Overseas parents owe almost $1 billion in child support

Almost $1 billion is owed in child support by people living overseas, with one person in debt for $4.3 million. What impact does this have on parents struggling to raise their children and how is the Government tackling the issue?

For nine years, Tania Symes has hoped for some financial support from the father of her youngest boy.

But during that time, not a single cent has arrived from her former partner after he packed up and moved to Australia.

Symes estimates that she has missed out on about $70,000 in child support payments, money that would have been life-changing when she was struggling to feed her family.

“We were living in Auckland at the time and we just couldn’t afford to live. The last six months we were living up there we were living off food parcels and food grants, my weight went from 55kgs to 45kgs because I was earning the minimum wage.

“I messaged him when living in Auckland and said I was really struggling and his response was ‘Go and see WINZ, they’ll help you’.”

Now living in Feilding with her parents, Symes has a better-paying job and is saving for a house deposit.

Receiving child support would still be a huge help in raising her son, she says, who is now 13.

She remains in sporadic contact with her former partner, knows where he lives and that he is working.

But despite providing those details to the Inland Revenue Department (IRD), along with his cell phone number, nothing has happened.

Symes is just one of thousands of parents struggling to raise their children without financial support from their former spouse.

There is $3.2 billion of child support owing, with $909m owed by overseas parents and $1.5b owed domestically. The remainder is made up of debt owed to non parent carers and parents who are now based in Australia, along with debt owed by employers who hadn't deducted from liable parents' wages.

In the 2016 financial year $474m in child support was collected, with $280m passed on to parents and $194m going into Government coffers to offset the sole parent support benefit.

For chasing debtors across the Tasman, the IRD has the benefit of a reciprocal agreement with the Australian Department of Human Services that can collect on its behalf.

Figures show that since the agreement began in 2001, $428m has been sent back to New Zealand while $729m is still being sought.

“Only a small portion of child support customers, that Inland Revenue considers are residing in Australia, are compliant,” the IRD told Revenue Minister Judith Collins in a February briefing.

The IRD also uses private debt collectors to chase up some of their more problematic clients and has collected almost $1m since 2014, although it has spent a third of that on agency fees.

Figures released under the Official Information Act reveal that the biggest defaulters owe astronomical amounts in child support.

As at May 31, the 20 highest outstanding debts for liable parents living in Australia total $26m and range from $930,000 to $2.1m.

For parents living overseas, but not in Australia, that figure is even higher.

The 20 highest debts internationally total $55.5m, with one parent owing an eye-watering $4.3m.

Most of the money owed in child support is in penalties.

The longer a person avoids paying child support the more penalties they accrue, with compound interest continuing to inflate the sums.

For domestic defaulters, 79 percent of the money owed is in penalties while that figure is 90 percent for those living overseas.

Last year the Government announced it was relaxing its penalty rules and would consider wiping debts to try to encourage parents to pay what was originally owed in child support.

The law still needs fixing

In 2015 the formula for calculating child support payments was also tweaked.

It now takes into account the income of both parents, how often they care for their children and the cost of raising a child.

But it was criticised for some shortcomings, such as not considering dependent children from new partners in a relationship.

Rob St George believes the system remains grossly unfair to some parents.

As the founder of childsupportnz.com, a website he started for both receiving and paying parents, he says he constantly hears from people placed in unfair situations.

As a father paying child support himself, with a partner who was receiving child support from her former spouse, he had first-hand experience of both sides.

“For example, if her ex stops paying my family is disadvantaged because I’m still paying for my kids and because she lives with me, she’s not entitled to Working For Families.”

St George cites a lack of parental alienation laws in New Zealand, which means that when splits turn bitter one parent can poison their child against the other.

The way child support was calculated was also confusing, with little information on how IRD had reached their cost estimate for raising a child.

Some of those who were most affected were women working for the minimum wage while their ex-partners were on the benefit.

If there was a 50/50 shared care arrangement, the working parent would be paying their counterpart despite being unable to afford to do so.

“It’s not this lady’s fault that her ex is on the benefit but she’s supposed to pay for it, she already pays tax, why does she also have to pay for her ex’s life choices.”

In its briefing to the Minister, the IRD said the recent changes to the Act had received mostly positive feedback.

But despite the recent reforms, child support debt continued “to be a challenge”.

Newsroom wanted to speak to the IRD about how they were chasing up overseas debtors and criticisms of the child support scheme.

Senior media advisor Pete van Schaardenburg said that would not be possible and asked for questions to be written in an email, before responding that no comment could be made before deadline because “one of the managers required to sign off on it is on leave”.

Judith Collins did respond to a request for comment and said while the IRD was required to charge penalties on outstanding child support they now had greater flexibility to write off penalties for customers who engaged with the department.

There were already measures in place to collect overseas child support payments and the IRD was regularly reviewing those methods.

Back in Feilding, Symes doesn’t think the system is working and just wants someone to do something so she can better provide for her family.

“They just need to get their butt into gear, I want some money for my son.”

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

FOUNDING PARTNERS