A recent report tabled in the House by the Office of the Auditor General on the IRD’s management of the child support system highlights some serious issues in this rather sensitive area.
Over $1.5b is owed in child support payments.! This is forecast to rise to $7b by 2018 unless something drastic is done soon to address the problem. Of the current $1.5b outstanding, only around $195m is actually owed to parents – the rest is owed to the IRD in penalties and interest.! The OAG concluded that the severity of the penalty regime can actually act as a disincentive to people meeting their parental responsibilities, as opposed to the incentive it is supposed to be.
I think most of us agree that any parent who doesn’t take responsibility for their children by providing for the necessities of life needs to take a good hard look in the mirror. ‘Front up and take responsibility’ is the message society needs to send to those who abandon their dependants. About 68% of parents do make the correct payments on time, but that leaves 32% of parents who don’t.!
However, we need to have a system that is fair and an agency managing the system that understands its own responsibilities to the country’s citizens as well. The data in the OAG’s report shows that the IRD only calls around 40% of those who enter into the child support scheme. Remember, people enter this scheme often at a time of great turmoil and emotion. IRD should be making an effort to contact EVERYONE and work with people to outline their financial responsibilities and how to best manage the situation. A staggering 96% of all those within the child support system have had to pay a penalty at some point in time. This is astounding. The penalties are harsh – as mentioned, the OAG acknowledged this - if you are a minute late in paying, your debt jumps by 10%, then a further 2% per month. A person’s debt doubles around every 3 years.
The thing I find a little disturbing though, is that the penalty payments collected by the IRD don’t go to the parents looking after children, but straight into the IRD coffers. How about this: if a person with a child support debt dies, the IRD tries to claim that debt from the estate – the estate doesn’t go to the children, who could well do with the funds – but to the IRD.! How perverse.
At a speech in October last year, Minister Dunne said that he would have a paper to cabinet in ‘a couple of weeks’. Almost a year later, and no sight of it yet. So, like the management of most issues, Key’s cabinet collectively fiddles while Rome burns. Its becoming a common theme. Does this govt actually care? Dunne has known about this problem for around 3 years (remember the man was Revenue Minister under Labour), and still hasn’t done a thing.! Where is the plan to remedy this situation? It simply doesn’t exist. And who suffers? Kiwis who can least afford it. That’s hardly fair Mr Dunne and Mr Key.