If you have been reading the adventures of the Snag family you will appreciate that in this article Mr Snag is about to lose his job and we will see how this affects the whole mix of benefits, maintenance and the like.
However we will also be examining the issue of the capitalised maintenance for the unemployed H and therefore first need to examine the situation before losing employment.
The SSA requires that any capitalised maintenance be apportioned via s 1116 (ie divide the capitalised maintenance by the number of years until the youngest child reaches 18). It has already been pointed out that the family law industry, for reasons which do not need to be advanced here, avoids its mandatory specification of such capitalised maintenance by all manner of "creative accounting" and "uncaught fish" via s 75(2) resulting in "soft fraud" of the taxpayer to the tune of about $20,000,000 per week (as previously estimated - but read on).
In a paper to the Minister for Social Security entitled "the Dole Diary of B Frank", the author detailed how the DSS could simply deem these amounts (quoting the Vanstone-Wright family as an example) and research indicates that such steps have indeed been taken in target cases, saving an estimated 1 to 10 million dollars per week in Family Payment from the total of 20 but perhaps 40 million previously lost.
It is instructive to once again investigate this capitalised maintenance phenomena via the present Snag family.
Please take a look at the RHS of the top graph details of Snag family with capitalised maintenance where you will see that the combination of the dark grey and green income for W has indeed reduced the Family Payment to the "minimum" value. You will see that this was a reduction of $60 pw (from $95 to $35), not a great amount? Or is it?
Perhaps the rationale of the court condoning this soft fraud was that the CSA assessment was so excessive that it would blot out the Family Payment on its own so there would be no need to bother the registrar in chambers, who pushes through the unfortunate 95% of settlements via the rubber stamp consent method, to work out what was H's, what was W's and what was maintenance via "nebulous, unspecified, under the table adjustment"?
The problem was that the 50 c in the dollar reduction of Family Payment diluted the effect of the assessment, as excessive as it might be, so there was Family Payment still being paid which should not have been paid had the letter of the law been observed as to capitalised maintenance. And each year another 50,000 people are added to the queue. You may wish to do the calculation at $60 per week for each beneficiary and, if you do, you will get > 1 billion dollars pa. Frightening is it not for only $60 pw, seemingly not a great amount?
But that's just the good news, wait till you see what happens when Mr Snag goes bottom up.
When it came he was almost relieved. Mr Snag was such a diligent engineer that his boss was in obvious fear of him being promoted to his job. He was constantly suggesting to management that they use a contract engineer "to save on super costs etc". The pressure of preparing a court case without any training took its toll on Mr Snag and that was all his boss needed. The company said "your personal problems are not our concern" and he did not even get a reference. In fact it proved to be the end of his career, not just his job.
Mr Snag became one of the huge army of self unemployed, emotionally incapable of ever returning to the vulnerable position of being well paid which got him into the mess he was in in the first place.
Mrs Snag was doing fine and had found how to do an Excel pivot table, but didn't know what to do with it. Her boss said to her "Oh I see you have done a pivot table, good work!", for he was working on her and had arranged for her to "assist" at the Gold Coast conference next month.
And there lies the situation of perhaps 80% of family law ex families as Nicholson CJ announced from Hobart. All that remains is to account the cost to all.
Please take a look at the RHS of the top graph again and BACK to here Mr Snag unemployed but no capitalised maintenance
W no longer gets any child support and in fact if you refer to the LHS (which is not complete as to this exercise) you will at least glean that a negative green suggests that W should pay H's cost of $44 during contact - in a fair world that is. However W is back on full Family Payment.
The overall situation is that on her $24,000 income where she would normally clear $19,000 as a normal taxpayer, she still ends up with $33,000.
So the remaining exercise is to see what happens if we have the combination of Mr Snag unemployed and the DSS correctly apportioning the $75,000 over the 5 yrs (till Snag Jnr reaches 18, under s 1116) at about $15,000 pa. As seen for unemployed with capitalised maintenance, the $15,000 does not quite reduce the Family Payment to the minimum but it does get maintenance income tested by $125 pw.
Before totalling that, you will observe that a married Mrs Snag with unemployed H would get 65% of the cost of children from the government whereas our Mrs Snag only gets 59%. However that is because the capitalised maintenance was 133% of the total cost of children. So the other aspect of that is that H should have gone to the CSRO (or the family court, Lightfoot and Hanson etc) to get credit for the capitalised maintenance which would have reduced his child support to zero (except for the dreaded 25% rule, s 128 CSAA).
So as Jan Bowen points out at p 34, "a lawyer who has not ensured that a non-custodial parent client's interests are protected in this regard may be open to action for negligence" (which ended any hope her "Practitioner's Guide to Child Support" would ever be used by a practitioner). But Mr Snag actually went to court and put her Honour on notice he was aware of double dipping but her Honour went ahead and dipped him well past the bounds of s 128, in fact by 100% or so. Who does Mr Snag sue, her Honour? But a close reading of s 128 confirms that if Mr Snag takes the s 66 path to child maintenance, s 128 is N/A, so once again the path suggested is not only fully equitable but seems to have been considered by the legislators in all the Acts, albeit that nobody has yet asked the court "can I just do it?".
So the estimated figure of 1 billion pa for this soft fraud is probably quite wrong considering so many people are unemployed and the Dench for Mr Snag was contained to 25%. It could be well over 2 billion pa. Even more frightening.
The really, really good news, as explained to Jocelyn Newman is that the structure of s 1116 means that if it is instigated later in the apportionment period it has the effect of a double dip, or perhaps double clawback effect would be a far more suitable expression under the circumstances, and as such, a concerted bit of latter deeming can claw back most of the money lost, some under the previous government (the Liberal "black hole")
If the reader does not understand that mechanism, consider the case of the Snags with $75,000 to apportion. If the solicitor for Mrs Snag "arranged" her affairs so that the maintenance income testing was not done for the first 2 years but then the DSS "found her out" and deemed her then, the $75,000 would then be divided by 3 rather than 5 and Mrs Snag would get the full Family Payment the first 2 years but then her chickens would come home to roost and she would get only the minimum for the last 2 years (and perhaps 12 months behind bars with her solicitor under s 1343 SSA?). In many cases (obviously not for the Snags), the full amount of soft fraud would be clawed back and, joy to the world, the author believes Jocelyn Newman understood that and is now acting upon it.
Or conversely, if she isn't, why isn't she?
That concludes the bitter sweet topsy turvey fortunes of the Snags as Mrs Snag on the Gold Coast fought to keep her boss out of her motel room wishing to God she had never listened to the ladies at the tennis club and taken their divorce investment advice.
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