New Child Support Rules Deepen Poverty for 160,000 Sole Parent Families

11 August 2008

ACOSS is concerned about the findings in the report released last week by the Minister for FaHCSIA, Jenny Macklin and Minister for Human Services Joe Ludwig, on the effects of child support changes that commence this week. These changes were legislated in 2006.

“The Government’s report on the effects of the child support changes is a valuable first step towards assessing the effects on children of a very complex set of policy changes. ACOSS is concerned about the estimate in the report that 160,000 sole parent families living on low incomes will have their income reduced as a result of the changes, typically by around $10 a week. The vast majority of these families are struggling to raise children on their own on incomes of less than $800 per week,” ACOSS President Lin Hatfield Dodds said today.

Children in sole parent families already face a high risk of poverty. For example, recent research by the Social Policy Research Centre found that over one third of sole parent families were unable to afford dental treatment and over one in five lacked a decent and secure home.

Analysis of the report indicates that 51% of parents on income support who receive child support payments will have reduced incomes, whereas 33% will have higher incomes, as a result of the changes. Over three quarters of families on income support who will have their income reduced, are caring for their children alone. This means that they will not benefit from increases in Family Tax Benefits for those sharing care with their former partners, and their children are less likely to benefit from increased informal support from their other parent.

One of the reasons for reductions in child support payments for many low income sole parent families is that the Family Tax Benefits they receive is now taken into account when calculating child support. Increases in Family Tax Benefits in recent years have played a crucial role in reducing child poverty. It would be unfortunate if some of these increases are ‘clawed back’ now through lower child support payments.

Among former partners paying child support, a majority of those receiving income support payments themselves and who are affected by the changes lose income as a result. Thirty five per cent of payers on income support payments who are affected by the changes lose income, compared with 21% who gain.

The child support changes are very complex and it will take time to work out their overall effect on children who are vulnerable to poverty. They include positive changes such as greater efforts to enforce child support obligations and ensure that these cannot be avoided through sharp accounting practices.