Table 2: Summary of the impacts of the options Impacts Meets Recommendation and Social Option Economic/ Revenue Administrative objectives net impact Compliance implications Risks implications impact implications One Partially The revenue cost of the The administrative Compliance costs for Increases in positive Debt may continue to Not recommended. Status quo A, B, C current reform changes impacts of this option are liable parents are compliance behaviour escalate to unmanageable & D to penalty and debt rules an integral part of the expected to decrease as will have flow-on effects levels if incentives to This option addresses is estimated at around wider child support payment arrangements for receiving carers and negotiate and enter the problem definition $10 million per annum. reform programme. are made and interactions their children to the payment arrangements but only partially meets with Inland Revenue extent that payments are are insufficient. the policy objectives. Estimated that a 1% decrease. due to carers not the increase in the amount Crown. Liable parents are The risks to continued of child support paid to An increase in positive discouraged from paying debt levels and the Crown would have a compliance behaviour is Improved perception of child support as a result of financial positive fiscal impact of anticipated as a result of Inland Revenue and the of inflationary penalties support are significant. around $2m per annum. incentives to into child support system over time. payment arrangements. through a less punitive penalty regime Parents who have paid penalties may perceive inequity other parents are relieved of penalties owed. demands on income prevent the repayment of child support debt resulting in less financial support for children. Delays in the legislative process delay implementation of the reforms.
Table 2: Summary of the impacts of the options Option Meets objectives Impacts Recommendation and net impact Economic/ Revenue impact Administrative implications Compliance implications Social implications Risks One Status quo Partially A, B, C & D The revenue cost of the current reform changes to penalty and debt rules is estimated at around $10 million per annum. Estimated that a 1% increase in the amount of child support paid to the Crown would have a positive fiscal impact of around $2m per annum. The administrative impacts of this option are an integral part of the wider child support reform programme. Compliance costs for liable parents are expected to decrease as payment arrangements are made and interactions with Inland Revenue decrease. An increase in positive compliance behaviour is anticipated as a result of incentives to into payment arrangements. Increases in positive compliance behaviour will have flow-on effects for receiving carers and their children to the extent that payments are due to carers not the Crown. Improved perception of Inland Revenue and the child support system through a less punitive penalty regime Debt may continue to escalate to unmanageable levels if incentives to negotiate and enter payment arrangements are insufficient. Liable parents are discouraged from paying child support as a result of inflationary penalties over time. Parents who have paid penalties may perceive inequity other parents are relieved of penalties owed. demands on income prevent the repayment of child support debt resulting in less financial support for children. Delays in the legislative process delay implementation of the reforms. Not recommended. This option addresses the problem definition but only partially meets the policy objectives. The risks to continued debt levels and of financial support are significant.