A Commonwealth Ombudsman investigation of Child Support Agency debt recovery practices has found that these can cause unnecessary hardship and distress for parents and children.

Commonwealth Ombudsman Philippa Smith said: ‘The CSA has procedures to reduce the distress of financial hardship for families when recovering overpayment debts—unfortunately we found that not all Agency staff were following these procedures.’

‘Our investigation also identified a number of systemic and legislative shortcomings in Child Support administration.

‘Changed circumstances of the parents and retrospectively in calculating ‘the amount due’ is a feature of the Child Support Scheme which can frequently place custodial parents in debt,’ she said.

The parent who receives child support can be overpaid because of a change in the other parent’s circumstances. The custodial parent often has no control over these changes and may not even be aware of them.

There are also situations where the CSA learns of an error in its assessment, or the way it processed a document. Correcting this with retrospective effect can also create an overpayment.

‘Unfortunately overpayments are an unavoidable feature of the Child Support Scheme, however, when recovering overpayments, the Commonwealth should take into account the often precarious financial position of the family who unknowingly received and spent the overpayment,’ Ms Smith said.

Ms Smith said overpayment recovery actions should not simply be a triumph of bean counting at the expense of a family’s needs.

The Ombudsman investigation also revealed a number of shortcomings in the agency’s procedures, including:

• the way the CSA’s accounting system records and manages debts and recovery; problems with the CSA’s negotiation process
• retrospective reductions in child support which in many cases cannot be matched by retrospective increases in Social Security payments
• the custodial parent’s possible loss of past Family Payment entitlements [paid by Centrelink]
• the CSA’s policy of intercepting the custodial parent’s tax refunds to recover child support debts
• overpayments arising from the non-custodial parent’s estimate of current year income, and
• difficulties for the CSA when its own error contributed to, or caused, the overpayment.

Ms Smith acknowledged the CSA’s positive response to the report and said the agency had already made significant changes to its overpayment notification and recovery procedures.

The Ombudsman made the following recommendations:

• the CSA should continue making payments for a reasonable time after an overpayment debt was notified
• custodial parents be provided with written advice about reasons for overpayments, the amount of the overpayment, and how it will affect their future child support entitlements
• during debt recovery action, the CSA should withhold a percentage of a payment rather than recover a set amount
• Centrelink should consider increasing the custodial parent’s Family Payment to reflect the reduction caused by repayment action, or the CSA consider waiving a portion of the overpayment which is equivalent to the Family Payment not received during the overpayment period
• CSA should revise its policy on intercepting custodial parent’s tax refunds, and when intercepting tax refunds, it should negotiate a suitable amount with the custodial parent
• CSA overpayment advices should warn custodial parents that the CSA may recover a debt from future tax refunds if no recovery arrangement is made,and
• the CSA should consider waiving overpayments when the debt was caused by CSA error.

We believe that the actions proposed by the Child Support Agency in response to this report will go some way to improving administrative processes for recovering any child support overpayments, and hopefully make it less confusing and fairer for those involved.

Media Contact

Media 02 6276 3759
Email – Media@ombudsman.gov.au

Date of release: 28 January 1998