Australia has $1.7b in unpaid child support. These MPs have a plan to claw it back

Deadbeat parents have racked up $1.7 billion in unpaid child support, prompting calls to enlist the Australian Tax Office to claw the money back.

There was a severe lack of support in the system for short-changed parents, while weak enforcement meant the mostly male parents who owed money were not being held to account, a parliamentary committee’s report on financial abuse has found.

Child support payments could be transferred to the Tax Office to better enforce the scheme.Credit: Arsineh Houspian

The report’s key recommendation was for Services Australia to hand over its child support payment responsibilities to the Tax Office, which it said would be better equipped to force parents to pay what they owed.

Committee member and Labor MP Zaneta Mascarenhas labelled those withholding child support payments to get back at their partners as “scumbags”.

“The thing that breaks my heart is that it affects children,” she said.

“Parents are withholding this money to intentionally hurt their partners, but by doing that they’re hurting their children as well.

Swan MP Zaneta Mascarenhas called parents that did not pay their child support “scumbags”.Credit: Alex Ellinghausen

“People that do that are scumbags and I just feel so incredulous that this is even a thing, and the scale of it is astounding.”

The eight-month inquiry heard that unpaid child support was being used as a form of financial abuse. It found there was about $1.7 billion of unpaid support from 218,000 parents.

Of the committee’s 61 recommendations, capturing all corners of Australia’s finance sector, five focused on overhauling the child support system.

Child support payments can be made through private arrangements between a couple or through the Services Australia’s Child Support Agency if communications break down.

Both avenues were panned as ineffectual by organisations such as Single Mother Families Australia. The organisation estimated about 475,000 children were being affected by withheld payments and a further 500,000 by non-payment in private arrangements.

The parliamentary committee adopted the view that the Tax Office should take over from Services Australia to better enforce payments.

It also recommended that both private child support payers and payees declare their payments to the ATO each year, along with evidence such as bank statements.

If the ATO found those declarations did not align with what the payee was entitled to, or it did not receive a declaration, then the child support payments should automatically convert to the Tax Office’s collection system, it said.

The committee recommended that short-changed parents should receive tax credits equal to what was owed to them in the preceding year and that the payer should incur a tax debt.

Other recommendations to curb financial abuse included establishing anonymous reporting systems so those experiencing family and domestic violence could report financial abuse to banks and other financial institutions.

The report said the financial toll on victims of financial abuse was estimated to be $5.7 billion – almost $3 billion more than the total amount lost to scams in Australia last year.

Committee chair Senator Deborah O’Neill said the 61 recommendations were a testament to the strength of the victim-survivors who shared their stories.

“Their bravery in pursuit of the national interest has enabled the committee to deliver this unanimous report,” she said.

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