Single mothers are the most impoverished household type in Australia. Receipt of child support can keep single parent households out of poverty, however research indicates those in greatest need are also the most likely to miss out. In today’s analysis, Zoë Goodall (@ZAGoodall) and Policy Whisperer Kay Cook (@KayCookPhd) both of Swinburne University, and Terese Edwards (@Terese_NCSMC) of the National Council of Single Mothers and their Children share highlights from their new report into how women experience the child support system and why it is often difficult to receive payments.

Figure 1: Survey results on the impacts of withholding child support.

The purpose of child support is to keep children from single-parent families out of poverty. That was the intention when it was introduced in Australia 30 years ago. But a combination of bureaucratic complexity, lack of enforcement, and legal loopholes mean that the system is utterly failing at this purpose – and the (underestimated) $1.59 billion in unpaid child support is proof.

What’s the impact of ex-partners not paying child support? For 75 per cent of women with child support debts who responded to our survey, it is their children missing out on social activities. Sixty-six per cent said it resulted in struggling to pay for school fees, books and uniforms, while 64 per cent said they’ve been forced to reduce their food purchases. Shockingly, 41 per cent of women owed child support said the lack of money had led to children missing medical appointments or other healthcare needs. See Figure 1.

Our survey of 469 women who are child support customers revealed many equally harrowing statistics. Together, researchers from Swinburne University of Technology and the National Council for Single Mothers and their Children asked women about their child support arrangements, compliance, administration, domestic violence, and the impact of child support on themselves and their children. Below, we outline some of our key findings, as well as recommendations for how the Government could begin fixing this broken system.

Assessment: Information is often withheld

Child support assessments are usually calculated using the standard formula from the Department of Human Services – Child Support (DHS-CS). The formula takes account of each parent’s income and how much overnight time they spend caring for the child(ren). But our participants flagged issues with both aspects, reporting deception from their ex-partners and an unequal onus of proof. Of women with a formula assessment, 47 per cent said that their ex-partner did not lodge regular tax returns, and that this had a negative impact on the amount of child support payable. When no tax return is lodged, DHS-CS will use an income estimate, but 75 per cent of women whose assessment used this method believed it was inaccurate.

Figure 2: Why women withdraw from the Change of Assessment process.

Women also reported their partners’ use of income-minimising strategies, including cash-in-hand work, putting assets and bank accounts under a third party’s name, and threatening to take early retirement.

Care arrangements were also hard to prove. If parents are unhappy with their child support assessment, there is a Change of Assessment process. Many women in our sample had looked into this process, but withdrew for various reasons, particularly related to the complexity and lack of privacy that the process entailed; see Figure 2.

Collection, Non-Compliance and Enforcement

Figure 3: Women describe their interactions with the Child Support Agency in cases of unpaid support.

Fifty-five per cent of our participants received payments via the DHS-CS, while only 15 per cent used Private Collect. This is compared to the national caseload where 52 per cent of parents transfer payments privately.

Private Collect payments are counted as 100 per cent compliant. Private collections are not overseen by the Government, although they are encouraged by the Government.

Of our respondents receiving child support payments, 22 per cent said they sought DHS-CS Collect due to partial, sporadic or non-payment through private arrangements. But if women make this switch, the DHS-CS only attempts to collect the last 3 months of arrears unless there are “exceptional circumstances”. Almost two thirds of women with Private Collection arrangements were not aware of this rule.

We asked women whose ex-partners had unpaid child support how they would describe their interactions with DHS-CS about their debt; see Figure 3.

When women were unable to rely on child support being paid, due to an ex-partner’s unwillingness and the lack of assistance from the DHS-CS, this limited their ability to budget.

Centrelink Connections: Women are punished for lack of payment

Ninety per cent of our participants reported receiving Family Tax Benefits (FTB), which means that there are financial penalties if they do not apply for child support. If Family Tax Benefit (Part A) recipients don’t seek child support, they can only receive the base rate of payments unless they have an exemption. When child support payments are received, FTB(A) is reduced by 50 cents for every dollar above the Maintenance Income Free Area.

In Private Collect, the DHS-CS assumes all payments are fully compliant and therefore pays FTB based on the ‘expected’ amount of child support. But, of the women in our survey who received FTB, used Private Collect and reported ‘expected’ and ‘received’ amounts for the previous month, 28 per cent received less than the expected amount of child support, with an average shortfall of $257. This reduced their household budget not only by the child support that they didn’t receive, but also by the portion of their FTB(A) above the Maintenance Income Free Area, as this was scaled on the basis of their expected child support payment.

Figure 4: This screenshot from the DHS website clearly explains that the recipient parent is the one who is penalised when income is under- reported by the payee.

For women using DHS-CS Collect, there are two methods the DHS uses to calculate FTB payments. The Modified Entitlement Method is the default, and it also relies on the expected amount of child support. The Disbursement Method uses the actual received amount. Both methods reconcile FTB(A) and child support payments annually. However, the default use of the Modified Entitlement Method must be questioned, as it disadvantages women whose ex-partners do not pay in full and on time. Of the women who received FTB, collected via DHS-CS and reported ‘expected’ and ‘received’ amounts of child support in our sample, 59 per cent received less child support than expected. For these women, they also lose both child support and FTB until annual reconciliations occur.

Further harm is done to recipient families when ex-partners do not lodge tax returns until years later. In these cases, when the correct taxable income is determined, it can increase the amount of child support that should have been paid, and therefore can mean that women should have received less FTB(A). The DHS website specifically states that they will raise a debt against child support payees in such a situation - see Figure 4.

Domestic Violence: Exemption difficulties and deliberate withholding of payments

Twenty-four per cent of our respondents said they had conflict with their ex-partner, while a further 19 per cent said they had experienced domestic violence or financial abuse/pressure. Of the women who had a history of domestic violence, 41 per cent did not know that such violence was grounds for seeking a child support exemption. This raises the question of why DHS-CS staff are not making the exemption process clear.

For women who had experienced domestic violence but did not have an exemption, 59 per cent reported their ex-partner deliberately made partial, sporadic or non-payments to cause them financial uncertainty and distress. Just over half also said that their ex-partner uses child support as a bargaining chip. When asked if they had informed the DHS of their ex-partner using child support to manipulate their income, a quarter said that they had but received an unhelpful response.

Clearly, the DHS-CS is not well-equipped to handle domestic violence and financial abuse. The only recourse for domestic violence victims is to seek an exemption – which is often unknown, can put them in more danger, and, perversely, rewards violent men by excusing them from financially supporting their children.

What Now?

Our survey demonstrates that the Australian child support system is letting down those who need it most – vulnerable single mothers and their children. Recently, Prime Minister Scott Morrison announced an inquiry into family law and child support, which is the third inquiry into child support since 2003. We remain cautious, though, as previous inquiries have ignored the issues of greatest concern to single mothers, and the new inquiry will reportedly be co-chaired by Pauline Hanson. The inclusion of a politician who used her maiden speech to decry “single mums having more children just to maintain their welfare payments” does not fill us with confidence.

Instead, here are our recommendations for how to start fixing the child support system:

1. FTB(A) calculations

a. Do not recommend Private Collect

Most people are unaware how difficult it can be for single parents to collect child support payments. The system badly needs reform. Photo by Hermes Rivera on Unsplash

b. Provide the option to choose between the Modified Entitlement Method and the Disbursement Method on application forms

c. Do not backdate FTB(A) calculations on the basis of income adjustments

2. Decouple child support from FTB(A) by excluding child support income in FTB(A) calculations

3. Income calculations

a. Do not recalculate child support on income estimates made without documentation

b. Compel both parties to lodge a tax return annually

Both hostile ex-partners and the DHS-CS are impeding single mothers from raising their children in financially stable households. Unless urgent changes are made, children in these families will continue to suffer.

You can read the full Debts and Disappointment report on Analysis and Policy Observatory.

This post is part of the Women's Policy Action Tank initiative to analyse government policy using a gendered lens. View our other policy analysis pieces here and follow us on Twitter @PolicyforWomen

Debts and Disappointment: How Single Mothers and their Children Experience the Australian Child Support System