Reasonable maintenance action exemptions

Reasonable maintenance action

11.7 As discussed in Chapter 9, A New Tax System (Family Assistance) Act 1999 (Cth) (referred to in this Discussion Paper as the Family Assistance Act) requires a person who receives more than the base rate of FTB Part A for a child to take reasonable action to obtain maintenance, where it is reasonable to do so.^[2] This is referred to as taking ‘reasonable maintenance action’ or the ‘maintenance action test’.^[3] To comply with this requirement, a person is generally required to apply for child support, where eligible, and to collect payments either privately or via the CSA.^[4] If a person does not take reasonable maintenance action, the FAO will reduce FTB Part A payments for the child to the base rate.^[5] There is therefore a financial consequence if such action is not pursued.

11.8 Also as discussed in Chapter 9, the reasonable maintenance action requirement is a key strategy to the objective of limiting government expenditure to the minimum required to ensure that children of separated parents receive adequate financial support, and that parents have the primary responsibility of financial support for their children. To this end, the reasonable maintenance action requirement is complemented by the ‘maintenance income test’, which operates to reduce FTB Part A by fifty cents for every dollar of child support, above an exempted amount, until the base rate of FTB Part A is reached.

11.9 Parents who are eligible for child support have 13 weeks after separation to apply for child support or obtain an exemption, as discussed below, to avoid a reduction in their FTB Part A rate. While 13 weeks is a significant extension of the previous 28 day period, which applied before January 2007, it may not be sufficient for those experiencing family violence. ^[6]

Family violence exemptions

11.10 Individuals may obtain exemptions from taking reasonable maintenance action on a number of grounds. Grounds relevant for victims of family violence are:

• ‘violence or fear of violence’;^[7] and

• ‘harmful or disruptive effect’ on the payee or payer (including cases of rape or incest).^[8]

11.11 Centrelink determines all requests for exemptions. The CSA and Centrelink refer persons who may be eligible for exemptions to Centrelink social workers. Indigenous Service Officers (ISOs) may also grant exemptions.^[9] In some cases, family violence victims may contact Centrelink prior to contacting the CSA and receive an exemption at this stage—therefore having no contact with the CSA.

11.12 Exemptions relieve a person from the requirement to apply for child support. Exemptions may also be available to end an existing child support assessment. As discussed in Chapter 9, where payees receive more than the base rate of FTB Part A, the CSA cannot accept their elections to end the assessment without Centrelink approval, unless they are no longer eligible for child support.^[10]

11.13 The Family Assistance Guide describes the role of social workers and ISOs in this context. They should ensure the customer understands that:

• child support is for the financial benefit of the child and the parent caring for the child,

• child support improves the financial resources for children not living with both parents and can be received until the child turns 18 years,

• children are entitled to receive support from both parents, and

• child support does not have to involve contact between the parents. ^[11]

11.14 It notes that social workers may alleviate customers’ privacy fears, refer the customer for other assistance needed, and ‘present the advantages of the [child support scheme] for children in a more positive light’.^[12]

11.15 Indigenous customers are referred to ISOs, who have a specific role. In determining whether to grant an exemption, the Family Assistance Guide provides that ISOs should consider the reason the customer does not want to obtain child support, and the likely effect on the customer and his or her community. Where customers live in remote areas, the ISO should determine if the other party is ‘likely to be in a position to pay child support’, and seek advice from community contacts if necessary.^[13]

11.16 The Family Assistance Guide also provides that social workers or ISOs should assist the customer in verifying the grounds for an exemption, fully exploring avenues such as: health professionals; community agencies; legal practitioners; police; relatives; or friends. It states that, wherever possible, a letter of verification should be obtained from these sources.^[14] The Family Assistance Guide also provides that the social worker should document the verification source, or why verification is not possible.^[15]

Exemptions not in legislation

11.17 Exemptions from the requirement to take reasonable maintenance action are not set out in family assistance legislation. Rather, exemption policy is contained in the Family Assistance Guide and, to a lesser extent, the Child Support Guide. In Family Violence and Commonwealth Laws—Child Support and Family Assistance, ALRC Issues Paper 38 (2011) (Child Support and Family Assistance Issues Paper), the ALRC asked whether legislation should provide that a person who receives more than the base rate of FTB Part A may be exempted from the requirement to take reasonable maintenance action, on grounds of family violence.^[16]

Submissions and consultations

11.18 Most stakeholders submitted that the exemption from the reasonable maintenance action requirement should be stipulated in legislation.^[17] For example, the Welfare Rights Centre NSW argued that ‘a legislated exemption is preferred for reasons of clarity and certainty’.^[18]

ALRC’s views

11.19 Exemptions from the reasonable maintenance action requirement are a significant matter of policy, and therefore should be included in the legislation itself, rather than only in the supporting policy guide. The requirement to take reasonable maintenance action is contained in the Family Assistance Act. Exemptions provisions would therefore be appropriately placed in that Act.

11.20 Including exemptions in legislation acknowledges their significant role in protecting victims by permitting them to opt out from the assessment and collection of child support, without a consequent reduction of their FTB Part A payments. Further advantages are that legislative provisions are more authoritative and transparent, and may provide victims of family violence with increased procedural certainty.

Accessibility of family violence exemptions

Barriers to exemptions

11.21 Exemptions may be inaccessible to victims of family violence for a number of reasons. They may be ‘uninformed or not aware’^[19] of the availability of family violence exemptions or deterred by the complexity of the exemption procedure and the evidence required.^[20]

11.22 Financial barriers may also deter victims from seeking exemptions. Where an exemption is granted, a person does not receive child support payments. The lack of child support payments may not be fully compensated by an increase in benefits. A victim of family violence who obtains an exemption may therefore receive less overall income than if he or she received child support payments.^[21] If this prospect deters victims from requesting exemptions, their safety may be compromised. Conversely, where they do obtain exemptions, decreased levels of income may compound the financial disadvantage already widely experienced by victims of family violence.^[22]

Duration of exemptions and reviews

11.23 Exemption reviews have been identified as a factor that potentially deters victims from seeking exemptions.^[23] The Family Assistance Guide provides that Centrelink should generally review cases in which it has granted an exemption at least every 12 months, although the timeframe varies depending on the circumstances and the type of exemption.^[24]

11.24 The Child Support Guide provides that reviews determine ‘whether the parents’ circumstances have changed and, if so, whether the exemption is still appropriate’.^[25] Information about exemption reviews in the Family Assistance Guide is limited, stating that the form of review depends on the circumstances, so that, for example, it may be conducted by telephone.^[26]

11.25 The Family Assistance Guide provides for the timing of exemption reviews, according to the type of exemption. Family violence exemptions are not specifically listed, and therefore fall under the category ‘other circumstances’, for which the time period provided is ‘as applicable’.^[27]

11.26 The ALRC understands that exemptions due to violence or fear of violence are initially granted for a 12-month period. Centrelink social workers review the exemptions at the conclusion of this period. In the Child Support and Family Assistance Issues Paper the ALRC noted its understanding that exemptions may be granted on a permanent basis at the 12-monthly review. The ALRC has since received different information regarding the availability of permanent exemptions, and the practice of permanent exemptions in cases of family violence is not articulated in the Family Assistance Guide.

Submissions and consultations

11.27 In the Child Support and Family Assistance Issues Paper the ALRC posed several questions in relation to family violence exemptions from the reasonable maintenance action requirement. The ALRC asked if legislative or policy changes are required to ensure exemptions are accessible^[28] and, in a related question, whether CSA staff should be required to provide information about family violence exemptions when dealing with child support applications.^[29]

11.28 Also in relation to exemption accessibility, the ALRC asked whether changes are needed to family assistance and child support legislation and policy:

• to address the financial disadvantage of victims of family violence who obtain an exemption;^[30] and

• to ensure that exemption periods are of an appropriate duration.^[31]

Barriers to accessibility

11.29 Stakeholders reported that customers are often unaware of the availability of exemptions, and this is a barrier to accessibility.^[32] The Australian Domestic and Family Violence Clearinghouse (ADFVC) reported that many participants in a study it had undertaken were ‘not aware of the family violence exemption or had only found out about it after applying for child support.^[33] The Commonwealth Ombudsman also noted that it had received complaints from child support and FTB recipients who said they were unaware of family violence exemptions.^[34]

11.30 Stakeholders also commented that customers are not provided with information about exemptions. The Council of Single Mothers and their Children (CSMC) submitted that there is a lack of information about exemptions from Centrelink and CSA staff, which results in a lack of awareness about their availability.^[35]It notes that ‘it is particularly difficult to locate information on family violence on the Child Support Agency website’.^[36]

11.31 National Legal Aid stated that, along with a lack of awareness of exemptions, customers may decide not to pursue an exemption as they are not properly informed of consequences. It noted that the decision not to pursue an exemption may be based on reasons including ‘fear, privacy concerns, and/or because the customer thinks that even with the exemption they will not receive an increased rate of FTB by reason of income’.^[37]

11.32 Stakeholders further noted that family violence is generally under-reported or minimised, and customers may not disclose family violence.^[38] The ADFVC noted that barriers to disclosure include:

concerns about not being believed; having to retell their story of violence to multiple service providers and organisations, which women found retraumatising; and not recognising their experience as domestic violence.^[39]

11.33 The Australian Association of Social Workers (Qld) (AASW) raised the issue of evidence required to support an application for exemption:

It is our view that consultation with the domestic and family violence service sector with emphasis on services for immigrant women would be useful to determine appropriate levels of evidence that are not too onerous on the victim and do not require a personal protection order. Women report that there appears to be a heavy reliance on personal protection orders as evidence of domestic and family violence. It is our experience that there are many circumstances where even with the existence of serious physical assault, it is not safe to pursue such an order.^[40]

11.34 The Ombudsman cautioned that it should not be assumed by CSA and Centrelink staff that victims of family violence will choose not to receive child support.^[41] National Legal Aid also commented that victims of family violence may wish to obtain child support and should be provided with various supports.^[42]

11.35 The Non-Custodial Parents Party (Equal Parenting) commented generally that it supports the removal of the ‘artificial link’ between FTB and child support—however, it opposed the reforms proposed in the Child Support and Family Assistance Issues Paper.^[43]

Providing information about exemptions and screening

11.36 A number of stakeholders considered that the CSA should be required to provide information about exemptions when dealing with applications for child support. The ADFVC stated that:

For victims of family violence to make informed decisions that impact both on their safety and well-being, they must have information about their rights and entitlements.^[44]

11.37 The Ombudsman commented that CSA staff should provide information about family violence exemptions when dealing with applications for child support as ‘it is likely that a victim of family violence may not have thought to tell the CSA about their situation when applying for a child support assessment’.^[45]

11.38 A couple of stakeholders expressed qualified support for family violence screening in this context.^[46] The ADFVC considered that screening by trained officers would be useful to identify victims and provide them with targeted information.^[47]

11.39 National Legal Aid commented on information that should be provided to victims of family violence who choose not to obtain exemptions. It stated that legal advice should be recommended to such customers, and that the CSA and Centrelink ‘should clearly explain the steps that the CSA would take to contact the other parent about payment of child support, including the time frames involved, allowing sufficient time for the customer to obtain advice and plan for their safety’.^[48]

Financial disadvantage due to exemptions

11.40 There was some overlap in stakeholder responses to the issue of financial disadvantage as a result of exemptions, and the issue of reforms to ensure that persons who use family violence are not relieved of financial responsibility when victims obtain exemptions.

11.41 National Legal Aid described the ‘unfortunate paradox’ presented by the family violence exemption.^[49] It stated that, while an exemption may be in the best interests of the child and the carer parent, they may be denied the financial support required for their day-to-day needs as a consequence. It provided the following case study.

A woman who had been on an exemption for six years due to family violence, discovered later that the liable parent was on a substantial income and that she had foregone a considerable amount of funds which could have provided significant financial support for the child. … The client suffered what she considered a significant financial penalty by having an exemption in place to protect herself from family violence. The funds in question would have made a demonstrable difference to the child in terms of education and other opportunities.^[50]

11.42 National Legal Aid considered that while safety must be prioritised ‘there are not sufficient resources to ensure that all customers with a family violence exemption are fully compensated for their loss of child support’.^[51] Consequently, it considered that all options should be explored in identifying the appropriateness of a family violence exemption. It further stated that advice and support should be provided so that customers may make ‘informed decisions about their safety and the effect of pursuing child support’.^[52] It noted that the amount of child support the customer is eligible to receive may be a relevant factor in such decisions.^[53]

11.43 Stakeholders suggested a number of other reforms to address financial disadvantage due to exemptions. The ADFVC commented that some women in their study, Seeking Security: promoting women’s economic wellbeing following domestic violence, who had obtained an exemption were worse off financially than if they had received child support. To address this issue it supported

the child support system used in Sweden and Norway, whereby the government provides guaranteed child support payments directly to recipients, ensuring payments are made in full and on time. Payers are pursued by the government, which is infinitely better resourced to do so than individual, often vulnerable women. As a result, payees do not experience the risks involved in investigating ex-partners or pursuing non-payment themselves. Single parents can also apply for advance maintenance directly from the government. The approach aims to provide financial surety for resident parents and provide some measure of safety from retaliation, while keeping non-resident parents accountable.^[54]

11.44 The ADFVC clarified that, in a system of guaranteed payments, the exemption option should be preserved, as some women in their study considered that any attempt to compel child support payments would increase the risk of further abuse.^[55]

11.45 There was some focus on the role of the CSA in collecting child support. The CSMC stated that:

The current system that leaves collection of child support as an individual responsibility (sometimes facilitated through the CSA) leaves women escaping violence little option to ensure their safety, but to forgo child support payments.^[56]

11.46 It suggested that the government ‘take responsibility for collection of the payments (eg, through the CSA). This would remove the need for individuals to be responsible for arranging collection of payments from someone who uses violence against them’.^[57]

Duration of exemptions and reviews

11.47 In relation to the duration of exemptions, the Law Council of Australia commented that the time periods—and the provisions regarding exemptions generally—‘appear to be appropriate’.^[58] The ADFVC stated that the grant of a permanent exemption at the 12 month review was not the experience of participants in a study it conducted, who ‘expressed frustration about having to reapply for the exemption multiple times and saw this as a needless process’. It noted that ‘consistency of practice would improve this process’.^[59]

11.48 The AASW noted that information of the availability of permanent family violence exemptions at the 12 month review is not readily available. It stated that the information should be available so that victims may make informed decisions, and prepare for a review of their circumstances at the end of this period.^[60]

11.49 National Legal Aid commented generally on the Family Assistance Guide, stating that it is important for exemption policy ‘to be clear and consistent with the rationale for decisions being readily capable of being ascertained’.^[61]

ALRC’s views

Improving accessibility of exemptions

11.50 Victims must be able to opt out of the child support scheme where obtaining child support would compromise their safety. Exemptions from the reasonable maintenance action requirement should therefore be readily accessible to victims.

11.51 On the other hand, agencies should not assume that all victims of family violence desire an exemption, nor that exemptions are the appropriate response to all family violence cases. This would conflict with the principle of self-agency discussed in Chapter 2. A key theme of Chapters 9 and 10 is improving the administration of child support cases to protect the safety of victim, thus facilitating their participation in the child support scheme. Reforms to increase the accessibility of exemptions should complement, rather than undermine, reforms to increase accessibility of the child support scheme for victims of family violence.

11.52 In the ALRC’s view, reforms proposed in Chapter 4 will increase the accessibility of exemptions. In particular, family violence screening by the CSA, FAO and Centrelink, and inter-agency information sharing about ‘safety flags’, should remove barriers to exemptions. These measures will increase the likelihood that those eligible for family violence exemptions are identified and provided with targeted information.^[62] Other Chapter 4 proposals that should improve the accessibility of exemptions are:

• provision of information by agencies to customers about how family violence is relevant to child support and family assistance—including information about exemptions; ^[63]

• referral of all customers who disclose family violence to Centrelink social workers;^[64]

• training for agency customer service staff, Centrelink social workers and ISOs in relation to:

• ensuring customers who disclose family violence know about their rights and possible service responses—including exemptions; and

• the nature, feature and dynamics of family violence, its effect on victims, and responding to and interviewing family violence victims.^[65]

11.53 The ALRC notes stakeholder comment that there is a reliance on personal protection orders as evidence of family violence in the administration of exemption policy. This is contrary to the procedure contained in the Family Assistance Guide. The reason victims report more onerous evidence requirements than provided for in the Family Assistance Guide is unclear. It could perhaps be attributed to limited staff understanding of the policy, or misunderstandings and communication difficulties—perhaps heightened in circumstances where victims are experiencing distress or upheaval. If this is the case, the proposals described in Chapter 4 should address the issue—in particular, those regarding providing information to customers, and staff training.

Potential for exemptions to cause financial disadvantage

11.54 The ALRC considers that the most effective way of addressing the potential for exemptions to lead to financial disadvantage is to improve the safety of victims through the administration of child support cases. As noted above, this should enhance the child support system’s accessibility, and limit the uptake of family violence exemptions to those cases where victims have made an informed decision that exemptions are the best strategy to ensure their safety.

11.55 A critical component of this approach is providing victims with information about the administrative options that may address any safety concerns. Customers who disclose family violence should be referred to social workers to discuss the services and supports available to victims, amongst other relevant matters. In the child support context, a key service that may improve victim safety is CSA collection of child support. As discussed in Chapter 9, CSA collection minimises inter-party contact about child support, and generally relieves victims from the responsibility of collecting payments.

11.56 Other reforms, proposed in Chapter 9, would improve the safety of victims by the CSA seeking their input before taking significant action on their case. Information about these measures may also assist victims in making appropriate choices in relation to participation in the child support scheme.^[66]

Duration of exemptions and reviews

11.57 The administration of family violence exemptions should apply consistently and transparently. Therefore the ALRC’s preliminary view is that the Family Assistance Guide should provide more information regarding the duration of family violence exemptions—both for an initial period, and on review. If this is variable according to circumstances, this should be specified in the Family Assistance Guide—and the factors to which the social worker should have regard in determining the duration of the exemption should also be included.

11.58 There is a point of tension in enhancing the accessibility of exemptions, and enhancing the overall accessibility of the child support system for victims of family violence. This issue of the duration of exemptions sits at this tension-point. The ALRC notes stakeholder comments that numerous reviews are frustrating and potentially re-traumatising for victims of violence. However, the ALRC also acknowledges that reviews of exemptions may be desirable as, in many cases, the risk and fear of violence may decrease over time.

11.59 In such circumstances, a review of an exemption—and the associated contact with a social worker—may provide the victim an opportunity to engage with the child support system, to his or her potential financial benefit. Periodic reviews may enhance the accessibility of the child support scheme, and ensure that a victim does not incur financial disadvantage.

11.60 Periodic reviews may also be a way of ensuring that a victim remains visible within the system, with access to referrals and other supports. This function may be further consolidated or enhanced, given the ALRC’s proposals regarding the training of social workers.^[67] The proposed training may also be useful in assisting social workers to alleviate the frustration or distress that some customers experience as a result of periodic reviews.

11.61 For the above reasons, the ALRC does not propose reforms to the availability of permanent exemptions. In the ALRC’s preliminary view, more detailed information about the duration of exemptions, including the availability of a permanent exemption, if applicable, should be provided to victims of family violence, in particular, prior to exemption reviews. Further, information about the review process should be readily available. The ALRC considers this information should be stated clearly in the Family Assistance Guide.

Consequences of family violence exemptions

Persons who use family violence relieved of financial responsibility

11.62 The operation of the exemption policy as reflected in the Family Assistance Guide and the Child Support Guide has some problematic consequences. Most notably, persons who have used family violence do not have to pay child support when the victim obtains an exemption. Persons who use family violence are therefore not required to take financial responsibility for their children in these circumstances.

11.63 The Child Support and Family Assistance Issues Paper noted the alternative model provided by some US states, where child support debts accrue while exemptions are in place. Once the exemption expires, the person who has used violence is liable to pay the debt in full.^[68] This may prevent persons who use family violence from benefiting financially when victims obtain an exemption.

Victims required to pay child support

11.64 A further issue is that there is no barrier to prevent a person who has used family violence from applying for child support, in cases where the victim has obtained a exemption. As a result, victims who have obtained an exemption may in some circumstances be required to pay child support to the parent who has used violence. This may occur following a change to care arrangements—for example, where an arrangement changes so that the person who has used violence provides more care.

Submissions and consultations

11.65 In the Child Support and Family Assistance Issues Paper, the ALRC asked whether reforms are needed to ensure that persons who use family violence are not relieved from financial responsibility when victims obtain exemptions from the requirement to take reasonable maintenance action.^[69] The ALRC also asked if a person who has been granted an exemption due to family violence should also be exempt from paying child support to the person who has used family violence.^[70]

Exemptions relieve persons who use family violence of financial responsibility

11.66 Stakeholders considered that exemptions that have the effect of relieving persons who use family violence of financial responsibility is a significant problem.^[71] The CSMC articulated the problem as follows:

those who use violence, in effect, receive a bonus for their behaviour—not having to contribute to the financial support for their children. Conversely, children are denied the financial support for which they would otherwise be entitled to.^[72]

11.67 The National Council of Single Mothers and their Children (NCSMC) expressed a similar concern. Both the NCSMC and the CSMC suggested the introduction of a fine or penalty for persons who use family violence to address the issue. The NCSMC stated that a ‘Domestic Violence Payment and Transfer Scheme’ should be established,

premised upon the notion that perpetrators of violence should not be financially rewarded for their criminal conduct whilst ensuring that agencies protect victims. Under this proposal, perpetrators of violence would be required to make a financial contribution to this scheme. The payment would not be child support but a domestic violence penalty and it would be collected by a government department other than the Child Support Agency.^[73]

11.68 Several stakeholders stressed that the safety of victims and their children is more important than ensuring that persons who use family violence are not relieved of financial responsibility for their children.^[74] For example, the Ombudsman considered that ‘the overriding priority must be the safety of the carer and the children’, and pointed out that exemptions may ‘reduce the violence and fear of violence experienced by a payee that stems from applying for child support against a payer’.^[75]

11.69 The Ombudsman also stated that this is a ‘difficult policy area’, and suggested that

it would be appropriate for Commonwealth laws, and the arrangements to administer them, to support and protect victims of family violence as far as possible, so that they can be safely encouraged to seek child support. We consider that this requires a more coordinated approach by CSA and Centrelink when a person discloses a fear of family violence.^[76]

11.70 Similarly, National Legal Aid submitted that ‘the best systems response’ is training, screening and risk assessment, and agency collaboration ‘to ensure consistency in the information provided and that all options are explored with the customer’.^[77]

Exemptions from paying child support for victims of family violence

11.71 Stakeholders generally supported the proposition thata person who has been granted an exemption from the requirement to take reasonable maintenance action due to family violence should also be exempt from paying child support to the person who has used family violence.^[78] The AASW stated that, in their experiences with family violence victims, many ‘do not forgo potential income from child support lightly and to also be required to pay child support is not reasonable under these circumstances’.^[79] Maria Vnuk noted that her research indicates that there is ‘considerable churn’ for female payers—that is, members of this group had been payee parents at other times in the duration of their child support case or cases.^[80]

11.72 National Legal Aid weighed up several factors in addressing this issue. It noted that a ‘blanket rule’ in which exempted parents are not required to pay child support could result in children being financially unsupported in cases where child support payment is appropriate. It also noted that an exempted payer parent may wish to provide support to his or her child.^[81] On the other hand, National Legal Aid considered that such a rule may deter persons who use violence from manipulating care arrangements for child support reasons and, on balance, considered this the ‘least potentially detrimental solution’.^[82]

11.73 The Ombudsman offered a different perspective, reiterating that safety must be the overriding priority in administering exemptions:

Extending the exemption to apply to both parents may seem fair, but would arguably not achieve the same result of protecting the safety of the carer and children. It could mean additional financial hardship for the children, depriving them of a level of financial support both now and possibly into the future. It could also lead to further violence to the (now) former carer, or even the child, if the current carer is unable to obtain child support on the basis of past events and behaviour.^[83]

11.74 The Ombudsman also pointed out that such a reform requires a fundamental review of exemptions. Currently, no findings are made in the process of granting exemptions. However, the Ombudsman also noted that if granting an exemption to a person could affect the other parent’s entitlement to current or future child support, then ‘procedural fairness calls for a more stringent test regarding the presence of violence or fear of violence’ and there needs to be ‘an objective test that would also call for a response from the alleged perpetrator’.^[84]

ALRC’s views

Exemptions relieve persons who use family violence of financial responsibility

11.75 It is problematic that family violence exemptions may relieve persons who use family violence of financial responsibility for their children. The ALRC considers that the best way to address this issue is to improve the accessibility of the child support scheme for victims, thereby enhancing their ability to participate in the scheme. To this end, the ALRC has incorporated a number of stakeholder suggestions to improve the child support scheme and establish a consistent inter-agency response to family violence. These proposed reforms are set out in Chapter 4—and some of the key proposals are discussed above.

11.76 Exemptions protect victims by addressing the risk of violence that may otherwise be triggered by a child support application or liability. In cases where exemptions are deemed necessary by victims, their safety must be prioritised over concerns about relieving persons who use family violence of their financial responsibilities.

11.77 The ALRC does not propose to introduce a system, similar to that in some US states, whereby child support debt accrued during an exemption period is payable when the exemption is lifted. Requiring a person who has used violence to pay a child support debt at a later stage may compromise the safety of victims. The ALRC considers that reforms to impose financial penalties against persons who use family violence would be a quasi-criminal response, which is not accommodated by the objects or the operation of the child support scheme.

Exemptions from paying child support for victims of family violence

11.78 Reforms to make family violence exemptions available to child support payers who have previously been exempted from obtaining child support may have unintended and adverse consequences. Making exemptions available to payers, or to customers who are payers for periods of their child support case, may create an incentive to manipulate claims of family violence. Persons who use family violence—and others—may apply for an exemption solely to avoid child support liabilities. This may financially disadvantage victims, as well as other members of the general payee population, and their children.

11.79 Making exemptions available to child support payers would also necessarily reduce the accessibility of exemptions. In the existing system, granting an exemption to a parent does not affect the other parent’s rights or entitlements. Therefore, there is a relatively low threshold for supporting evidence, as demonstrated by the policy contained in the Family Assistance Guide.Further, Centrelink does not—and need not—make findings of family violence to grant exemptions, and there is no need to inform the other party and obtain his or her response to allegations.

11.80 However, if such a reform were introduced, granting an exemption to a parent may affect the other parent’s current or future child support entitlements. As pointed out by the Ombudsman, this would require a fundamental overhaul of the exemption process. The updated process would import procedural fairness requirements—including providing the other party the opportunity to respond, and providing him or her with relevant information and evidence. It would also require more stringent evidence standards to support an exemption application.

11.81 This tightening of procedure is likely to undermine the effectiveness and accessibility of exemptions, and seriously compromise victims’ safety in those cases where exemptions are the appropriate protective response. Consequently, the ALRC does not propose reforms broadening the availability of exemptions to payers, or potential future-payers.

Partial exemptions

Background

11.82 As discussed in Chapter 9, payees may elect to collect child support privately. Unless a payee has been granted an exemption, he or she must collect the full amount of child support to fulfil the ‘reasonable maintenance action’ requirement. If the payee does not collect the full amount, he or she may be required to change from private collection to CSA collection.^[85] If the payee does not comply, his or her FTB Part A is reduced to the base rate. The FAO will assume that the payee is collecting the full amount of child support, unless the payee advises otherwise.^[86]

11.83 The Ombudsman provided a useful summary of how this works in practice:

The CSA reports each ‘private collect’ payee’s ‘entitlement’ to Centrelink, which then assesses the payee’s FTB Part A on the basis of an assumption he or she has collected 100% of their assessed entitlement, on time and in full. The automated transfer of data between the CSA and Centrelink is an efficient way to assess fortnightly FTB entitlements. It is subject to a ‘reconciliation’ at the end of the financial year, where the payee/FTB recipient is asked to confirm that he or she collected their child support. If the payee advises Centrelink that he or she received less child support than he or she was entitled to it places them at risk of being found to have failed the ‘reasonable maintenance action’ test.^[87]

11.84 The application of the reasonable maintenance action test in these circumstances may affect victims of family violence. Where payees do not disclose that they are not collecting the full amount of child support, they may be disadvantaged by having their FTB calculated according to a higher child support income than they are actually receiving. Victims of family violence may be affected by these consequences. As stated in Chapter 9, victims may elect to collect privately, and collect less than the assessed amount, due to fear of, or coercion by, a person who has used violence.

11.85 The Centrelink e-Reference—described in Chapters 5 and 12—provides that payees may obtain a partial exemption to enable them to privately collect less than the full amount of child support.^[88] In such cases, payees will not be required to change to CSA collection. In addition, their FTB Part A will be calculated on the amount of child support actually received, rather than the amount of the child support assessment.^[89] Partial exemptions are available on grounds of family violence.^[90]

11.86 The e-Reference is not a publicly available document, and neither the Family Assistance Guide nor the Child Support Guide explicitly mentions partial exemptions. The Family Assistance Guide does provide that where payees receive less than the assessed child support amounts, their FTB may be reduced to the base rate, except where the payee applies for CSA collection or an exemption has been granted.^[91] It also provides that:

Unless the applicant/recipient has been granted an exemption, they must privately collect 100% of the amount payable under the order/agreement or the formula assessment, otherwise CSA collection will be required.^[92]

11.87 FaHCSIA, in correspondence with the ALRC, has indicated that it considers that it could be clearer in the Family Assistance Guide that payees with an exemption may privately collect less than the full amount of assessed child support, and it will update the Family Assistance Guide accordingly.^[93]

Submissions and consultations

11.88 In the Child Support and Family Assistance Issues Paper, the ALRC asked if, in practice, the requirement to take reasonable maintenance action affects victims of family violence who collect less than the full amount of child support. It further asked if any reforms are needed to ensure that victims of family violence in these circumstances are not financially disadvantaged by receiving less FTB Part A.^[94]

11.89 The Sole Parents’ Union illustrated the issue:

Some victims of violence elect to collect child support privately as a way to avoid child support altogether. Because of the requirement to take reasonable maintenance action, they are then forced into the situation [where] they either have to lie about the child support collected, or they settle for minimum family tax benefit. Neither situation is acceptable.^[95]

11.90 The Ombudsman submitted that the policy currently ‘seems only to allow a payee who fears family violence to choose to receive all their child support, or none of it, at the risk of losing their FTB’.^[96] The Ombudsman also considered that the Family Assistance Act ‘does not require a rigid ‘all or nothing’ approach to maintenance action’.^[97]

ALRC’s views

11.91 Partial exemptions would appear to address the issue of adverse FTB consequences for family violence victims who privately collect less than the full amount of child support. However, partial exemptions are not adequately provided for in the Family Assistance Guide and, unsurprisingly, stakeholders appeared unaware of the existence or availability of partial exemptions for victims of family violence.

11.92 The ALRC considers that the Family Assistance Guide should be amended to provide explicitly for partial exemptions, and supports FaHCSIA’s intention to update and clarify the text. This is an important strategy for raising awareness among customers and their advocates.

11.93 The ALRC further considers that customers should be generally informed of partial exemptions, and that this should be a component of the exemption-related information to be provided to customers in accordance with Proposal 4–8.

11.94 More targeted information about partial exemptions should be provided by Centrelink social workers to payees who have disclosed family violence, particularly when they end CSA collection. This measure is accommodated by Proposals 9–3, which provides that payees who elect to end an assessment or CSA collection should be referred to Centrelink social workers, and also Proposal 4–10, which provides that all customers who disclose family violence should be referred to Centrelink social workers.

11.95 Proposed reforms regarding screening may also assist the provision of targeted information about partial exemptions, insofar as they would facilitate referrals to Centrelink social workers. In particular, the ALRC proposes in Chapter 9 that the CSA should screen for family violence, and refer payees who have disclosed family violence to Centrelink social workers, when payees request to end a child support assessment, or elect to end CSA collection of child support.^[98]