Tougher compliance uncovers $300m in suspected child care fraud


Lawyer, NSW Migration Agent


The Abbott Government’s tougher stance on child care compliance has uncovered hundreds of millions of dollars worth of suspected fraudulent payments to child care services, with the vast majority found to be in family day care.


Assistant Minister for Education Sussan Ley said the Government’s introduction of random checks of child care usage by parents in January 2014 had significantly contributed to the discovery of payment irregularities to child care services estimated to be worth upwards of $300 million.


About $250 million – or 80 per cent – is estimated to be attributable to family day care services alone.


However, Ms Ley said the Abbott Government was fighting back, with compliance action undertaken by the Government since coming to office estimated to have already prevented between $70 million and $90 million in further fraudulent claims being made. This is an independently verified figure.


“I am horrified by the extent of this blatant disregard for the law,” Ms Ley said.


“These services are supposed to be focussed on the high-quality education and care of our children; instead they’re clearly putting their effort into ripping off families and taxpayers. It’s unacceptable.


“That’s why this Government set up a dedicated child care payment compliance taskforce and it’s paying off. It’s the same reason we’re strengthening child care payment laws to close loopholes and stop dodgy practices such as child swapping and phantom claims happening in the first place.


“However, there’s a lot more to be done and we will continue to work closely with the child care sector, families and other levels of government to stamp out dodgy practices and better educate services.


“What bothers me most about this is that it hasn’t happened overnight. Labor were being warned about the rapid growth in family day care services as early as 2012, yet they put their head in the sand and decided to cut child care compliance checks by 30 per cent in 2012-13 instead.”


About 50 child care services have faced compliance action under the Abbott Government, including 32 services caught by the Abbott Government’s dedicated child care payment compliance taskforce in 2014-15 alone. About 90 per cent of these were family day care services.


This includes multiple suspensions, cancellations, service restrictions and fines totalling about $2.6 million in 2014-15 to date.


Ms Ley expected the number of services caught, and the amount of taxpayer funds recovered and protected from future rorting, to continue to grow as the taskforce continued its compliance crackdown and stronger payment laws came into effect in the coming months.


“If we want to truly deliver a better child care system that makes it more affordable, flexible and accessible for Australian families, then we need to continue to clean up the sector first,” Ms Ley said.


“Access to high-quality child care has never been more important for Australian families and our economy and we need to ensure these dodgy services don’t undermine public confidence in the sector. Particularly given the majority of child care services do the right thing.


“We still have a big task ahead, but this government remains committed to the challenge.”


The number of family day care services across Australia has almost doubled since 2012 to about 773 services. Family day care services manage a network of home-based educators, with some services now overseeing hundreds of educators across multiple states.


Random parent checks are just one tactic used to support the Abbott Government’s child care payment compliance taskforce, which also uses a combination of targeted investigations into suspicious claims, random child care service checks, forensic data analysis and better education.


The Abbott Government has also tightened Commonwealth Family Assistance laws to close “legislative loopholes” and stamp out dodgy practices such as child swapping, phantom claims, unregistered educators and services operating across state borders to avoid scrutiny.


Labor cut the number of child care compliance checks from 763 checks in 2011-12 to 523 checks in 2012-13. In contrast, there were more than 1300 compliance checks undertaken in 2013-14 as a direct result of the Abbott Government’s increased compliance efforts, with a further 900 checks already undertaken in 2014-15 to date.


Ms Ley said the best thing concerned families or child care services could do was report dodgy child care practices to the Government’s tip off line by calling 1800 664 231 or emailing tipoffline@


“I also stress the importance of families checking their child care statements for any irregularities.”


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