TORONTO, ONTARIO--(Marketwired - Aug 22, 2014) - The federal guidelines mandating child support payments in divorce cases in Canada fail to equitably distribute costs between parents (as per the Divorce Act) and are not supported by economic evidence, concludes a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
"The guidelines in Canada focus solely on the income of the non-custodial parent and explicitly ignore circumstances that intact families get to consider, such as government child benefits, age of the child, decisions on extraordinary expenses, and family financial constraints," said Christopher Sarlo, economics professor at Nipissing University and Fraser Institute senior fellow.
"The guidelines also ignore all non-custodial parenting costs, any new partners of the parents, and most importantly, the fact that children are not just costs. Consequently, the formula overcompensates most custodial parents for child-rearing costs."
The study, An Assessment of Federal Child Support Guidelines, critically evaluates the formula that determines the amount of child support in Canada. It notes the lack of economic research and biases underpinning the guidelines, the differential treatment of the separated parents, the net wealth transfers between separated parents, and the consequences to families and children.
For example, federal child support guidelines are based on an arbitrary equivalence scale-a set of ratios that attempts to calculate the extra costs of adding people (in this case, children) to a household. Known as the "40/30 scale," it was originally designed to calculate poverty and cannot be applied in all situations.
Yet, notes the study, that's exactly what's happened. Consequently, child support payments are based on an equation that leaves many non-custodial parents paying an inordinately high amount of child support, which grows as incomes increase.
The study also notes how the majority of non-custodial parents are men and cites a Department of Justice report that found, in contested cases, courts award custody of children to mothers 90 per cent of the time.
Adding to this inequity, the guidelines assume that a mother, when awarded custody, has the child 100 per cent of the time. But of course, this is seldom the case. Non-custodial fathers often care for children (on weekends, for example) and the child-rearing costs they pay during those times are ignored.
"With a divorce rate close to 40 per cent and 70,000 divorces every year, these issues should cause political leaders and policy-makers substantial concern. We have a mandatory set of rules impacting hundreds of thousands of Canadian families that are not based on any economic studies on the cost of raising children," Sarlo said.
"The guidelines fundamentally violate their own stated objectives, leave little or no room for custodial parents to provide financial support for their own children, and are not consistent with the guidance provided by the Divorce Act. The real concern, of course, is the adverse impact of the guidelines on divorce, marriage and procreation."
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org