New proposed child support formula

The Australian child support system has come under scrutiny recently as many individuals are picking up on major flaws. This has led a number experts to develop a new proposed child support formula which they hope the Australian Government will implement.

Child support, by definition refers to the ongoing payment made from one parents to financially benefit the children and other parent once the marriage has broken down. Many parents rely on the income from child support in order to give their children the best life possible.

However, as mentioned above, there are a number of problems with Australia’s child support system. Firstly, the formula creates the incorrect incentives. It encourages the mothers to not work and stay at home while also increasing the chances the father will attempt to hide income or not earn as much as they could.

Typically, the mother will remain the predominate caregiver and the current formula essentially penalises them for working more and therefore earning additional income. The greater their income, the less child support they will typically receive. This seriously demotivates the main caregiver to returning to work or increasing their number of hours.

The children of broken down marriages are certainly financially hurt by this system as it penalises the main caretakers when they start working. It is a double edged sword – either the children obtain less financial support or the main caregiver will choose to work less hours.

In terms of the parent that is actually paying the child support, the figure becomes much too high when this parent’s income is considered mid to high. This heavy taxing of the payer’s income offers no real benefit to the child.

By forcing the high income parent to essentially help fund and maintain the ex-partners lifestyle can create friction and demotivate the paying parent to further their career because when they start earning more, they will have to pay more in child support.

The current issues with child support in Australia stem right from the roots – the formula lacks proper mathematical foundation. The formula is designed as if the spending habits of marriage and divorced couples are the same.

Therefore, the formula doesn’t make mathematical sense because the spending habits are completely different. Divorced couples certainly will not be spending in the same way as they were when they were still married.

This formula shouldn’t look to penalise the mothers who want to work extra hours and shouldn’t penalise the fathers for earning extra income and being solid providers. The formula should look to simply compensate the primary caretaker for any extra costs experienced when raising the children alone.

In order to ensure a fairer child support system is in place, a new time sharing method should be put in place. This formula is very simple and certainly a lot fairer than the current system.

Here, both parents are responsible for 50% of the children’s care. However it is very rare that divorced parents will be able to split the time 50/50. So when one parent ends up preforming more than 50% of the total care for the children, the other parent will be required to compensate for the extra time put in by their ex-partner.

This model can be tweaked to ensure a system that Australia currently has now, as many examples have shown. So, instead of keeping this out dated and complicated formula, it can easily be replaced with a transparent and easy to follow formula that works in a similar way to the old one.

Therefore, in theory, it will not be difficult to overhaul the old formula and start putting in place the steps to ensure a smooth transition. The Australian Government should look to employ economists, accountants, mathematicians and analysts to test all the viable formula options and finalise on the one that works the best with the assistance of the appropriate government agencies.

It is certainly highly recommended from a number of experts that the old child support formula is thrown out. It is completed out dated and essentially demotivates both parents to work less which in turn provides a less than ideal situation for any children involved.

And when you think about it, all this formula was meant to do was ensure that the children of a broken down relationship do not end up being worse off. A new formula should be developed with the assistance of professional mathematicians etc. to help provide these children with a better living situation.

Mike Smith
Mike Smith
Executive Editor at Best in Australia. Mike has spent over a decade covering news related to business leaders and entrepreneurs around Australia and across the world. You can contact Mike here.
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