Two A, B, C Modelling shows a high Administratively, this Compliance costs for Greater increases in Debt may continue to Recommended. Addressing & D response to debt option closely aligns liable parents are positive compliance escalate to unmanageable repayment incentives with the child expected to decrease as behaviour (than under levels if incentives to This option addresses support and approach to penalty support reform payment arrangements option 1) will have negotiate and enter the problem definition legacy write-off would result in programme. are made and interactions effects for receiving payment arrangements and meets the policy debt net reductions to the with Inland Revenue carers and their children are insufficient. objectives. Crown Operating In addition to option 1, a decrease. to the extent that Balance of $1.2 million minor increase in payments are due to Parents who have paid In addition to promoting in 2015/16, $8.3 million administration cost is An increase in positive carers not the Crown. penalties may perceive positive compliance in 2016/17, and $14.9m anticipated relating to compliance behaviour is inequity other behaviour for legacy in 2017/18, and $22.7 training, operational anticipated as a result of Greater improved parents are relieved of debt, this option is million in 2018/19. processes and incentives to enter into perception of Inland penalties owed. expected to have communications. payment arrangements. Revenue and the child positive impacts on The positive fiscal support system through a Other demands on future compliance impact of the changes as Partial offset of The expected decrease in less punitive penalty income prevent the behaviour as debt a result of increased administration cost from compliance cost and regime than under option repayment of child becomes more child support paid to the shorter term payment increase in positive 1. support debt resulting in manageable. Crown is estimated at arrangements as fewer compliance behaviour less financial support for $0.9 million for the penalties charges and are anticipated to be children. 2015/16 year which collected. greater than option 1 as a increases to $1.8 million result of stronger Delays in the legislative in the 2017/18 year. Increased capacity for incentives to repay debt. process delay Inland Revenue to implementation of the The changes are achieve greater coverage reforms. expected to cost across the debt book. $500,000 will be funded internally by Inland Revenue.
Two Addressing support legacy debt A, B, C & D Modelling shows a high response to debt repayment incentives and approach to penalty write-off would result in net reductions to the Crown Operating Balance of $1.2 million in 2015/16, $8.3 million in 2016/17, and $14.9m in 2017/18, and $22.7 million in 2018/19. The positive fiscal impact of the changes as a result of increased child support paid to the Crown is estimated at $0.9 million for the 2015/16 year which increases to $1.8 million in the 2017/18 year. The changes are expected to cost $500,000 will be funded internally by Inland Revenue. Administratively, this option closely aligns with the child support reform programme. In addition to option 1, a minor increase in administration cost is anticipated relating to training, operational processes and communications. Partial offset of administration cost from shorter term payment arrangements as fewer penalties charges and collected. Increased capacity for Inland Revenue to achieve greater coverage across the debt book. 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 enter into payment arrangements. The expected decrease in compliance cost and increase in positive compliance behaviour are anticipated to be greater than option 1 as a result of stronger incentives to repay debt. Greater increases in positive compliance behaviour (than under option 1) will have effects for receiving carers and their children to the extent that payments are due to carers not the Crown. Greater improved perception of Inland Revenue and the child support system through a less punitive penalty regime than under option 1. Debt may continue to escalate to unmanageable levels if incentives to negotiate and enter payment arrangements are insufficient. Parents who have paid penalties may perceive inequity other parents are relieved of penalties owed. Other 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. Recommended. This option addresses the problem definition and meets the policy objectives. In addition to promoting positive compliance behaviour for legacy debt, this option is expected to have positive impacts on future compliance behaviour as debt becomes more manageable.
2015-ris-sop-77-arrdrm-bill.docx