Child Care Payments
Compliance Programme
Strategy
1. INTRODUCTION
The Department of Education (the department) has a broad ranging child care payments
compliance programme to encourage, enforce and strengthen compliance with family assistance
law in the child care sector.
The department’s child care payments compliance programme seeks to:


protect the integrity of child care fee assistance payments made by the Australian
Government to support families accessing quality child care in approved child care
services
promote behaviour by approved child care services which is compliant with the family
assistance law.
In order to achieve these outcomes, the department is working closely with a wide range of
regulatory bodies including the Australian Taxation Office, the Department of Human Services,
and state and territory regulatory authorities to ensure services are correctly applying the rules
under all relevant laws.
1.1 Purpose and Audience
The purpose of this document is to provide stakeholders, including child care sector peak bodies,
child care services and families receiving child care fee assistance, with information on the
department’s child care payments compliance programme.
1.2 Scope
This document provides an overview of the department’s child care compliance activity with
regards to the following payments made under Family Assistance Law:



Child Care Benefit (CCB) including:
o Special Child Care Benefit (SCCB)
o Grandparent Child Care Benefit (GCCB)
Child Care Rebate (CCR)
Jobs, Education and Training Child Care Fee Assistance (JETCCFA).
2. APPROACH TO CHILD CARE COMPLIANCE 2013-14
In mid-2013, the department introduced a more sophisticated, results oriented approach to the
department’s child care payments compliance programme. Key elements introduced in 2013-14
to enhance and strengthen the department’s compliance activities included:


enhancing data interrogation and analysis capacity and developing high risk indicators to
assist in identifying services at high risk of non-compliance
introducing Random Sample Parent Checks (RSPC) to provide improved assurance about
the accuracy of child care payments




prioritising compliance effort to high value compliance work based on the risk of noncompliance
establishing a Child Care Payments Compliance Branch to manage the department’s
outcomes-focused compliance programme including associated compliance
infrastructure/supports (e.g. project planning, management information and deterrence
compliance communications)
creating a the Serious Non-Compliance Taskforce to focus on services at high risk of
serious non-compliance
increasing imposition of penalties and sanctions, where justified.
Feedback on the revised approach from key stakeholders, including the Australian National Audit
Office (ANAO), has been positive.
In addition, an independent high level review found that the frameworks underpinning the
department’s compliance approach reflect best practice. The review also found that the results
of the Random Sample Parent Checks correlate strongly with the high risk indicators thereby
confirming:


the predictive accuracy of the high risk indicators as a valid and robust indicator for
identifying child care services at high risk of non-compliance
the appropriateness of focusing our compliance effort on these services.
3. CURRENT OPERATING ENVIRONMENT
The Australian Government is investing more than $28.5 billion from 2014–15 to 2017–18 in child
care and early childhood learning. This includes a record $13.6 billion on the Child Care Benefit,
which provides means-tested assistance to reduce child care fees and $14.9 billion on the Child
Care Rebate to assist families with out-of-pocket child care costs.
Legislative provisions through Family Assistance Law are in place to protect this investment in
child care assistance to families. Service providers have a legal responsibility to meet the
requirements of the law in order to be approved under Family Assistance Law.
The department acknowledges that the majority of service providers are providing high quality,
accessible and affordable child care to Australian families and are complying with their legal
requirements. The department also acknowledges that some service providers try to comply but
don’t always succeed as they may not be fully aware of their legal requirements or have the
necessary skills. There is, however a proportion of service providers that have deliberately
decided not to comply and commit fraud.
Emphasis will be given to working collaboratively with all service providers to enhance their
knowledge of and adherence to their obligations. Notwithstanding this, failure to respond
positively and promptly to identified breaches may result in penalties such as the cancellation of
approval to administer child care payments, termination of relevant funding agreement/contract
or prosecution for fraud.
The department encourages service providers to self-assess and voluntarily disclose noncompliance to the department. This will be taken into account in determining the appropriate
corrective action, noting that where an overpayment has occurred the department will seek to
recover the funds.
The department’s compliance response and decisions on where to invest its compliance effort is
based on an analysis of the risk of non-compliance. This ensures the most effective use of
resources to achieve the best result. A graduated and proportionate response to non-compliance
is taken, depending on the attitude to compliance and type of behaviour of each target group as
shown in the compliance pyramid below.
Diagram B.
Compliance Pyramid
Adapted from the Compliance Model developed by Braithwaite and integrated into the Australian Taxation Office approach to
compliance
To understand the non-compliant practices that may be occurring and the extent of
non-compliance across the sector, interrogation and analysis, tip-offs and service information,
including the outcomes of compliance activity, is interrogated. Service providers at greatest risk
of not complying are then identified, prioritised and targeted. Measuring and reporting on results
demonstrates that the compliance effort is achieving its objectives in a cost-effective manner.
4. BROAD RANGING CHILD CARE PAYMENTS COMPLIANCE PROGRAMME
The department’s broad ranging child care payments compliance programme focuses on
prevention, including education, detection/recovery and deterrence as follows:



Prevention – educating services and families about their responsibilities and putting in
place procedures and systems to minimise the risk of incorrect payment and fraud,
including updating and tightening the approval process with the aim of reducing the risk
of future non-compliance by approved services
Detection and Recovery – undertaking targeted compliance reviews, investigating fraud
and, where required, recovering child care payments through legal proceedings
Deterrence - imposing sanctions and penalties where services engage in non-compliance
activities and communicating the outcomes of compliance activities to the sector to act
as a deterrence.
The programme is being further strengthened through a variety of related actions, including:






maintaining strong relationships with State Regulatory Authorities and other
Commonwealth agencies to achieve stronger compliance outcomes through leveraging
our respective compliance powers
examining and implementing legislative options (Family Assistance Law and National Law)
with a view to limiting ‘sharp practices’ and strengthening compliance powers
tightening administrative processes for the approval of new services entering the child
care sector
reviewing the policy settings of existing child care and early childhood learning
programmes to tighten and better target funding and identify opportunities to minimise
potential non-compliance
actively progressing potential fraud cases
working closely with peak industry bodies to improve their members’ awareness of their
legal obligations and good practice.
In addition, opportunities to enhance legislation and procedures for child care payments that
minimise the risk of non-compliance in the future will be considered in conjunction with the
Australian Government’s response to the Productivity Commission Inquiry into future options for
child care and early childhood learning.
5. APPROACH TO CHILD CARE COMPLIANCE 2014-15
The department continues to strengthen and build on the 2013–14 approach to child care
compliance.
The key enhancements to the department’s compliance approach in 2014–15 include:

moving to a national approach (away from the state by state approach) to setting
compliance priorities to ensure available resources are directed to addressing the
highest risk services/activities nationally

introducing a clearly defined compliance outcome to improve payment accuracy, as
measured by Random Sample Parent Checks (RSPCs), to ensure all compliance activities
are specifically directed towards achieving this outcome

setting compliance performance measures and targets to:
o guide the identification of compliance activities and prioritisation of compliance
cases
o strengthen the department’s ability to monitor the effectiveness of compliance
activities in achieving the 2014–15 compliance outcome.

strengthening compliance communications to, amongst other things:
o assist in deterring non-compliant behaviours and help the Australian Government
to proactively communicate the reasons for the compliance action and the
importance of maintaining the financial integrity of taxpayer funds
o guide key messaging relating to compliance activities so that it is clearly and
consistently communicated to promote existing penalty provisions.
The Serious Non-compliance Taskforce continues to be a critical element of the department’s
outcomes based compliance programme. The Taskforce’s focus on services at high risk of noncompliance and communicating the outcomes of compliance activities is having an impact and is
a key component of our deterrence communication strategy.
The outcomes achieved by the Taskforce are being used to strengthen the department’s
compliance functions more generally.