Annual report - 2004 - Part 3

Managing debt and outstanding returns from the 2004 Annual Report - 3

Our focus has been on reducing the debt of people who owed more than $5,000; they represent 27% of total debt and 9% of our customer database ²⁰. At the start of the year this group comprised 11,336 cases who owed $116.2 million in assessment debt ($224.6 million total debt). Our focus has resulted in a significant improvement in the profile of this group including:

^{20 As at 30 June 2004.}

• in 2003-04, 43% of current year assessments were paid in full and on time, compared to 27% in 2002-03
• a 4% reduction in their assessment debt to $111.5 million, while total assessment debt slowed from 18% growth last year to 14.5%
• 447 customers who owed $7 million in debt with an average value of $15,660 are now debt-free.
• We are now expanding our current focus to include:
• actively case managing new customers for a longer period to ensure early compliance habits are formed and maintained
• increasing the number of debtors being actively case managed and focusing on paying parents who are self-employed and have a high assessment debt
• improving the collection of debt from salary and wage earners
• developing relationships with employers to ensure paying parent deductions occur
• increasing our focus on the debt of overseas customers.

We have already improved our ability to collect debt from people based in Australia. Under the enhanced reciprocal agreement with our equivalent Australia-based agency it does not matter whether a person is based in Australia or New Zealand, their debts will be followed up for payment.

While this means payment is collected from parents based in Australia, our debt figures also increase from the New Zealand-based Australians who we are now following up for payment of debt. Under the reciprocal agreement:

• $22 million (2,400 debtors) of our total debt concerns Australians now living in New Zealand
• $77 million (5,200 debtors) of our total debt concerns New Zealanders now living in Australia, up from $29 million in 2002-03
• approximately $3.2 million has been collected on both sides of the Tasman.

The provision for doubtful debt (penalty and interest only) has increased by $60.6 million from 2002-03, reflecting the growth in penalty debt. The increase
in the provision is $21.5 million less than the increase last year.

Child Support - making a real difference

^{Child Support Christchurch debt team
Seated, left to right: Gareth Sanders, Jason Grose, Louise Davidson, Ken Pope. Standing, left to right: Beverley Tobin, Kaye McLean, Larissa Batchelor. Absent: Jon Kingsbury.}

"One of the best things about working for Child Support is seeing the real difference we make to the lives of families," says David Udy, National Manager, Child Support.

"It's very rewarding to be able to collect payment from a parent where there has been continued non-compliance for some time because of the difference it can make to the custodian and children.

"The actual work of negotiating a payment takes some effort to ensure the interests of all parties are taken into account. This possibly includes the new family of the paying parent, as well as the custodian and children who have been missing out on the payments. If we can't negotiate an arrangement to pay off a debt over time and maintain any current payments, then we take enforcement actions.

"We've all got stories of where we have telephoned custodians to tell them that they will be getting some extra money because a child support debt has been paid or enforcement action has resulted in collection from the paying parent. Sometimes the money has been outstanding for a number of years and the custodian gets quite emotional in telling us how the payment will improve their child's quality of life. Sometimes this is for basics like healthcare, such as new glasses.

"We've also found that getting debt under control can be a real relief for the paying parent. This year Child Support got some extra funding to deal with customers with long-term and high-level debts of over $5,000. These parents were often difficult for us to reach - for instance, if we knew their contact details, they may not have responded to our mail or telephone contact. And sometimes it was the worry of the level of the debt that stopped them communicating with us. Some paying parents have told us what a relief it is to be doing something about the debt, rather than just have it hanging there.

"Having the extra funding has allowed us to individually case manage these customers. We've been able to put extra effort into making contact and either negotiate payment of the debt over time, arrange the payment of a lump sum, or take enforcement action. The results of our actions have seen some positive outcomes for families."

Other pages in: Annual report - 2004 - Part 3

• Our compliance model from the 2004 Annual Report
• Making it easy to comply from the 2004 Annual Report - 1
• Making it easy to comply from the 2004 Annual Report - 2
• Tailored services meeting needs from the 2004 Annual Report - 1
• Tailored services meeting needs from the 2004 Annual Report - 2
• Focusing audits on long-term compliance from the 2004 Annual Report
• Managing debt and outstanding returns from the 2004 Annual Report - 1
• Managing debt and outstanding returns from the 2004 Annual Report - 2
• Adjudicating and ruling on the law from the 2004 Annual Report
• Using the full force of the law from the 2004 Annual Report

Date published: 15 Nov 2004

Back to top