Australian children pick up the tab for parents failing to pay

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By RAILI SIMOJOKI

Twelve years ago, Kerry’s* ex-partner kicked her and her two-year-old daughter out of their family home. When she asked him for child support, he dumped a box of nappies at her front door.

It was one of few voluntary contributions he’d make to raising their child. Instead, Kerry was left to withdraw money from her superannuation to cover rent, food, medicine and every other need for her growing child.

Fast-forward to present-day and the amount he owes in child support has reached $41,000. He hasn’t lodged a tax return for 10 years. The Child Support Agency docks his wages, but Kerry goes for months without payments because he’s constantly changing jobs.

It’s up to her, not the agency, to track him down to each new workplace. She googles phone numbers he calls her on, checks his emails to her daughter and organises to pick-up their child from his latest employer.

“I hate involving my daughter, but I’m desperate,” she says.

Australia’s total child support debt hit $1.6 billion this year. Around a quarter of agency payers – mostly fathers – are in debt. Parents entitled to child support, mostly mothers, have a median income of $23,953.

Refusal to pay child support is condemning single mothers and their children to great hardship.

The amount of unpaid child support in Australia hit a staggering $1.6 billion in 2019.

Helen’s* life runs parallel to Kerry’s. Her ex-partner is a successful executive in the insurance industry, yet he owes $20,000 in child support for their eight-year-old daughter. He has interests in a string of companies and owns an investment property. Last year the Child Support Agency upped his contribution after finding 15 bank accounts, with hundreds of thousands of dollars flowing into them over a three-month period.

The Child Support Agency docks $180 per week from the rental property income but the rest is tied up in joint bank accounts, companies and family trusts. He recently paid around $500,000 off a home loan in just over a month.

“Child support say they’ll litigate but nothing seems to happen,” says Helen, a part-time student who receives Centrelink payments.

The Child Support Agency’s powers include docking wages and welfare payments, deducting from tax returns, overseas travel bans and litigation. In some cases, litigation is the only way to force payment. But in 2014, a parliamentary inquiry found the agency’s litigation spend was “extraordinarily low”, being only “one tenth of one per cent” of the total child support debt.

Associate Professor Kay Cook of Swinburne University says, in most cases, it’s not poor people who owe the money – it’s those with hidden income.

“It’s anyone with their own business, their own accountant, or working cash-in-hand,” Dr Cook says.

Tactics include hiding money in company structures, changing jobs and late lodgement of tax returns.

Swinburne University’s Kay Cook says there are plenty of ways for parents not wanting to pay child support to scam the system.

Maria* is owed $130,000 in child support by the two fathers of her five children, aged six – 16. She fled from the first father 14 years ago, to escape escalating verbal and physical abuse. He now owes $113,000 in child support for their two teenaged daughters. The agency has officially given up, classifying the case as “non-pursuit of debt”.

Meanwhile, she’s raised her children alone, while studying and running a cleaning business.

“Its always been a struggle, there is never any point where I’ve felt comfortable,” says Maria. The second father is a serial job changer who has accrued a $20,000 debt. Neither father has lodged a tax return for more than 10 years.

Terese Edwards of the National Council for Single Women and Their Children says payers often lodge late tax returns as a way to minimise income for child support purposes. A 2017 audit found the Australian Tax Office rarely fined child support clients for lodging late returns and didn’t contact all customers with multiple overdue returns.

The Department of Human Services said enforcement has since been strengthened, including a new process to fine ‘high risk’ payers with late returns. But the figures suggest this isn’t working. In the 2018-19 financial year, the Australian Tax Office only finalised one quarter of all overdue tax returns for child support clients – 136,000 of 548,000.

Because child support reduces family tax benefits, mothers can be saddled with a huge welfare debt when a tax return is lodged after many years, revealing the payer’s income is higher than estimated. This particularly hurts those who receive child support directly from the other parent, rather than through the Child Support Agency.

Encouraged by the Department of Human Services, private collect arrangements – where child support is exchanged between parents rather than through the agency – are now more than half of all child support cases. But the department doesn’t track compliance for these cases, suggesting the $1.6 billion total child support debt may be far higher than reported.
For these parents, the Child Support Agency won’t help chase the child support debt that causes the mother’s welfare debt. It simply assumes all money owed has been paid.

“Yet the mother has no control, influence, and was probably more frustrated by the estimated income than anyone else,” says Ms Edwards. 

The child support scheme’s weak enforcement contributes to post-separation domestic abuse, Ms Edwards says.

“It goes beyond the finances. If you have the capacity, it’s all about letting that person know – I can still make you feel insecure, I can still control you – after separation, and there is not a thing you can do,” she says.

Financial control can be used long after separation as a form of inescapable domestic violence.

Beth’s* abusive ex-partner perceived child support as money for Beth, not their daughter. So instead of money he gave her vegetables and nappies. He was self-employed, declaring his income at around $17,000 a year and paying her $30 per week.

“He would punish me by paying late, usually after we’d been arguing,” she says.

“In the end, I always backed away from dobbing him in, because of his behaviour with my daughter. He would be aggressive in her presence, verbally abusive. She was afraid of driving with him, because he would get angry and speed.”

Normally, women must seek child support, or else their family tax benefits are docked. Domestic violence victims can be exempted from this requirement, though this is not widely known.

“But it has this perverse impact of financially rewarding violence,” Ms Edwards says.

Kate*, a single mother with a 12-year-old daughter, made a private collect agreement with a violent ex-partner. He didn’t pay, but her family tax benefits were still reduced.
She asked the agency to collect on her behalf. He was furious.

“When he’d come around to see my son, he’d say things like I was a bad mother, you can’t house this child, you’re not fit, you’re mentally unstable,” she says.

Kate used the domestic violence exemption, even though it meant she was financially worse-off.
“I was trying to balance him having the child, and not being angry, and also trying to survive.”

Since then, her financial situation has worsened. She now lives in a campervan, while searching for stable accommodation.

Ms Edwards is advocating for a government-guaranteed child support payment, used in some Scandinavian countries, to be trialled for domestic abuse victims.

“This way the debt would sit with the government, who have a range of levers at their disposal,” she says.

“The might of that compared with a woman is outstanding.”

Dr Cook says single mothers have been outgunned by advocacy from men’s rights activists.

“Nobody wants to touch it because it makes men angry,” she says.

A fresh inquiry into child support has been announced following a campaign by Pauline Hanson’s One Nation party.

“They [non-custodial parents] are being fleeced by their former partners, who often deny access to the child,” says Senator Hanson.

Men’s rights activists believe it’s unfair fathers must pay child support, while not getting more custody. Barry Williams, spokesperson for the Lone Fathers Association, advocates for greater enforcement of court-ordered access for paying parents.

“If they forced the access as much as the child support, more people would pay child support,” he says.

Maria tries not to think about the opportunities her children missed out on as a result of the more than $100,000 in child support owed to her.

“We could have owned our own house. They could have done more sporting activities, visited my family overseas, my A-grade daughter could have gone on a school language exchange.”

“I lock it away and try not to obsess over it, because it will send you mad – what should have been. We’ve got a pretty nice house, we’ve been fed and clothed,” she says.

She feels sad that the fathers don’t want to be involved in their children’s lives.

“I think they probably suffer more from daddy issues than from material things, to be honest.”

*Names have been changed to protect children