EXPEDITED CHILD SUPPORT

An Overview of the Commonwealth Countries'
and United States' Procedures for
Establishing and Modifying Child Support

Part 1
The Administrative Child Support Schemes of the Commonwealth Countries (continued)

NEW ZEALAND

A. History of the Existing Scheme

Prior to 1992, New Zealand dealt with family maintenance through a dual system comprising the Liable Contribution Scheme administered by the Department of Social Welfare on the one hand, and court maintenance orders and maintenance agreements administered through the courts on the other hand. The Liable Contribution Scheme introduced in 1981 was designed to recover money for the children of custodians on social assistance through recovering it from the non-custodial parents. It was open to the non-custodial parents to object to the Department of Social Welfare about the amount they had to pay and to apply for a reduction on the grounds of hardship. Under the latter system, maintenance due through either an agreement or an order would be paid through a maintenance officer of the Department of Social Welfare to custodians on social assistance. A number of problems were identified with this dual system, including the following:

  1. both systems were characterized by a high number of ad hoc decisions not at all consistent from region to region;

  2. there was a high level of arrears outstanding that went uncollected;

  3. there were inconsistencies between the two systems in terms of amount of support assessed; and

  4. custodial parents not on social assistance were required to take action through family court, often a lengthy and expensive process.

In 1989, the government appointed the Working Party to develop an improved system. The Working Party included members of the Department of Inland Revenue, the Department of Social Welfare, the Treasury, the State Services Commission, the Department of Justice, the Ministry of Women's Affairs and the Manatu Maori. The structure developed was modelled in large part after the newly established Australian system. The Child Support Bill was introduced into the House in August 1991 and became law in December 1991. The Child Support Act 1991 and the system it created became operational in July 1992.

B. The Child Support Scheme
General

Under the current New Zealand system, the Child Support Agency, part of the Department of Inland Revenue, administers child support. The system is mandatory for those persons on welfare. Parents not receiving social assistance may apply for the services of the Child Support Agency if the liable person is a resident of New Zealand or a citizen and if the custodian is the sole or principal provider of care or sharing custody.

Those people not receiving social assistance have the choice of whether or not to request the assistance of the Child Support Agency. Alternatively, these parents may either proceed through court or arrive at a voluntary agreement with the other party. If the parties draw up a voluntary agreement, they then have the option of having it dealt with by the Child Support Agency, at which point it would be handled administratively and would be subject to all the administrative processes outlined in this section of the report.[26] In cases where there are multiple outstanding issues, the matter would likely proceed through the court process. In this situation, the court would generally also resolve the issue of child support. Again, the parties would then have the option of having the court order handled administratively.

For multiple outstanding family issues, the New Zealand family courts rely on the role of mediation to resolve many outstanding issues. As far back as 1978, the Royal Commission on the Courts stated the following:

The Family Court concept demands that the Family Court should be essentially a conciliation service with court appearance as a last resort, rather than a court with a conciliation service. The emphasis is thus placed on mediation rather than adjudication. In this way the disputing parties are encouraged to play a large part in resolving their differences under the guidance of trained staff rather than resorting to the wounding experience of litigation, unless such a course is inevitable.[27]

In the absence of the court's involvement, the Department of Inland Revenue administers the child support program. This department is involved for the same reason Australia took this approach - because this department has direct access to the information needed to implement existing enforcement measures. Further, the department has expertise in collecting money.

The process starts with the custodial parent's application for child support. The agency then notifies the liable person in writing that an application has been received and accepted and asks that an attached form be completed to confirm details relevant to the assessment.

The Formula

The agency assesses the amount of support liability through application of a formula, the components being

  1. taxable income - based on income tax records;

  2. a living allowance based on the number of dependents supported by the liable parent; and

  3. a child support percentage - the difference between taxable income and the living allowance is multiplied by a percentage rate based on the number of children for whom the liable parent is paying.

Once the Child Support Agency has applied the formula, either the custodian or the liable parent may apply for an order to depart from the formula assessment if certain criteria are satisfied. Prior to 1994, all such requests were handled judicially through the court process. In a situation of shared custody where each parent has care of the child or children for at least 40 percent of the year, both parents are treated as liable and reduced percentage rates are used to calculate liabilities. These liabilities are then offset.

The Departure Scheme

Since July 1, 1994, departure orders might be granted by a review officer through the administrative review process or, failing that avenue, by the family court. This change came about partially as a result of an observed increase in family court litigation following the enactment of the child support legislation. As Bill Atkin of the Victoria University of Wellington reports, "the Child Support Act provoked an enormous amount of litigation. Almost all the proceedings [were] departure applications."[28] Liable parents saw this court avenue as a good option because figures released by the Department of Justice indicated departure orders were granted by the court in approximately 46 percent of cases.[29]

The change to the departure system, brought into effect in the Child Support Amendment Act 1994, means that a review officer must now consider an application before it proceeds to family court.[30]

If an administrative order is in place, parties requesting a review must first apply for an administrative review before applying to court. The parties then have the option to subsequently attend at court if still dissatisfied. The liable parent must continue to pay support pending the review hearing unless he or she successfully applies for a temporary reduction of the payments.

To request a review of one's circumstances for possible departure from the standard formula, either the custodial or the non-custodial parent must send the application to the Child Support Agency so the review officer can review the file and request any other relevant information. Prior to the review, all the related documentation and supporting evidence are sent out to each of the parties, so the parents should be aware ahead of time of the issues for review.

The grounds and facts forming the basis for the review request must be different from any used in previous administrative hearings. Further, no increase or decrease can be granted for an amount less than $520 per year. In addition, the same grounds required to bring a departure order application in court must be satisfied. These grounds parallel those in the Australian legislation:

  1. at least one of the grounds set out in Section 105(2) of the Child Support Act 1991 is satisfied;

  2. it is "just and equitable" to all parties that a departure order is made;[31] and

  3. it is "otherwise proper" that the order is made.[32]

Pursuant to Section 105(2)(a) of the Child Support Act 1991, departure may be granted because of the reduced ability of one of the parties to provide financial support due to special circumstances and

  1. a duty to maintain another child or person with or without special needs;

  2. commitments necessary to support oneself; or

  3. commitments necessary because of a duty to support another child or person.

According to Section 105(2)(b), departure from the standard formula may be granted because, in the special circumstances of the case, the costs of maintaining the child are affected

  1. by the high costs incurred in enabling access to the child;

  2. because the child has special needs; or

  3. because the child is being cared for, educated or trained in a way expected by either of the parents.

Pursuant to Section 105(2)(c), the third possible basis upon which to bring the application is that, as a result of the special circumstances of the case, it would be unfair and unjust to apply the standard formula assessment because

  1. the income, earning capacity, property or other financial resources of either one of the parties was not considered;

  2. previous payments, transfers or property settlements made for the benefit of the child were not considered; or

  3. the custodial parent has an entitlement to the continued occupancy of property in which the liable parent has a financial interest.

There are 41 review officers in New Zealand. All of them are lawyers who have their own independent legal practices and have been contracted by Inland Revenue to function as review officers as required. The hearings are conducted in the child support office closest to the applicant's place of residence. In the situation where the other party lives a distance away, he or she will participate in the hearing over the telephone. The applicant will first outline his or her case to the review officer and then the review officer will telephone the other party to hear the other side. If any new issues arise during the course of the hearing that could not have been anticipated through reading through the documentation and evidence, the other party will be notified of those issues by the review officer and will be asked to respond.

There is no cost to either party attached to requesting an administrative review, and since being implemented in July 1994, the process has resulted in considerably less litigation in court. The standard for conducting reviews agreed to between Inland Revenue and the government is that 85 percent of reviews are to be conducted within seven weeks, with the balance to be conducted within 10 weeks.

Varying a Child Support Order

The Child Support Agency conducts an annual assessment of existing support orders every April. This assessment is based on the non-custodial or the absent parent's income indicated on the tax return from the previous year. The assessment is then sent out to the non-custodial parent, and a notice of entitlement goes out to the custodial parent.

If the non-custodial parent wishes to dispute this revised assessment, he or she may do so on the basis that his or her income for the present year is at least 15 percent less than the amount appearing on the previous year's tax return. In this situation, the person would be required to send to the Child Support Agency a completed estimation form, providing some form of evidence of the income reduction. The estimation form would then be reviewed and processed administratively simply by plugging in these newly provided income figures. A new assessment and notice of entitlement would then be issued.

Another way in which the non-custodial parent might request a modification is on the basis that his or her living situation has changed during the current tax year. To request a revised support calculation on this basis, the person need only inform the office and the assessment will be adjusted according to the formula.[33]

C. Proposals for Reform and Evaluation of the New Zealand Child Support Scheme

In 1993, the government established a Child Support Review Team ("the Working Party") headed by a former family court judge, Judge Trapski. The tasks of the Working Party were as follows:

  1. to examine and consider the child support legislation and the operation of the corresponding scheme; and

  2. to provide recommendations for amendments to the Child Support Act 1991 and for operation of the child support scheme and to propose a methodology for future monitoring of the scheme.[34]

The Working Party commented on a number of shortcomings in the existing New Zealand system including the following.

  1. The formula:

    1. it is too complex;

    2. the living allowance provided for is "artificial, illogical and unrealistic"; and

    3. the formula produces anomalies, particularly when there is split custody, a remarriage of the non-custodial parent or additional children for the non-custodial parent.[35]

  2. The base for the assessment: the taxable income base does not always accurately reflect a non-custodial parent's ability to pay and, in some circumstances, should be expanded.

  3. Maximum liability: the Working Party could see no justification for the maximum liability provision, particularly in the situation where the non-custodial parent has the ability to pay more money.

  4. Failure to consider the true economic costs of caring for a child: the Working Party suggested that, rather than changing the basis for the non-custodian's liability to account for this factor also, the New Zealand government conduct a nationwide study of the actual costs of caring for children.

  5. The departure order provision: it is too complicated and the interpretation is unclear.

  6. Voluntary payments handled administratively: the Working Party recommended that, once a voluntary agreement has been registered, the non-custodial parent should be both notified about the implications and told to cease making payments independantly.

  7. Administrative problems: these problems included the unnecessary volume and complexity of the agency's notices and correspondence; an inadequate service level and slow response to inquiries; the low level of quality of any provided information; and general criticisms about the management of people's personal affairs.

In regard to these identified administrative shortcomings, the agency made a number of recommendations for reform, such as the following.

  1. Improved information management: to provide relevant, timely, accurate and understandable information to clients and front-line staff. A major problem identified in regard to this recommended change was that the computer system in use generated confusing and conflicting notices. This system was originally set up for Inland Revenue's more general functions.

  2. Well-defined and properly contained job descriptions for child support personnel: to deal more adequately with the emotional content of the job at every level. The system utilized a case management approach involving one case officer to follow a case through from beginning to end. The duties of this person included initial contact, registration of both parents, assessment of the child support amount and collection. The Working Party suggested these job demands were too strenuous for most case officers and the job profiles should therefore be redefined.

  3. Sufficient staff training: to allow personnel to deal more effectively and sensitively with clients. There were many criticisms from the public that some of the child support personnel lacked adequate interpersonal communication skills. The Working Party suggested enhanced training in listening, oral communication, negotiation, conflict resolution and stress management.

  4. Access to the agency: to provide more effective and efficient service to both non-custodial and custodial parents. The Working Party suggested installation of a toll-free telephone number because often parents would prefer not to attend at the agency office, and the telephone is the most effective means of communication in those situations.

  5. Stress management programs: to train staff members within the agency itself.

Finally, the Working Party also recommended ongoing independent evaluation of the child support system through the establishment of a group to be known as the Child Support Evaluation Advisory Group to monitor the legislation, to field the comments of parents and to assess the social impact of the child support program on parents and children, particularly in regard to the Maori people. Many of the recommendations contained in the Trapski Report have not been acted on because of the current political climate in the country.[36] However, as noted, some of the identified administrative problems have been acted upon already, and the Trapski Report is used as the major reference guide for potential reform in the future.

Although the Trapski Report and other studies of the child support scheme have resulted in substantial reform, the New Zealand system is not immune from criticism. These observations parallel comments directed at both the United Kingdom and Australian systems. In 1994, Bill Atkin stated, "[it] is doubtful ... whether the Child Support Act has in practice achieved the goal of meeting the needs of children and their custodians."[37] A major criticism of the scheme is that child support has been separated from other family law issues to be treated as a completely distinct issue. In a further 1995 article, Atkin commented:

[The Child Support Act 1991] ... is an attempt to solve the ongoing financial needs of children and care givers but its principles have little to do with equalization of custodial and non-custodial financial positions. It functions on the basis of a set formula which is meant to apply to all families. In particular circumstances, it can therefore lead to gross inequalities. It operates in isolation of property division and tradeoffs to take account of maintenance. The consequence now is that it is most unwise for non-custodial parents to settle property disputes in a way which includes ongoing provision, or for a non-custodial parent to take on additional obligations which are unlikely to lead to an adjustment in child support payments.[38]


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