Not so much

How long before these figures are taken into consideration by the CS formula?

The Sydney Morning Herald
12 March 2009

Cost of kids not so high after all
By Adele Horin

The cost of raising children is not nearly as high as parents have been led to believe, a study reveals. Far from a child costing $10,000 a year, as previous research indicated, the price is more like $1300.

Michael Dockery, an associate professor in the school of economics and finance at the Curtin University of Technology, says children may even enhance their parents' wealth.

"People now believe they'll be millions of dollars out of pocket if they have children," he said. "It's nonsense."

If children were a "cost", parents would end up less wealthy than comparable couples without children. But his study, based on 3168 couples, found this was not the case. When the net wealth of the parents and the child-free was compared - housing, shares, superannuation and savings - the parents were only marginally worse off, suggesting a child "cost" only $1300 a year.

When wealth accumulation between 2002-06 was considered, couples with children were a little better off.

Dr Dockery said couples with children were more likely to be home-owners and to have a bigger house.

Previous Australian studies have shown that a typical family will spend $537,000 on raising two children from birth to 21. Dr Dockery claims the cost is more like $55,000.

Dr Dockery disputes the logic of seeing children as a cost. The price people were prepared to pay for fertility treatments showed children were regarded as a "very large net benefit".

He also takes issue with studies that used the amount of money parents spend on children to determine their cost. "There seems little justification for considering expenditure on children to be a measure of their cost, any more than going to a restaurant can be considered a cost to the patrons." Restaurant-goers saw their night out as a benefit, not a burden.

As well, when couples chose to have children they understood they would have to switch their expenditure from dining out to nappies and child care.

"They value having the children more than the lifestyle," he said. "To argue they are worse off makes no sense."

Dr Dockery cautioned against using his research to calculate child support because the situation for sole parents was different. But he said the family payments system had helped make children "cost-neutral" and the emphasis on benefits for "working families" needed to be changed to help all people.

New Formula

Is the new Child Support formula working? There's certainly no outrage about it, so perhaps it is.

One thing it hasn't accomplished is targeting those who rort the system or the gender bias that has been longstanding. You know the rorters, parents who demonstrate a low income but are asset and lifestyle rich. For example, a mother in a shared parenting situation who is a company director, buying a house, who enjoys regular interstate and overseas holidays, spends money freely on luxuries, expensive clothing and dines out more than the average person can afford to. Yet her taxable income falls below the child support threshold, so pays no child support. The father on the other hand lives hand to mouth, sometimes having to borrow money to pay his bills because his child support expenses take a considerable slice out of his income. Monies that further enhance the lifestyle of the mother.

Take a case like this through the CSA and all the mother has to do is claim she is being supported by her new partner to ensure no change in assessment. Reverse the roles and the father would be accused of failing in his financial duty towards his children, most likely investigated and made to cough up cash under the 'capacity to pay' legislation.

Isn't it about time the legislation is changed to look at the combined assets of relationships on both sides of the divide? After all. in family law, company income and combined assets of a couple are considered to be theirs and to be divided accordingly if they separate.