TABLE OF CONTENTS
Introduction..................................................................................................................................................... 3
Scope of the Framework ..................................................................................................................................... 3
The Child Care Environment ............................................................................................................................ 3
Family Assistance Law ........................................................................................................................................ 2
Community Support Program ............................................................................................................................. 2
Monetary and non-monetary compliance.......................................................................................................... 2
Compliance Strategies ..................................................................................................................................... 3
Figure 1: Compliance Model ........................................................................................................................... 3
Principles ......................................................................................................................................................... 4
Approach To Risk ............................................................................................................................................. 4
Figure 2: Child Care Benefits Compliance Continuum .................................................................................... 5
Elements Of The Compliance Framework ........................................................................................................ 6
Figure 3: Framework overview ....................................................................................................................... 6
Prevention .......................................................................................................................................................... 6
Detection ............................................................................................................................................................ 7
Deterrence .......................................................................................................................................................... 8
Link To The CCB Approvals Process .................................................................................................................. 9
Education ............................................................................................................................................................ 9
Link To CSP / Programs .................................................................................................................................. 10
Evaluation Of The Program ............................................................................................................................ 10
Child Care Payment Compliance Framework
Introduction
The Australian Government has a comprehensive compliance strategy to protect the integrity of payments
made to support families accessing quality child care.
This revised Child Care Payment Compliance Framework (the Framework) replaces the previous Framework
and responds to recommendations made by the 2011 Child Care Payments, Approvals and Compliance Review.
Greater emphasis will be given to working collaboratively with the child care sector to:
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empower individual services to become better informed of their legal (and other) obligations, and
develop an improved understanding of the practical interpretation of these requirements.
This document outlines the scope, principles, strategies and key stakeholders intended to maximise the
success of this program of work.
This document does not limit the range of action that may be taken by the Australian Government in relation
to child care payments compliance. It is the guide by which the Department of Education, Employment and
Workplace Relations (the department) will deliver payment compliance in accordance with family assistance
law and program requirements.
The Framework aims to ensure the integrity of child care payments made by the Australian Government. The
Framework is expected to encourage, enforce and strengthen compliance in the child care sector.
Scope of the Framework
Work conducted under the Framework will focus on Child Care Benefit/Rebate (CCB/R) payments (including
Special CCB) made to families, most commonly through child care services. In addition, this revised Framework
demonstrates the linkages with the Child Care Services Support Program (CCSSP) and outlines compliance
activities for services receiving payments from both programs.
The Framework does not cover compliance for the following which are addressed by other organisations:
1) Provider and service approval under the National Quality Framework; or
2) Requirements of legal entities under the Corporations Act.
However, it should be noted that compliance under these areas may intersect with compliance under the
family assistance law, and this Framework does envisage that there would be cooperation between the various
regulatory agencies to achieve compliance outcomes.
The Child Care Environment
The child care sector involves multiple layers of regulation at both Commonwealth and State government
levels.
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Family Assistance Law
Family assistance law is the body of law that governs CCB and CCR payments. It is comprised of:
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The A New Tax System (Family Assistance) Act 1999;
The A New Tax System (Family Assistance) (Administration) Act 1999; and
A range of legislative instruments enacted under these Acts.
Family assistance law regulates who can be an approved service, the conditions approved services have to
meet, how much CCB and CCR should be paid, and how and when it should be paid. Family assistance law also
defines the compliance powers the department has and what we can require of child care services.
Importantly, the legislation also defines the limitations of our compliance powers.
An important aspect of the compliance function is to feed into the future legislative agenda and contribute to
improving the legislation. Compliance has a unique position in this regard because the work affords us a
valuable perspective on the practical implementation of legislative provisions and the extent to which those
provisions are actually enforceable or not.
Community Support Program
The Community Support Program (CSP) provides a range of payments directly to child care service providers
with the aim of improving access to child care, especially in areas where the market would otherwise fail to
provide services. The CSP comprises:
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Mainstream Establishment sub-program – support payments under this sub-program are designed to
help operators meet the costs associated with establishing a new Mainstream child care service.
Mainstream Sustainability sub-program – support payments under this sub-program are designed to
help operators of Mainstream services maintain the delivery of child care in circumstances where it
may otherwise not be viable to do so.
Non-Mainstream sub-program – support payments for Non-Mainstream Services through ‘Budget
Based Funding’.
The Framework recognises the links between CCB compliance and effective management of CSP funding
agreements, including ways that the two activities can support each other to achieve broader program level
compliance outcomes.
An increased focus on CSP compliance will seek to strengthen the knowledge and understanding of child care
providers who receive CSP, as well as introducing strategies to ensure payments are correct and provide
assurance that the funding is meeting the objectives of the program.
Monetary and non-monetary compliance
For the purpose of this Framework, it is helpful to make a distinction between monetary and non-monetary
compliance. Services are subject to administrative requirements, such as record keeping requirements, which
do not directly influence the amount of money that is paid to services or to families. While we should be
concerned by non-compliance with these requirements, the non-compliance itself does not directly impact on
the accuracy of Government financial outlays for families.
In contrast, services also have an obligation to report attendances through the Child Care Management System
(CCMS), and the payments are made automatically based on these reports. If a service reports incorrectly,
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then the wrong amount of fee reductions and CSP can be paid. For this reason, compliance has a strong focus
on attendance reporting as the key area of monetary non-compliance.
Furthermore, services that receive CSP funding are required to comply with the terms and conditions of their
funding agreement, including appropriate use of the payments received.
Compliance Strategies
This Framework is built on three main strategies: Prevention, Detection/Recovery and Deterrence. These three
strategies are interrelated, and the application of most compliance activities will involve aspects of, or a mix of,
all three of these strategies.
The following pyramid diagram shows how compliance activities will be approached, depending on the
attitude to compliance of each particular target group. The pyramid shows a continuum of attitudes toward
compliance, with the most compliant at the base and the least compliant at the top.
Figure 1: Compliance Model
Note: This image was borrowed from the Compliance Model used in the Australian Tax Office.
This model categorises services by attitude as an indicator of risk, and shows the appropriate strategy for each
risk category. Each of these strategies will involve some mix of prevention, detection and deterrence. The
model also emphasises the overarching objective which is to shift services from higher risk categories to lower
risk ones.
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Principles
The following principles underpin the rationale of the Framework:
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Compliance outcomes are best managed by influencing behaviours through responses and
intervention rather than treating the symptoms of non-compliance.
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The underlying assumption of the compliance posture is that most child care providers will endeavour
to comply with the requirements but may not be fully aware or have the knowledge/skill to achieve
this i.e. they “try to comply, but don’t always succeed”. There are a limited number of
facilities/operators that actively attempt to exploit loopholes and commit fraud.
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The Framework will consider risk from an overall program perspective to guide the allocation of
resources and mitigate risk factors, given the size of the sector and the mixed levels of capability and
regular changes in ownership and staff.
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The characteristics and risk profiles associated with individual child care providers will be considered
as part of the monitoring, analysis and compliance testing components of the Framework.
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Taking the risk posture of the program into account, this Framework is designed to support and
encourage compliant outcomes, not just catch people out after the event. That is, the Framework will
have a preventative and pre-emptive focus.
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The desired outcome is that by making it easy for child care providers to comply through support,
knowledge and tools there will be a higher level of compliance.
Notwithstanding these principles, child care providers must also be aware that they have a responsibility to
meet the requirements of the law in order to receive the benefits of child care payments, and they need to
take that responsibility seriously. A failure to respond positively and promptly to identified breaches of law will
result in sanctions and penalties.
Approach To Risk
Given the size of the annual spend on CCB/CCR and the number of CCB approved services spread across the
country, the department must manage its compliance effort on a risk-based approach. The characteristics and
risk profiles associated with individual child care providers will be considered as part of the monitoring,
analysis and compliance testing component of the Framework.
The department will also undertake more broad based activities to improve compliance at the lower-risk end
of the spectrum. This includes education activities, as well as conducting random reviews of services primarily
for the purpose of measuring rates of non-compliance and change to these rates over time.
The application of a rating scale will provide the department with a guide to interact/manage providers at
different levels of the continuum as outlined in Figure 2.
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Figure 2: Child Care Benefits Compliance Continuum
Note: Image from the KPMG Child Care Payments, Approvals and Compliance Review 2011.
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Elements Of The Compliance Framework
Figure 3: Framework overview
Note: Image from the KPMG Child Care Payments, Approvals and Compliance Review 2011.
The Framework envisages a wide range of methods for achieving compliance outcomes. These methods
constitute the practical application of the three strategies of prevention, detection/recovery and deterrence.
Note that in the spirit of the principle of adaptability, the methods described here are not exhaustive. There
always remains the possibility of new techniques being devised and adopted.
Prevention
Education – The Framework focuses on improving competencies of child care providers through awareness
and pre-emptive intervention. Services will be provided with a variety of methods to access information to
ensure they understand their responsibilities, and to answer their questions so they understand how to
comply. The key aspects of education that this Framework covers will include information about legislation
and policy as well as timely advice and responses to issues or queries from external stakeholders. The
department’s educative strategy will be flexible enough to respond to feedback and provide timely advice and
will require the tracking of emerging issues and developing strategies and including stakeholders in the
solutions. The strategy will also consider a joint approach to both CCB/R and CSP compliance.
Delivery mechanisms will be influenced by the effectiveness of reaching the target audience as well as the
resources available to develop and support the activities. Mechanisms may include, but are not limited to:
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On-line information about the legal requirements of running a CCB approved service;
Written material targeting specific issues for the various care types;
Providing a secure portal for CCB approved operators to access educational materials and day to day
operational information;
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Developing systems and tools for departmental staff as an easy to access help facility on operational
and policy issues;
Identifying subject matter experts to represent the department at key industry forums;
Awareness sessions for service providers by State and Territory officers ; and
Direct communication with services through email or mail-outs.
A significant number of entities seek to become CCB approved every year and with this segment of the market
there is an emphasis on making information available to potential operators and newly approved operators.
Technical / System enhancements – The CCMS has been built with some design features that contribute to
the prevention of non-compliance. Future development of these features will provide further scope to
improve the system in this way.
The key objective for such system design is to work with the child care industry and with the commercial third
party software providers to develop IT solutions that make it easier for services to comply with their legal
requirements.
Detection
Compliance reviews – The department is obliged to ensure that CCB/CCR and CSP payments are being made in
accordance with the law and are being received by the intended recipient. There are laws that define these
responsibilities including family assistance law and the terms and conditions of any Funding Agreements
between services and the Australian Government. More broadly, there is also an expectation by the
community that tax payer funds are expended in an appropriate and legal manner.
Random compliance reviews will continue to be one of the key activities in terms of detecting non-compliance
and providing valuable insight in to the practices of child care providers. Child care services selected for review
will include a sample of services in receipt of CSP funding.
In addition to identifying possible areas of fraud or risk, these reviews provide the department with an
opportunity to educate services about their responsibilities and work with them to rectify any incorrect
practices or perceptions. The reviews give the department a physical presence in, and dialogue with, the
industry which cannot be gained by other means of communication such as emails or newsletter.
Data mining and other data analysis – In addition to compliance reviews, emphasis will be placed on the tools
and methods to test compliance through data analysis. These include:
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General data analysis to consider risk factors of service types and other common characteristics of
non-compliance. This analysis will provide a perspective of where the highest risks lie;
Data profiling and matching to develop standard profiles of stakeholders subgroups to identify
outliers and investigate the reason they fall outside the profile. In some cases this may be
appropriate, for others further investigation will be required; and
Trend data will inform awareness activities and areas in which there are knowledge gaps or
difficulties.
Targeted campaigns – Based on ongoing data analysis, the department may undertake a targeted campaign on
a particular issue. This will normally mean a direct approach to relevant child care provider(s) seeking
clarification.
From time to time, the department may need to engage with a particular sector of the child care industry to
clarify certain behaviours or practices. This risk based approach may mitigate against having to make individual
approaches to child care services and increase the department’s presences in the sector.
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As the department builds on its data capabilities, it will explore the options around the exchange of data with
other government agencies for the purposes of law enforcement.
Targeted campaigns will also focus on specific behaviors and ‘sharp practices’ in an effort to change attitudes.
The risk factors that drive these campaigns will be based on the amount of money, the number of instances
and the effect on the reputation of the program.
Further targeted activities focusing on CSP-funded services may be undertaken where areas of non-compliance
are identified.
Tip-offs – Tip-offs are a valuable source of information. They are proven to be one of the most reliable sources
in identifying fraudulent behaviors, but they are also a good source in identifying ‘accidental’ non compliance.
The department provides a service where individuals can give anonymous information, and all tip-offs are
investigated. On the basis of a tip-off the department generally contacts a service to clarify information.
Fraud investigation – Once fraud is suspected and there is a high degree of evidence to support the
supposition, departmental officers are obliged to report the fraud.
The actions of departmental officers with regard to responding to fraud are governed by the department’s
DEEWR Fraud Control Plan 2011 – 2014 which is available from the department’s website.
If fraud is suspected, the department’s fraud investigators will gather evidence and take whatever action they
deem necessary based on the facts. The outcome of a fraud case could mean the imposition of criminal
charges against an individual.
Even if a matter is being investigated by the department’s fraud investigators, it does not exempt a service
from rectifying incorrect reports. The department may still take action against the approved operator of a noncompliant service and, at the same time work with the service to prevent further incorrect payments and
inappropriate behaviours.
Deterrence
Deterrence has two components. First is the consequence, or the penalties that can be imposed for noncompliance. The second component is the perceived and actual probability of the non-compliance being
discovered. The Framework looks to draw on both of these methods as a valid means of achieving compliance.
The department’s presence in the market increases services awareness of compliance generally and increases
the perception that they will be caught if they are doing the wrong thing. The department achieves this
presence through compliance reviews, education and targeted campaigns.
There is an expectation in the broader community that people who break the law should be punished and
family assistance legislation provides for a range of penalties that may be imposed. They range from:
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Infringement penalties in the form of fines;
Civil penalties imposed by a court;
Provisions for criminal charges;
Provisions to publicly name CCB approved operators who breach their conditions of CCB approval;
and
Sanction which may result in the cancellation of CCB approval or a variation to approval conditions.
The department’s first principle in identifying non-compliance is that it will work with the service to rectify the
issue. While the department has a range of options with regards to penalties, it uses these options depending
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on the circumstances of the case. Because co-operation is the preferred method of resolution, the department
selects penalty options on the basis of what is most likely to result in a satisfactory outcome and meet the
requirements of the law, any stated (fraud etc) policies and community expectations.
However, it should be noted that the responsibility for understanding and complying with their legal
obligations rests with the child care services themselves. The department seeks to provide reasonable
assistance and guidance but if services continue to be non-compliant despite the department’s efforts to help
them comply, they should expect penalties to be imposed.
Link To The CCB Approvals Process
The long term goal of the Framework is to improve the professionalism and administrative competence of the
child care sector. Accurate child care payments rely heavily on the administrative processes of child care
services, and careless mistakes and poor processes can easily lead to overpayments.
This goal is partly addressed through compliance activity – one key purpose of a compliance review is to
identify when such administrative failings have occurred – and through education, to help services improve
their systems and processes.
However, the Framework supports the ‘prevention is better than cure’ approach and focuses on providing
education to child care services in their continuum of approval. The provision of effective education at the
outset, before poor practices are embedded into the child care service operation, will provide clarification for
potential child care providers regarding their obligations and responsibilities, and improve capacity of the
sector over time.
Appropriate controls over the granting of CCB approval at the outset¸ in line with the family assistance law and
determinations, will further provide improvements to the competence of the sector. Those operators who
have shown poor administrative competence are prohibited from re-entering the market or increasing their
market share. Changes to the suitability rules embedded into family assistance law provide a broader legal
basis for considering applications for CCB approval.
Education
The aim of the Framework is to empower the child care sector to become self-sufficient in the way they
become familiar with their requirements under family assistance law.
The department will make available the information that will guide a CCB approved operator to obtain an
understanding and the information will be made through a variety of forums as described elsewhere in the
Framework document.
The department will continue to work with the industry to maintain a two way feedback loop which ensures
that information that is made available to child care services is in a format that maximizes the chances of being
comprehended.
Through this feedback loop and through other means of communication, the department aims to educate the
sector on their obligation to take responsibility for their operations and establish robust administrative
practices which support correct reporting into CCMS.
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Link To CSP / Programs
Many CCB approved services also receive program funding through the CSP program which is administered by
the department. The department will look to improve the administrative linkages between the two programs
to ensure that the aims of the administration of CCB/CCR and Funding Agreements are met.
In more practical terms this means:
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Information obtained through normal program monitoring may be shared between the compliance
and program areas; and
When services are in breach of their legal obligations with regard to CCB, the department may invoke
provisions available under the respective funding agreements to elicit compliance. This may in some
cases mean the suspension of program payments.
The automation of CSP payments to services based on attendance data reported into CCMS ensures more
accurate payments under the CSP, particularly where the payments are directly linked to these reports.
The introduction of the National Quality Framework provides another opportunity for information sharing
between key stakeholders. The CCB compliance program will actively encourage these linkages for the
purposes of improving program outcomes.
Evaluation Of The Program
One of the challenges for the CCB compliance program is to evaluate its effectiveness in terms of positive and
sustainable impact on compliance behaviours. Most certainly this would involve checking the integrity of
payments, identifying the rate of non-compliance and making observations about how these may have
changed, over time. This is the quantitative aspect.
However, the department has a variety of methods in which it interacts with child care services as part of the
CCB compliance program. These methods include compliance reviews, information available on websites,
advice from the CCMS Helpdesk, targeted reviews, direct feedback and even infringement penalties. These are
seen to have an educative function and are also a source of information regarding the performance of the
compliance program. This is the qualitative input.
The department will analyse the data and feedback provided by these sources on a regular basis with a view to
continuous improvements of its compliance program and directing resources to the areas of highest risk.
With a longer term view in mind, the department will also periodically review information sources to measure
their effectiveness and may consider the use of alternative sources by improved data mining techniques and
information sharing with key parties such as ACECQA and state regulators.
Ongoing monitoring of compliance behaviours will measure effectiveness of the various strategies. Analysis of
future behavioural characteristics of Child Care providers will direct the department’s efforts to ensure the
success of the Framework.