It All Starts Here Family Day Care Scheme Pty Ltd and Secretary, Department of Education

[2019] AATA 2512

It All Starts Here Family Day Care Scheme Pty Ltd and Secretary, Department of Education [2019] AATA 2512 (13 August 2019)

Division:GENERAL DIVISION

File Number(s):      2018/2208

Re:It All Starts Here Family Day Care Scheme Pty Ltd

APPLICANT

AndSecretary, Department of Education

RESPONDENT

DECISION

Tribunal:Senior Member A Poljak

Date:13 August 2019

Place:Sydney

The decision under review is affirmed.

...............................[SGD].........................................

Senior Member A Poljak

CATCHWORDS

CHILDCARE – family assistance law – child care benefit – cancellation of approval as an approved child care service – breach of conditions of provider approval – overseas children and educators -  late reporting and enrolments – overlapping sessions – absences before and after care – exceeding educator limit – exceeding educator to child ratios – suitable person to operate a child care service – appropriate sanction – egregious breaches - provided child care in circumstances where not lawfully allowed – given rise to risks for the safety, health and wellbeing of children – governance arrangements systematically flawed - decision affirmed

LEGISLATION

A New Tax System (Family Allowance) (Administration) Act 1999 (Cth) ss 195, 195A, 196, 200, 205, 201A, 219, 219AB, 219N, 219QB, 219QE

Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2017 s 4
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017(Cth) para 10
Education and Care Services National Law Act 2010 (Cth)

Family Assistance Legislation Amendment (Jobs for Families Childcare Package) Act 2017 (Cth) sch 4 item 10

CASES

Moonlight Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 2706 (7 August 2018)

Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 1463 (28 May 2018)

SECONDARY MATERIALS

Education and Care Services National Regulations under the Education and Care Services National Law regs 124, 158, 159

REASONS FOR DECISION

Senior Member A Poljak

13 August 2019

1. On 18 March 2015, It All Starts Here Family Day Care Scheme Pty Ltd, the applicant, applied for approval for Child Care Benefit (“CCB”) under A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“the Administration Act”). The applicant was granted approval for CCB under section 195 of the Administration Act on 10 August 2016, with a start date of 22 August 2016.

2. The decision under review in these proceedings is a decision of a delegate of the respondent dated 10 April 2018 which affirmed an earlier decision of a delegate of the respondent dated 18 September 2017. That decision was a decision pursuant to paragraph 200(1)(e) of the Administration Act to cancel the approval of the applicant as an operator of an approved child care service.

3. The issues for determination in these proceedings are:

   (a)Whether the applicant has failed to comply with the conditions of their continued approval as an approved child care service under the family assistance law; and

   (b)If so, whether the non-compliance justified the cancellation of their approval.

4. I am satisfied that the applicant has not complied with conditions for continued approval pursuant to subsections 196(1), 196(2) and paragraphs 196(3)(a) and (b) of the Administration Act and that the extent and seriousness of the non-compliance justifies cancellation. My reasons are as follows.

   Relevant Legislative Provisions and Framework

5. The respondent has aptly set out the legislative framework and provisions relevant to this review in its statement of facts and contentions which I have reproduced, in part and with addition, below.

6. The family assistance law, as it relates to child care fee assistance, is wholly directed to supporting eligible individuals (for example, parents) with child care costs. In this context, the family assistance law provides a statutory framework under which parents have child care fee assistance calculated based on their individual circumstances, including by reference to personal income and activity-based parameters such as paid employment.

7. The family assistance law establishes a framework for entitlement to child care subsidies formerly known as CCB and child care rebate (“CCR”). The former CCB and CCR, which applied in the period when the Applicant’s approval was granted and subsequently cancelled, were contributions towards child care fees otherwise payable and, viewed as such, were entitlements of individuals who are parents or guardians of children, who have chosen to send their children into child care and who are liable to pay child care fees. Both payments are only payable in respect of sessions of care provided by an approved child care service.

8. The central requirement of the family assistance framework is that child care service operators must report fully and accurately to the Department of Education (“the Department”). Accurate reporting is essential for the Department to correctly calculate child care fee assistance and to ensure that no overpayments of public funding occur. In addition to this, to the extent that any payments of child care fee assistance are first paid to child care service operators, the family assistance law requires that operators fully pass on any such financial assistance to eligible individuals by way of fee-reduction. If that is not able to occur (for example, because the child care did not actually occur), then child care service operators are required to immediately remit such amounts of child care fee assistance back to the Department.

9. If approved as a child care service for this purpose, the operator of the service was obliged to continue to comply with a number of “conditions for continued approval” in order to maintain approval. The approval regime under which the applicant held approval has been repealed and replaced by an entirely new approval regime to support the new Child Care Subsidy (“CCS”) payment that commenced on 2 July 2018.The law relevant to the conditions for continued approval and other obligations of the applicant that led to its immediate suspension and cancellation was saved under item 10 of Schedule 4 to the Family Assistance Legislation Amendment (Jobs for Families Childcare Package) Act 2017 (Cth) (“ the Amendment Act”).

10. Section 196 of the Administration Act provides that there are three kinds of conditions for continued approval under the family assistance law, they are:

    (a)Eligibility rules that are set out in a legislative instrument made under subsection 205(1) of the Administration Act. That instrument was, when the decision on review was made, the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (“the Eligibility Rules”); subsection 196(1) of the Administration Act.

    (b)Requirements imposed under the family assistance law, including conditions for continued approval referred to in Part 8 of the Administration Act, the obligations set out in Part 8A of the Administration Act, and any other provision that imposes an obligation on a child care service under that law, including obligations to not contravene civil penalty and criminal offence provisions; subsection 196(2) of the Administration Act. Relevant to this matter are the obligations under section 219AB (enrolment notifications), section 219N (attendance reporting), and sections 219QB and 219QE (remit overpayments).

    (c)Other child care laws that relate to the operation of the service, the provision of care and its construction and equipment, including the Education and Care Services National Law Act 2010 (Cth) (“the National Law”) and Education and Care Services National Regulations (“the National Regulations”), as it applies in New South Wales; subsection 196(3) of the Administration Act.

11. For the purposes of subsection 196(3), regulations 158 and 159 of the National Regulations require attendance records to be made and kept by the approved provider and family day service educators that accurately record the name of children attending as well as arrival and departure times. They provide:

    158 Children's attendance record to be kept by approved provider

    (1) The approved provider of an education and care service must ensure that a record of attendance is kept for the service that--

    (a) records the full name of each child attending the service; and
    (b) records the date and time each child arrives and departs; and
    (c) is signed by one of the following persons at the time that the child arrives and departs--

    (i) the person who delivers the child to the education and care service premises or collects the child from the education and care service premises;
    (ii) the nominated supervisor or an educator.

    (2) A preschool program provided by a school is not required to comply with subregulation (1) if it keeps attendance records in accordance with the education law, or Government education department policy, of the participating jurisdiction.

    159 Children's attendance record to be kept by family day care educator
    A family day care educator must keep a record of attendance that--

    (a) records the full name of each child being educated and cared for at the

    family day care residence or approved family day care venue; and

    (b) records the date and time each child arrives and departs; and
    (c) is signed by one of the following persons at the time that the child arrives and departs--

    (i) the person who delivers the child to the family day care residence or venue or collects the child from the family day care residence or
    venue;

    (ii) if the signature of the person who delivers the child cannot reasonably be obtained--the family day care educator.

12. Under section 200 of the Administration Act, if the Secretary (or delegate) was satisfied that an operator of an approved child care service had not complied, or was not complying, with a condition (or conditions) for the continued approval of the service, the Secretary was able to impose one or more of a range of "sanctions" set out in subsection 200(1). One of the available sanctions was cancellation of the service's approval under paragraph 200(1)(e). When making a decision about whether to impose a sanction and, if so, which sanction to impose, the Secretary was to have regard to matters set out in a legislative instrument made under subsection 200(5) of the Administration Act, that is, the Child Care Benefit  (Breach of Conditions for Continued Approval) Determination 2017 (“Breach Determination”).

13. The Breach Determination provides that regard is to be had to the following matters in applying a sanction:

    4 Factors to be taken into account in applying sanctions

    The following factors are to be taken into account by the Secretary in considering whether to impose sanctions on a child care service under subsection 200(1) of the Act (consequences of breach of conditions for continued approval), and if so, which sanctions to impose:

    (a) whether, in the opinion of the Secretary, the breach of conditions for continued approval is minor or serious;
    (b) whether the service has breached any conditions of continued approval before, and if so, how often; and

    (c) whether the breach may threaten the safety of children for whom care is provided.

14. Under subsection 201A(1) of the Administration Act, the Secretary was able to immediately suspend the approval of a service if the Secretary reasonably believed that: (a) the service was not complying with all applicable requirements imposed by a relevant law of the Commonwealth, or of the State or Territory; or (b) there was an imminent threat to the health or safety of a child, or children, because of the care provided by the service to the child or children; or (c) due to urgent circumstances, it was no longer appropriate for the service to provide child care.

    Evidence and Consideration

15. The significant breaches of the family assistance law, and the National Law and the National Regulations, arise from the following issues:

    (a)Attendance records submitted for dates when children were overseas (“overseas children”);

    (b)Attendance records submitted for dates when educators were overseas (“overseas educators”);

    (c)Attendance records submitted outside the timeframes prescribed in section 219N(5) of the Administration Act (“late reporting”);

    (d)Attendance records showing enrolments reported outside of the timeframes prescribed in section 219AB of the Administration Act (“late enrolments”);

    (e)Attendance records showing sessions of care that overlap with sessions reported by other services (“overlapping sessions”);

    (f)Attendance records reporting sessions of care where either the child had not commenced, or had already ceased to use the service (“absences before and after care”);

    (g)Attendance records showing that the Applicant exceeded its approved educator limit of 40 educators (“educator limit”); and

    (h)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 (“educator to child ratios”).

    Children and Educators Overseas

16. The respondent undertook a search of the Centerlink mainframe and Immigration Advised Movements and found that the applicant provided section 219N attendance reports for the period 22 August 2016 to 14 May 2017 which attributed 1018 sessions of care to 35 children when they were reported to be overseas. Since April 2017, 219N attendance reports attributed a further 18 sessions to two children when they were reported to be overseas over June and July 2017. For the period 22 August 2016 to 14 May 2017, the Applicant submitted section 219N attendance reports attributing 418 sessions of care were to three educators when the educators were reported to be overseas.

17. Ms Hajar Noufl, the director of the applicant, provided an affidavit in these proceedings dated 19 December 2018.  In her affidavit, Ms Noufl acknowledged that the attendance reports identified by the respondent when the children or educators were overseas constitute inaccurate reporting. She also acknowledges that the procedures which were in place prior to August 2017 were inaccurate in ensuring that all sessions were taking place as scheduled.

18. The applicant contends that it took immediate steps to address the issue by implementing a significant change to its operations requiring the employment of two full time staff members as confirmation officers to conduct daily visits for each educator to ensure care is taking place as recorded. This was never implemented in practice as the applicant’s CCB approval was cancelled in September 2017. 

    Late Reporting

19. The respondent has identified that between 22 August 2016 and 14 May 2017, 1243 attendance reports were submitted by the applicant outside the prescribed timeframes and that over June and July 2017, a further 140 reports were submitted by the applicant outside the timeframes as prescribed in subsection 219N(5) of the Administration Act.

20. The applicant concedes that it submitted attendance reports later than required. In her affidavit, Ms Noufl contends that this occurred for a number of reasons, including issues with the applicant’s previous software provider Hubworks. She also contends that staff at the time lacked the necessary experience to ensure timesheets were being submitted diligently. Ms Noufl advised that to address the issue in the future, procedural changes have been put into place and the applicant had a new software provider.

    Late Enrolments

21. The respondent has identified 125 instances of late enrolments for the period April 2017 to July 2017 from section 219N reports submitted by the applicant. Of these, 23 instances were in excess of 20 days outside of the timeframes prescribed in section 219AB of the Administration Act.

22. The applicant concedes that it previously submitted enrolment notices later than required. Ms Noufl acknowledges in her affidavit that “this should not occur”. She claims that the policy of the applicant has always been to accept informal enrolments and allow children to receive sessions of care while the service awaits the necessary documentation. Ms Noufl states that this has proved difficult as parents of children do not provide the necessary documents despite repeated requests. In order the address the problem, Ms Noufl states that the applicant no longer allows the provision of any care to take place until such time as all required documents for enrolment are provided to the applicant.

    Overlapping Sessions

23. The respondent has identified 95 sessions of care that overlap with sessions reported by other services for the period 29 August 2016 to 18 April 2017 from section 219N reports submitted by the applicant. For the period April 2017 to July 2017, 155 sessions of care overlapped with sessions reported by other services.

24. The applicant concedes that it submitted sessions of care which overlapped with other services. Ms Noufl acknowledges in her affidavit that “this should not occur”. She states that the applicant requires the children’s parents to disclose to the applicant whether the child is in the care of another service in its child enrolment form.

    Absences Before and After Care

25. The respondent has identified 245 absences that were reported between 22 August 2016 to 14 May 2017, where either child had not commenced, or had already ceased to use the service. The aggregate of the 245 absences comprised of 176 initial absences for 145 children after a child has permanently ceased care, and 69 absences for children before they commenced care with the applicant.

26. The applicant concedes that it previously reported absent sessions of care before care commenced on after-care ceased. Ms Noufl contends in her affidavit that it took appropriate steps to address the issue, particularly by undertaking fortnightly reporting to ensure no such sessions could be claimed.

27. Applicant concedes that for a period of one fortnight, 2 July 2017 to 13 July 2017, when the applicant was required by the respondent to undertake manual reporting, it did not prepare the absence before and after-care report to ensure no such sessions were claimed. The respondent identified 17 instances in which absences were reported after a child ceased care with the service during this period of time.

    Exceeding Limit of 40 Educators

28. The respondent has identified four occasions where the applicant exceeded its limit of 40 educators.

29. Ms Noufl says in her affidavit at paragraph [92]-[93]:

    “The reason that these apparent breaches occurred is that I had to cancel or amend attendance records on the above dates. I could only do so by “re-registering” educators that were removed into the Applicant system. After amending the attendance records, I “de-registered” those Educators, and the number of educators recorded on the applicant and respondent’s systems returned to the prescribed limit of 40.

    I absolutely agree that the NSW State Regulatory Authority  imposes conditions to limit the number of educators engaged by a service to ensure that the service can adequately monitor the care being provided ensure the safety of the children. I disagree that the above apparent breaches in any way impacted on the ability of the Applicant to do so.”

30. The applicant submits that if this is to be considered a breach, it is a technical breach.

    Educator to Child Ratios

31. The respondent has identified 1370 instances where the applicant reported more than the amount limit of no more than four preschool aged children at any one time and 520 instances where the service reported more than the allowed limit of seven children a one time. These ratios are prescribed in regulation 124 the National Regulations.

32. The applicant concedes that it exceeded the educator to child ratio in some instances however contends that whilst the ratio was exceeded, it was for a small time (15 to 30 minutes on each occasion) and that there is a reasonable excuse for the breaches. The applicant submits that the parents collected or dropped off the children to the educators later than scheduled and this can overlap on some instances for a limited time. Ms Noufl acknowledged in her affidavit that this was a significant issue and stated that in order to address this issue in the future, the applicant will issue a reminder to parents to strictly collect the children on time. Further, the applicant will be required to have a period of at least 30 minutes between interchanging children with an educator.

    The Appropriate Sanction

1. The applicant contends that it has appropriate governance arrangements to ensure compliance with its obligations under the family assistance law, and this is shown to its continual improvement and the steps it has taken to ensure future compliance and contends that it is a suitable person to operate a service.

2. 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.

3. 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.

4. 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).

5. 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.

6. 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.

7. 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.

   Decision

8. The decision under review is affirmed.

I certify that the preceding 40 (fourty) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

.............................[SGD]...........................................

Associate

Dated: 13 August 2019

Date(s) of hearing:	8 February 2019
Counsel for the Applicant:	Mr H Elachkar
Solicitors for the Applicant:	Mr H Alameddine, Birchgrove Legal
Solicitors for the Respondent:	Mr B Dube, Sparke Helmore Lawyers