of Ws attracted to the DSS benefits, thus the number of Hs forced out of employment.

Of course the methodology exposed above whereby the H is required to support the public purse as well as support his children would be removed. However, as seen by Nicholson CJ's Hobart statement, that methodology backfired by depriving the government of taxation from previously employed Hs, in submission by the author (and it seems admission by Nicholson CJ) to a far greater deficit than the situation whereby the methodology had never been enacted upon the taxpayer.

In popular terms, a legislative bummer (for which the author pre-empts reform in the "equitable solution")

Perhaps the only casualty would be a downturn in income for the suburban solicitor and a decrease in the number of family court sub judiciary appointments, however the author is of the opinion that as a nation we can afford such a loss.

However the point which seems to have been overlooked by 99% of practitioners over the last 10 years simply by saying to Mrs Snags "here's the phone number of the CSA" is that they are losing millions of dollars in fees, by comparison to the property situation. Or rather it should have been the job of Mr Snag's solicitor to have picked up on this opportunity. In any event, the opportunity is now there for any solicitor with a bit of get up and go (a forlorn chance - even for their own good?) to take up the running from these articles, not just litigants in person.

The equitable solution

To start with the result and then move back to the boring algorithms used to achieve the result, H pays the W $119 pw towards her $166 pw cost of children and W pays H $13 pw towards his. The differential result is that the H pays W $106 pw as equitable maintenance or proper maintenance as far as the parties and children are concerned. You may observe this on the LHS of the upper 2 graphs.

As to proper in relation to the public purse, the fact that the total government payment to the W has only increased by 2% while the maintenance decreased by $146 pw is due to the pre-emptive change to the maintenance income testing via the Family Payment whereby the Maintenance Income Test Free Area has been removed and the "testing" has been increased from 50c in the dollar to parity. In other words, the public purse gets full relief for whatever H pays to W for the maintenance of their children.

Such equity for the taxpayer of course requires change of legislation but it is computed here to assist in such reform. On the other hand the equity for the family is available simply by making application to the family court, quoting your own solution derived from the computer module as expert evidence.

To provide a little more explanation, each party is provided with a non liable income (the blue on the top graph) which is in fact the exempted income of the CSA assessment, except it applies to both parties. The disregarded income of the CSA is "disregarded" and any explanation as to why would only serve to suggest the reader was as much of a moron as those who "invented it" (though curiously, not even the AIFS would own up to such before the JSC). May it just RIP after first being one of the main pieces of evidence to the court as to why an administrative assessment can not provide proper maintenance.

It will be seen that the whole basis of the DSS "safety net" is built on the concept that every adult citizen has the right to this $9,000 pa or so. A non parent is entitled to it via Newstart (or age/sickness etc pension). A single parent is entitled to it via the Sole Parent Pension and even the "everyday housewife" (with children) is now entitled to it via Parenting Allowance (at the "pensioner couple" rate). It will be noted from the Wright family exercise that the W did not have a blue section. Please rest assured that she does, it is in the form of the purple Sole Parent Pension (and even the FLA and CSAA tell us to "disregard" THAT amount - another nail in the coffin for the CSA formula and another plus for this computer model)

It has to said that, in total contrast to the ad hoc CSA formula, our social security system has been painstakingly thought out and is constantly fine tuned once there is a suggestion of discrimination, even to the "humble housewife". Perhaps the maintenance income testing anomaly will soon be remedied? There would seem to be little doubt that the testing pre 1993 via the Sole Parent Pension was discriminatory to sole parents and that the present testing of the Family Payment is correct but it's just the way it is levied that is total worry to the notion of equity.

The liable income of each party (the red on the top graph) is the after tax income minus the non liable income - that's straightforward. Then each party supports the other's cost of children in proportion to their liable income. In this case H pays 70% of the W's commitment and W pays 30% of H's commitment. As further explanation, were the liable incomes the same, each would pay 50% of the other's commitment. So far so fair.

But then we come to what Nicholson CJ would term the "cliff effect" (with reference to the similar CSA problem in Gyselman). This is the transition from where a party has no liable income so can pay nothing, to where the party can pay his/her full calculated cost of children. For example Mr Wright would normally have been liable for the whole of Mrs Wright's costs but this would have been 50% of his liable income. As an arbitrary starting point, for discussion/discretion, the author used the maximum 36% of the CSA formula as the "ramp up" (surely there must be one part of this logical vacuum which can be reused)

Or perhaps this should indeed be 50% (irrespective of number of children) as 50% is the rate at which most DSS benefits ramp out, including the Newstart Allowance (below $140 pf). Or maybe this is a matter of court discretion remembering that the exercise here is to apply to the court on the basis that this "expert evidence" provides a solution which is (far) more proper than the CSA assessment by comparison. It is up to the court to use its final discretion.

On the one hand it could be said that as soon as a party earns more than the non liable income, they should pay say 50% of the excess (up to the limit of the calculated amount). On the other hand the government is happy to provide the full Family Allowance up to an income of $24,000.

All of this suggests strongly that child maintenance needs to be treated the same as any other benefit, basically in the manner of the model suggested here, integrated with all the other benefits etc, expressed in the same format, taken out of the ATO and given to the DSS to administer.

Basically it could be said that that method was what was tried with the CSA, but the formula was just so totally illogical (to the extent that the JSC could not even identify the source) that we are now in the situation identified earlier where the golden goose is himself on social security and the country is left holding "the wrong end of the pineapple" to quote Brennan CJ in the recent F Arena High Court action.

At present there is a valid path to proper child maintenance through the family court using the FLA (presently untried) or using the CSAA both of which have almost identical provisions as remarked by Nicholson CJ in Gyselman (one such case already "tried" under the CSAA).

The cost of children

This leads conveniently into the main issue in the above exercise, the actual cost of children and s 66 J(2)(b) invites the court to consider any relevant findings on published research, etc. But before going to this, in Gyselman and Gyselman 1990 15 Fam LR219 Nicholson CJ said ;

132. The other unusual aspect of this matter is, as was pointed out by Kay J. in Savery (1990) FLC 92-131 at page 77,900, that s 117(4) and (6) are to be contrasted with s 66D(2) of the Family Law Act which allows the Court in determining the needs of the child to have regard to "any relevant findings of published research in relation to the maintenance of children."

133. It is difficult to know why that provision is not replicated in the Assessment Act. The view may have been taken that s 66D(2) of the Family Law Act would apply to proceedings under the Assessment Act. Whether that is so or not, it is clear that the matters set out in S 117(4) are not exclusive. Section 117(9) provides: "Subsection (4) to (8) (inclusive) do not limit other matters to which the court may have regard."

134. In any event, evidence of published research of acknowledged experts in a particular field of specialty is admissible, provided it is properly proved.

However, the author believes that an application under the FLA is preferable despite the fact it would be a first. As already mentioned, Nicholson CJ is dropping huge hints for someone to ask him to "do proper maintenance" in his court (esp the "whether that is so or not" hint above). Consider the question Stan Grant was required to ask him and the convenient answer.

STAN GRANT: "There's a confusion that's arisen recently, I suppose most notably in relation to the High Court, and the High Court's decision on native title, but the confusion about the role of courts. Do courts make law, or just interpret law and what is the difference anyway?"

NICHOLSON CJ "There was a fiction that was followed for many years that courts just interpreted law, but in fact the whole common law of England and later of Australia developed really from Judge made law. But it's a tortuous and slow process, it can only happen when someone brings an action and the issue is raised before the court. So the courts don't go out and look for opportunities to make law, they're not legislators in that sense".

In the opinion of the author, you have just been mailed a personal invitation to make application, even as stage 2. The reasons are obvious, the court would be seen as the good guy by fixing up the CSA mess, Hs being able to afford to stay in employment, integrating property and maintenance and getting the double dipping/specification monkey off the court's back. It's a win win opportunity for a court so criticised that the recently retiring Deputy Chief Justice Barblett remarked that the court was to be blamed for the El Nimo effect (of which one particular scientist agrees).

There are 2 popular studies quoted, Lovering who clocks in at about $70 pw a child in a family of unspecified marital circumstances and Lee who studied a married family apparently on Mars and got about $250 pw per child. Then the author has performed his own study on his own 3 then private school children in 1992, basically agreeing with Lovering and as such using this figure in these articles.

However it is hoped that a "proper" study completed but yet to be fully published by the UNSW Budget Standards Unit will clear up all the confusion. One of the reasons for publishing these articles before the UNSW results appear is to impress upon the DSS, who are presently digesting the results, that they need to be published for family law reasons as soon as possible quite apart from social security considerations.

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