Changes to child care system signalled

Both parents' incomes could be taken into account when child care payments are set, under proposed changes by the Government.

Revenue Minister Peter Dunne today released a discussion document, Supporting Children, outlining wide-ranging proposals to change the system.

Parents owe about $2 billion in unpaid child care payments and penalties. The scheme arranges financial support for the care of 210,000 children.

Mr Dunne said it needed to be fairer.

"The options in the discussion document also seek to get a balance between the welfare of the parent who receives child support and the obligations of the parent who pays it," he said.

"In keeping with the need for this balance, the document asks whether child support payments should be automatically deducted from employees' income, and whether the penalty and write-off rules for child support need to be amended to provide better and more effective incentives to pay."

Another option to be considered was to change the formula used to determine the amount of child support to be paid by a parent. Mr Dunne said it could be changed to take into account factors including the cost of raising children, the degree of shared care between parents who are living apart, and the income of both parents.

"An important part of getting the scheme right will be creating a situation where paying parents are more likely to comply with their obligations voluntarily.

"They are more likely to do that if they see their obligations as fair, transparent and reasonable - and not based upon some formula that seems to have no regard for their individual circumstances."

Mr Dunne said the scheme was introduced 18 years ago and was "outdated and sometimes unfair".

Families were often more complex; both parents were more likely to be working and often separated fathers had a greater role caring for children than in the past.

It was better if parents could reach their own arrangements but the scheme was a good backstop when that could not be worked out, Mr Dunne said.

The discussion document will be on Inland Revenue's website with submissions closing on October 29.