New Zealand Moves Toward Sanity in Child Support Laws

In New Zealand, fully 79% of all parents with child support orders are behind on their payments.  Read about it here (TVNZ, 10/23/11).

I recently wrote about the State of Ohio in which about 70% of parent with child support orders were delinquent.  Well, it turns out that New Zealand is actually worse off.  But as the article makes clear, the reasons are essentially the same; support levels are set unrealistically high in the first place, they’re almost impossible to modify downward in case of a lost job or other change in circumstances, and penalties for non-payment that are supposed to encourage timely payment actually do the opposite.

Figures released to the Sunday Star-Times show that of the 179,500 people liable for child support, 141,464 (79%) are behind…

“It’s just the amount that causes resentment,” [Hamilton Budgeting Adviser Claire Mataira] said…

Parents who did not pay their child support on time were charged the greater of $5 or 10% of the unpaid amount. On top of that, they faced a $1 or 2% penalty on the total overdue amount – including incurred penalties – every month.

Just to make sure you got that last, New Zealand charges 7% on all overdue amounts.  Then it compounds that interest by charging 7% on penalty amounts.  My guess is that it’s at least fairly common for a father to pay what the order says he owes and still fall further behind during the month he made the payment.  Resentment?  You bet.

Into the bargain, New Zealand child support authorities have powers those in the U.S. don’t, at least not yet.  Those include the power to obtain warrants for the sale of personal or real property to satisfy the indebtedness.  The latter apparently have never been used, but the former are not uncommon.  So if Americans think having your license to drive taken away is both bad and nonsensical, understand that in New Zealand authorities can take your car.

Not surprisingly,  when parents get behind on their payments and penalties kick in, they tend to discourage paying.  The reaction in many cases is to try to avoid the obligation altogether or in part by hiding income or emigrating to Australia.  A surprising number of New Zealand child support cases are administered by Australian authorities.

“Although penalties play an important role in encouraging parents to meet their obligations, if they are excessive they can discourage payment,” [Revenue Minister Peter] Dunne said. “Reducing penalty rates in certain circumstances, combined with other effective enforcement measures, will help parents resume payments.”

All of that is pretty familiar to Americans.  What’s decidedly less so is that the New Zealand government has decided to do something constructive about its child support debt crisis.  Read about it here (New Zealand Herald, 10/23/11).  For months, the government has been taking comments on the existing system and seems about ready to make new laws and regulations governing divorced parents with children.  Those will take effect in April of 2013, which seems like a long time just to refigure how child support and penalties for non-payment will be administered.

And I suppose it goes without saying that the reported fix won’t do nearly enough to treat non-custodial parents in ways that ensure payment of reasonable support amounts with reasonable ways of modifying support orders.  Only in a fantasy world would that happen and New Zealand doesn’t qualify no matter how many Tolkien dramas were filmed there.

Still, I’d argue that the fact that New Zealand is backtracking on the most draconian of its child support regulations is a step in the right direction and one I wouldn’t be surprised to see the rest of the world emulating in the near future.  Face it, child support laws in the English-speaking world are unjust and unreasonable in many different ways.  Plus, they affect an enormous number of people.  That’s a situation that’s ripe for change.  So we may well attend to what New Zealand does and what effects it has.

An overhaul of child-support payments will reduce the cost for part-time parents who spend just 28 per cent of the time with their children – two nights a week.

Revenue Minister Peter Dunne, who announced the changes, said they would recognise parents as “shared carers” of children if they had the child for 28 per cent of the nights down from 40 and would give greater consideration of both parents’ incomes when determining payments.

So parents who have their children two nights out of the week will see their support levels drop.  So will non-custodial parents whose exes work and earn.

Dunne said the proposed changes to the child-support formula would apply from April 2013, and changes to payment, penalty and debt rules would be introduced the next year. It would mean that some parents would receive lower payments but it would be a “fairer” system.

Now, that 28% care threshold contains a catch; most non-custodial parents have the usual every other weekend order meaning they have only half the parenting time required to qualify for the reduction.  So that particular change may sound good, but the truth is that it just won’t affect that many parents.  Somehow I’m not surprised. 

Union of Fathers president Allan Harvey welcomed the overhaul but said changes could go further. Fourteen per cent of nights in one parent’s care should qualify as “shared care” status – the equivalent of every second weekend.

“It’s not usual for children to be in one parent’s care every weekend.” Harvey also said family household income, when one of the former partners took a new partner, should be taken into consideration, rather than an individual parent’s.

So the new rules in New Zealand are far from the type of sensible, fair approach to child support that we might wish.  But it’s a step toward rationality.  More important, it’s not more of the same – the ever harsher, ever more punitive approach we’ve come to expect.  And in that way, it may be a harbinger of things to come.  Some day we may look back on these relatively modest changes and see that this was the time the tide turned.

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