Cancellation of Child Care Benefit Approval: It All Starts Here Family Day Care Scheme Pty Ltd and Secretary, Department of Education

This case, heard by the Administrative Appeals Tribunal of Australia, related to a review of the decision by the Commonwealth Department of Education to cancel the Child Care Benefit approval of It All Starts Here Family Day Care Scheme Pty Ltd (applicant) under A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).

The Tribunal had to consider two issues in this case (para.3):

• Whether the applicant failed to comply with the conditions of their continued approval as an approved child care service under the family assistance law; and  
• If so, whether the non-compliance justified the cancellation of their approval.

The Department argued that the conditions were not met by the applicant due to a number of breaches of the family assistance law and the National Law and Regulations (para. 15):

• Attendance records submitted for dates when children were overseas.
  
• Attendance records submitted for dates when educators were overseas.
• Attendance records submitted outside the timeframes prescribed in the family assistance law.
  
• Attendance records showing enrolments reported outside of the timeframes prescribed in the family assistance law.
  
• Attendance records showing sessions of care that overlap with sessions reported by other services.
  
• Attendance records reporting sessions of care where either the child had not commenced, or had already ceased to use the service.
  
• Attendance records showing that the Applicant exceeded its approved educator limit of 40 educators.
  
• Attendance records reporting more than the permitted limit of no more than four preschool aged children at any one time, and reporting more than the permitted limit of seven children limit at any one time.

The Tribunal after examining all the evidence affirmed the decision to cancel approval, stating that:

The applicant accepts that the non-compliances are a serious issue but that it has introduced steps to mitigate the errors as already outlined above in these reasons for decision. At hearing, the applicant stated that there was a drop in incorrect reporting during the period April 2017 to July 2017. The applicant also identified there was a significant drop in educators’ absence, late reporting, late enrolments, overlapping, educator limits, educator child ratios, and absences.
At hearing the applicant submitted that it had been frank in conceding issues and had taken steps to enter into a payment arrangement with the respondent. Although it has not had an opportunity to test the measures it has put into place to address the identified breaches, the applicant contends that these should still be taken into account. The applicant further submitted that it has already suffered a significant suspension and that cancellation was not an appropriate sanction.
In regards to a number of the breaches, the applicant appears to place responsibility on staff members and educators. As the operator, the applicant cannot excuse itself from responsibility for non-compliance with its obligations by pointing to the actions of educators or other staff members. The Tribunal has accepted in similar cases that the obligations imposed on the operator of a child care service cannot be avoided or excused by blaming others, including its own staff; see Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706 (7 August 2018); and Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 1463 (28 May 2018).
Section 195A of the Administration Act, as it stood at the relevant time prior to 2 July2018, operates to ensure that where an obligation, including a condition for continued approval, is imposed on an approved child care service, “it is taken to be imposed on the person operating the service”. This means that all obligations under the family assistance law were ultimately obligations of It All Starts Here Family Day Care Scheme Pty Ltd, acting through its officers, staff and agents, including its educators.
The applicant’s breaches are not minor. The misreporting of thousands of sessions of care is an extremely serious matter and demonstrates a lack of care and compliance with a number of legislative requirements under the family assistance law. Through its non-compliance with its conditions for continued approval, the applicant received payments of public funding that it should never have received. Further to this, the applicant, by breaching educator-child ratios, provided child care in circumstances where it was not lawfully allowed to provide such care, giving rise to risks for the safety, health and wellbeing of children under the applicant’s care.
In the circumstances of this case, I am satisfied that cancellation is the appropriate sanction. The health and safety of children and the quality of the care provided is of paramount concern. Should the applicant’s approval not be cancelled there is a risk that any children in the care of the applicant may not be appropriately cared for given the systemic failure of the applicant to oversee the level of child care that it held approval to provide. This is of particular concern in regards to the breaches concerning educator to child ratios. While I do acknowledge that that applicant was frank in conceding the breaches identified and has plans to address the issues in the future, these measures have not been tested. The breaches identified are egregious and highlight that the applicant’s governance arrangements are systematically flawed. For these reasons I find that the applicant is not a suitable person to operate a child care service (paras. 34-39).