Koala Family Day Care Pty Ltd and Secretary, Department of Education

[2018] AATA 4538

Koala Family Day Care Pty Ltd and Secretary, Department of Education [2018] AATA 4538 (6 December 2018)

Division:GENERAL DIVISION

File Number(s):      2017/6782

Re:Koala Family Day Care Pty Ltd  

APPLICANT

And  Secretary, Department of Education

RESPONDENT

DECISION

Tribunal:R. Cameron, Senior Member and the Hon. Matthew Groom, Senior Member

Date:6 December 2018        

Place:Melbourne

The Tribunal affirms the decision under review.

.......................................................................

R. Cameron, Senior Member

Catchwords

CHILD CARE - BENEFITS AND REBATES - cancellation of Applicant’s approval as a child care service -  Applicant no longer eligible for child care benefit or child care rebate – substantial non-compliance with regulatory framework over prolonged period – concession of breaches - appropriate sanction under A New Tax System (Family Assistance) (Administration) Act 1999 – decision affirmed

Legislation

A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999

Secondary Materials

Child Care Benefit (Breach of Conditions for Continued Approval) Amendment Determination (No 1) 2018

Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000

REASONS FOR DECISION

R. Cameron, Senior Member and the Hon. Matthew Groom, Senior Member

6 December 2018

INTRODUCTION

1. This is an application by Koala Family Day Care Pty Ltd (“Koala Family Day Care”) (the Applicant) seeking review of a decision of an Authorised Review Officer of the Secretary, Department of Education (the Respondent) made on 16 October 2017 confirming a previous decision cancelling the Applicant’s service approval (as a childcare service for the purposes of the family assistance law) under section 200(1)(e) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Administration Act”) (“the reviewable decision”).

   LEGISLATIVE FRAMEWORK

2. What is known as the “family assistance law” comprises two statutes being A New Tax System (Family Assistance) Act1999 (“the Assistance Act”) and the Administration Act. The family assistance law has created a system which provides for provision of several entitlements including those known as the childcare benefit (“CCB”) and the childcare rebate (“CCR”). These benefits are payable subject to satisfaction of certain conditions contained in the family assistance law in respect of sessions of childcare provided by an approved childcare service.

3. Anyone seeking to operate a childcare service may apply for approval as an approved childcare service for the purpose of claiming benefits under the family assistance law. (See section 194 of the Administration Act). When approval is granted to the operator of a childcare service under the provisions of Division 1 “Approval of childcare services” of Part 8 “Approval of childcare services and registered carers” of the Administration Act, it is subject to conditions which must be complied with at all times by an approved childcare service. These conditions are extensive and include but are not limited to, eligibility requirements, compliance with family assistance law, compliance with Commonwealth, State and Territory laws, financial viability, compliance with childcare placement limits and compliance with conditions imposed by the Minister and/or the Secretary.

4. Under section 200 of the Administration Act, if the Secretary or their delegate is satisfied that an approved operator of a childcare service has not complied with, or is not complying with a condition for the continued approval of the service, sanctions may be imposed upon it by the Secretary. The sanctions that may be imposed by the Secretary are prescribed in section 200(1). The range of sanctions that can be imposed are extensive. They include measures such as variation of conditions, reduction of any childcare places allocated to the service and suspension or cancellation of the service’s approval. Specifically, under section 200(1)(e) of the Administration Act the Secretary may cancel the approval of a childcare service.

5. The Secretary is required under section 200(4) of the Administration Act to have regard to any Ministerial Determination made under subsection (5). Such a Ministerial Determination may include factors to be taken into account by the Secretary in applying any of the sanctions contained in subsection (1) or factors to be taken into account in specifying the date of effect of a revocation of a suspension under subsection (3).

6. A Ministerial Direction has been made under section 200(5) of the Administration Act. This Ministerial Direction is known as the Child Care Benefit (Breach of Conditions for Continued Approval) Amendment Determination (No 1) 2018 (“the Amendment Determination”).

7. Clause 4 of the Amendment Determination provides that it applies to decisions made after its commencement, including decisions made on review. The Amendment Determination commenced operation on 4 April 2018.

8. The provisions of the Amendment Determination will not be repeated in full. The contents of it are referred to in their entirety for the full force and effect. Several observations should be made concerning the operative parts of the Amendment Determination.

9. Clause 4A of the Amendment Determination provides for a presumption in favour of cancellation with respect to certain breaches of conditions by an approved childcare service. Those breaches of conditions attracting the presumption in favour of cancellation may be summarised as follows:

   (a)A breach of reporting obligations under section 219N of the Administration Act (inaccurate representations of fees, inaccurate reports of sessions of care, child swapping) involving serious or frequent past contraventions (defined as involving either 100 or more inaccurate reports, or payments in excess of $5,000 due to inaccurate reports) (sections 4A(1) and (2));

   (b)Providing false, misleading or otherwise inaccurate reports regarding whether care was actually provided (specifically related to educators and/or children being overseas, incapacitated or not in attendance) (section 4A (3));

   (c)Failure to inform the Secretary about changes to key personnel (section 4A (4));

   (d)Not being suitable to operate a childcare service (section 4A(5)); and

   (e)Failure to comply with obligations relevant to children’s health and safety, physical environment, educator qualifications, keeping a register of educators and other requirements (section 4A(6)).

10. It should be noted, as contended for by the Respondent, that a sanction such as cancellation does not necessarily mean that the childcare business must cease operation. The consequence of cancellation of approval under the family assistance law is that the Child Care Benefit and the Child Care Rebate are not payable to parents/guardians for any childcare provided by that service. The childcare service concerned is still able to commercially function subject to it holding the requisite approval as an “Education and care service” from the appropriate regulator in a state which administers a separate approval framework dedicated to ensuring minimum standards of quality and safety of care under the “Education and Care Services National law”.

    RELEVANT FACTS

11. On 20 February 2012 the Applicant obtained approval as a childcare service under the family assistance law. Upon approval the Applicant carried on business as a childcare service provider.

12. Pursuant to the powers conferred upon it the Respondent conducted what is known as a “compliance review” for the period 1 July 2013 to 24 May 2014 (“the 2013/2014 compliance review”).

13. Following the conduct of the 2013/2014 compliance review on 10 July 2014 the Respondent wrote to the Applicant advising of its findings. Those findings identified various breaches by the Applicant of several requirements that it was obliged to comply with under the family assistance law. Further, in that letter the Respondent advised the Applicant of its requirements for rectification of the breaches identified in the 2013/2014 compliance review.

14. After the letter of 10 July 2014 was sent by the Respondent to the Applicant there were several meetings and an exchange of correspondence between them the purpose of which was to enable the Applicant to rectify the breaches of the family assistance law identified in the 2013/2014 compliance review.

15. On 10 September 2014 the Respondent by way of a letter gave notice of non-compliance arising from a consideration of the breaches of the family assistance law identified in the 2013/2014 compliance review.

16. Between the period of 1 July 2014 to 7 December 2014 the Respondent conducted a further compliance review (“the 2014 compliance review”).

17. Following the 2014 compliance review on 4 February 2015 the Respondent wrote to the Applicant providing details of the findings of such review. The letter identified further breaches of the family assistance law by the Applicant that had been uncovered in the 2014 compliance review. Further, the Respondent specified in that letter its requirements for the Applicant to rectify breaches of its obligations under the family assistance law identified in the 2014 compliance review.

18. Correspondence passed between the Applicant and the Respondent following the 4 February 2015 letter. The correspondence from the Applicant to the Respondent was directed to rectification of breaches of the family assistance law identified in the 2014 compliance review. The responses from the Respondent to the Applicant were directed towards matters it considered had not been addressed in the correspondence received from the Applicant concerning the breaches identified in the 2014 compliance review.

19. Importantly, the Respondent served written notices under section 158 of the Administration Act requesting documents on the following dates:

    (a)On 13 March 2017 seeking documents relating to child swapping rules as set out in section 10A of the Eligibility Determination; and

    (b)On 29 March 2017 requesting records relating to 24-hour care.

20. In response to these notices the Applicant provided the following:

    (a)On 4 April 2017 the Applicant provided documents pursuant to the notice concerning child swapping; and

    (b)On 11 April 2017 the Applicant provided documents concerning the 24 hour care.

21. Following a consideration of the documents and written responses provided by the Applicant in accordance with the section 158 notices and a meeting that took place between the parties on 10 May 2017, a delegate of the Secretary of the Department wrote to the Applicant notifying it of the intention to cancel the Applicant’s approval under the family assistance law and invited submissions from the Applicant as to why such approval should not be cancelled.

22. A submission was provided by way of response from the Applicant to the Respondent seeking to show cause why it’s approval should not be cancelled on 20 June 2017.

23. The Respondent considered the representations made by the Applicant under cover of its letter of 20 June 2017 and on 24 August 2017 gave notice to the Applicant that it had decided to cancel the Applicant’s approval under the family assistance law.

24. On 31 August 2017 the Applicant requested an internal review of the Respondent’s decision to cancel its approval under the family assistance law.

25. On 7 September 2017 the Respondent invited the Applicant to make a submission to the internal review.

26. The request for an internal review of the Respondent’s decision to cancel the Applicant’s approval under the family assistance law was further supported by a letter dated 22 September 2017 which contained a submission in response to the invitation by it to do so. The submission of the Applicant was directed to revoking the cancellation decision.

    ALLEGED BREACHES OF CONDITIONS BY THE APPLICANT

27. The Respondent contends that there are three categories of breach of conditions by the Applicant. They will be summarised and then a more detailed consideration of those allegations undertaken.

28. Firstly, it is contended by the Respondent that the Applicant has breached conditions concerning the accuracy of attendance reports submitted as required by section 219N of the Administration Act. Consequently there have been overpayments of childcare fee assistance that were made by reason of its reliance on such misreporting or perhaps more correctly inaccurate reports.

29. Secondly, breaches of conditions concerning suitability of the operator to carry out a childcare service having regard to the compliance requirements of Part 2 of the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (“the Eligibility Determination”). Six specific breaches of suitability conditions are relied upon by the Respondent as constituting these breaches of conditions. They encompass:

    (a)Child Swapping;

    (b)24 Hour Care;

    (c)Educators and Children overseas;

    (d)Reporting Absences after the service had permanently ceased providing care to the child;

    (e)Late enrolments and attendance reports; and

    (f)More than seven children in care.

30. Thirdly, breaches of conditions arising from obligations contained in the Education and Care Services National Law.

    Accuracy of Attendance Reports

31. Section 219N imposes an obligation on approved childcare service providers to give reports to the Secretary containing prescribed information for each week in which a session of care is provided to a child in relation to whom enrolment has been notified to and confirmed by the Secretary. The report must include attendance details and further information relevant to determining whether a fee reduction is applicable (section 219N(4)(a)(i)), making a determination of entitlement, or no entitlement in relation to care, (section 219N(4)(a)(ii)) and in relation to determining amounts of childcare rebate that are payable (section 219N(4)(aa)).

32. The Respondent undertook investigations by searching the Centrelink mainframe system in order to identify educators who are engaged by the Applicant and the children who were enrolled by it who had been recorded by the DHS system through Immigration Advised Movements as travelling overseas. This information was then compared by the Respondent against the attendance reports submitted by the Applicant in purported compliance with section 219N of the Administration Act.

33. The investigations unearthed several facts to demonstrate that the Applicant had lodged with the Secretary inaccurate attendance reports. (Full particulars of the inaccuracies in the attendance reports concerned are to be found at T9 of the T-documents which is a “Notice of Intention to Cancel Services Approval Under Family Assistance Law”. It contains expansive tables classified under subject headings, with specific names, registration numbers, dates, and sessions reported together with any other relevant information appropriately tabulated and recorded, as the case may be. It provides an accurate depiction of the defects in the attendance reports and their non-compliance with the provisions of section 219N).

34. Firstly, a total of 1,665 instances of care were reported by the Applicant for children and educators who were overseas. Child Care Benefits and Child Care Rebates were paid for these sessions totalling $6,766.24 to the Respondent.

35. Secondly, for the period 1 June 2016 to 2 February 2017, 27 sessions of care were reported by the Applicant which attributed the provision of care to particular educators for dates when those educators were overseas. In reliance upon these reports the Respondent paid the Applicant $827.94 in Child Care Benefits and $468.60 in Child Care Rebates.

36. Thirdly, for the period 1 June 2016 to 2 February 2017 the Respondent identified 1,638 instances of care reported by the Applicant which attributed the provision of such care to children who were overseas at that time. In reliance upon these reports the Respondent paid the Applicant $4,287.77 in Child Care Benefits and $1,181.93 in Child Care Rebates.

37. Fourthly, the Applicant lodged attendance reports for 890 days which involved four parents who were engaged as educators by it in violation of the child swapping rules. It also lodged attendance reports for fee assistance for 1,381 days in respect of eight parents where those parents (or their partners) were engaged as a childcare educator in breach of the child swapping rules.

38. Fifthly, 267 instances of reporting after child care had ceased.

39. Sixthly, 190 instances identified when data was not submitted within the required timeframe.

40. Seventhly, 130 instances of late enrolments were identified.

41. Eighthly, 8,649 sessions where the Applicant submitted attendance reports that exceeded the allowed limit of seven children in care at any one time.

42. Ninthly, 4,414 sessions of care were identified where care was provided to more than four pre-school age children in any one time contrary to the relevant conditions.

43. The response of the Applicant to these allegations is largely to be found in two written submissions dated 20 June 2017 and 22 September 2017. In the letter of 20 June 2017 the Applicant did not cavil with the findings of the Respondent concerning the allegations that it provided inaccurate attendance reports. The contents of that letter are referred to in their entirety for their full force and effect. Helpfully, the author of the letter which was signed by Mr Al-Hifadhi a director of the Applicant and Bruce Hammill, who describes himself as a “Supervisor” of the Applicant, analyses each report under the relevant subject heading by reference to specific Tables identified with the letters “A” to “F” and the additional heading “Previous failure to provide information in section 219 reports.” Under the last heading, tellingly (and to the Applicant’s credit) it is stated: “We do not deny that we have made mistakes but the mistakes were not made deliberate or recklessness but they were made due to lack of knowledge.” This sentence really does summarise the response to each of the subject headings in the letter which acknowledged that there had been inaccuracies in the reports, albeit not specifically identifying what they were. It kept repeating that there had been a thorough investigation and implementation of action plans and improvement processes which focused on administrative matters where breaches had been identified. The letter emphasises the Applicant’s contention that it had introduced systems and measures of crosschecking to ensure that only accurate reports would be submitted to the Secretary in the future.

44. A similar approach was adopted in the letter of 22 September 2017 from the Applicant to the Respondent. The letter acknowledged that there had been “errors” and stated that the Applicant “has rectified the errors and put in place processes and procedures to eliminate mistakes in the future.”

45. The 22 September 2017 letter also acknowledged that any educators who had caused errors in the records kept by it were no longer employed with the Applicant. Emphasis was placed in the letter on improved methods of training and scrutiny of the Applicant’s staff concerning the obligation to comply with conditions of approval and to ensure that accurate reports were given to the Secretary as required by the Administration Act. Once again there was no specific denial of the allegations made by the Respondent concerning the submission of inaccurate attendance reports.

46. In evidence before the Tribunal also was a letter of 18 September 2017 addressed to the Respondent’s Authorised Review Officer from one Mr. Abdul Sheikhahmed from an organisation known as “Ravaale Business Consulting Services”. He described himself as a “family day-care business consultant”. Apparently, he is also a Certified Practising Accountant. He stated he had been retained by the Applicant to provide “Family Day Care Payments Compliance and Accountability training to the staff and educators” of the Applicant. The letter from Mr. Sheikhahmed once again did not challenge the findings of the Respondent with respect to inaccurate reports. However, he stated he had conducted training to assist the Applicant to “continue to strive for consistent compliance and accuracy in all its CCMS data.”

1. Mr. Al-Hifahdi gave oral evidence before the Tribunal at the hearing of this application and did not question, in substance, the findings of the Respondent concerning the inaccuracy of the reports that had been lodged. This approach was also adopted in the Applicant’s Statement of Issues, Facts and Contentions, not to mention submissions made in both the opening and closing of its case at the hearing before the Tribunal.

2. Overall, Mr. Al-Hifahdi evidence and submissions sought to deflect responsibility for the inaccuracy of the reports to carers, educators and parents who had not adhered to what he perceived to be their obligations to compile accurate reports or perhaps, provide the raw material or data to be included in them. In some instances when it involved overseas travel he stated that he had in fact been deceived by reason of the carers not informing him that they had travelled overseas. In his evidence he accused them of “playing games” and in effect pleaded that if these people were to behave in such a way it was difficult to govern them and that ultimately the Applicant would be responsible. He conceded he signed the reports and then responded by saying: “I am being asked the impossible”. Additionally, he did emphasise that some of the carers who he said were a source of the problem had been sacked. Overall, his evidence on this topic did not face up to the realities of the obligations imposed on him by the family assistance law.

3. Having considered all this material and acknowledging that no evidence has been adduced by the Applicant to challenge the findings concerning inaccurate reports, the Tribunal concludes that this ground relied upon by the Respondent has been established.

   CONDITIONS RELATING TO SUITABILITY

   Child Swapping

4. “Child Swapping” is a term used in the family assistance law field which defines a prohibition on family day care educators and their partners from receiving childcare payments for their own children’s session of family day care if, on the same day, the family day care educator provides family day care for approved family day care service.

5. The investigations undertaken by the Respondent revealed that in the years 2016 and 2017 on 1,381 days the Applicant submitted attendance reports under section 219N of the Assistance Act for fee assistance where the relevant parent (or partner of the parent) were working as a family day care educator. This is a violation of the child swapping rules.

6. Additionally, it should be noted that of the 1,381 days identified a total of 890 of those days related to four parents who are engaged as educators by the Applicant itself. This meant that the Applicant submitted attendance reports for the care of children of educators who worked for it in violation of section 219N.

7. Once again, the material provided by the Applicant in response to these allegations does not deny them. In various ways it contains admissions that the child swapping rules had been violated. As the Respondent contends in its letter of 4 April 2017 to the Respondent, the Applicant states that it had asked the care providers concerned why they had broken the law and emphasised that they had been instructed that there was to be no child swapping. It repeats that the educators took responsibility for the breach of the childcare swapping rules. This letter does not deny the allegations but once again seeks to deflect responsibility for the breaches to employees. (This approach was also adopted in the Applicant’s Statement of Facts, Issues and Contentions as noted above.)

8. The letter of 20 June 2017 from the Applicant to the Respondent previously referred to in these reasons simply does not address the issue of child swapping at all. Given that this was made in response to a specific Notice from the Respondent regulator on 10 May 2017 “Notice of Intention to Cancel Services Approval Under Family Assistance Law” when the allegations of child swapping had been fairly and squarely put to it[1] one would have expected that such allegations would have been addressed. If the Applicant had a defence to the allegations of child swapping it would be reasonable to expect it to have been articulated by way of a letter in reply.

   [1] See document T 9 of the T documents at page 173 where details of such allegations are to be found.

9. The law of evidence does provide some guidance in this setting. The failure to answer a letter may amount to an admission if there are circumstances which render it more reasonably probable that a person who denied the assertions made against him in the letter would answer those assertions than he would not.[2] The failure to respond to this correspondence was not addressed in any evidence and the Tribunal. The Tribunal considers that it is reasonable to infer that such failure to respond was because the Applicant could not deny the allegations and by reason of this fact it constitutes an admission by conduct.

   [2] See Thomas v Hollier (1984) 156 CLR 152 at 157 and the authorities referred to by Gibbs CJ. See also "Cross on Evidence" 9th Edition J D Heydon at paragraph [33435] "Admissions by conduct".

10. The written response from the Applicant of 22 September 2017 under the heading of “Child Swapping” sought to what one might describe, “confess and avoid”. It states that it applied all possible policies and procedures together with awareness training. It contended that it could not possibly know if a parent of a child enrolled with it was working as an educator in another childcare provider. Also, the Applicant sought to once again to deflect blame onto the employees. A further attempt at deflection was made by contending that: “Although the number of sessions appear to be large there are only 6 educators conducting child swapping activities, and we have retrained those persons and given them a strong warning.” There was no denial of the child swapping as alleged by the Respondent. It would have been very easy for the Applicant to have stated the true position if it had not engaged in the child swapping alleged. The responses were carefully drafted and drafted at a time when the Applicant had the assistance of a competent expert in the industry. The Tribunal infers from this that the Applicant had no basis for denying the allegation.

11. Finally, in the oral evidence given by the Applicant’s director Mr Al-Hifadhi, there was no attempt to deny the allegations concerned. Given the failure to either deny or put an alternative account to rebut the child swapping allegations the Tribunal considers it reasonable to infer that there was no basis for the Applicant to deny the allegations.

12. Therefore, for the reasons articulated, on the evidence available the Tribunal finds that the child swapping allegations are established.

    24 Hour Care

13. This claim concerned 24-hour care certificates for periods of 24-hour care approved for Ayam Mahood and Adam Mahood for the period 7 October 2016 to 9 October 2016. This benefit is paid under the provisions of section 56(3) of the Assistance Act. It is confined to a situation where the claimant or the claimant’s partner (the parents) is unable to care for the child concerned because of work-related commitments or exceptional circumstances. There was no evidence before the Tribunal of either a requirement of the parents (in this case a sole parent) to work or special circumstances within the meaning of the Assistance Act. There was a letter from Dr Mostafa stating that the claimant Mr Hardy Mahoud was in need of 24-hour childcare as the sole parent as he was required to fly to Iraq. The evidence obtained by the Respondent including flight itineraries reveals that Mr Mahoud returned to Melbourne on 3 October 2016, which was before the period for which the claim was made. Therefore, it cannot be a valid claim.

14. There was no certificate provided that complied with the section 56(3) requirements of the Assistance Act. It has not therefore, been accurately reported and in any event by reason of Mr Mahoud’s return to Melbourne on 3 October before the dates for which the claim was made, the grounds upon which a right to claim such payment had not occurred.

15. The Applicant’s letter of 20 June 2017 to the Respondent does not address this question. There is no explanation offered as to why this is so.

16. Its letter of 22 September 2017 asserts that Mr. Mahoud’s passport shows that he flew from Iraq on 10 October 2016 and reached Melbourne on 11 October 2016 late evening. Those dates are after the dates for which the claim was made being 7 to 9 October. Also, the passport is not in evidence. It is not said how the passport reveals the dates of travel, such as for instance, whether it has a stamp on it bearing any and if so what date. The Tribunal therefore cannot find the evidence supports the fact contended by the Applicant that justifies a finding of compliance for this claim for 24 hour care. It does not.

17. The Tribunal therefore finds that this ground of non-compliance has been established.

    Educators and Children Overseas

18. The Respondent identified 27 sessions of care when educators were overseas. As with all of the claims by the Respondent details of the attendance reports submitted for dates when educators were overseas were provided, including the educator’s name, the dates of departure and return and the relevant sessions of care reported.[3] These allegations were not seriously contested in the letters of response or the evidence given on behalf of the Applicant. Specifically, the letters of 20 June 2017 and 22 September 2017 under the relevant heading are referred to.

    [3] See the table on page 175 of the T documents.

19. Once again there was no denial of these allegations in any of the correspondence and the approach adopted was to deflect blame upon the educators concerned for having not informed the Applicant of their travel intentions. Further, it was contended that their contracts had been terminated and additional educational training and awareness programs conducted. Finally, as a further measure to prevent subsequent occurrences of this breach of condition, it was contended that the frequency of announced, and unannounced visits to those educators would be increased. A similar approach was adopted in the Applicant’s Statement of Facts and Contentions.

20. Given that these contentions by the Respondent were not seriously contested it is again reasonable to infer that there was no basis for denying the allegations. Further, it was not tackled in any serious way in the evidence given from the witness box by Mr Al-Hifhadi.

21. As contended for by the Respondent it establishes that inaccurate reports were lodged by the Applicant in breach of the obligations created by section 219N. The attempts at deflecting blame and not confronting the problem, coupled with fairly limited attempts to explain such conduct away, also reflects poorly on the Applicant. An unwillingness to adhere to strict compliance with the family assistance law does demonstrate that there is a serious question mark about the Applicant’s suitability to operate an approved childcare service under the Administration Act.

22. The Tribunal finds that these grounds relied upon by the Respondent establish a breach of the conditions concerned.

    Reporting Absences after the service had permanently ceased providing care to the child

23. The Respondent contends that 267 reported childcare sessions after the child had ceased care (document T9 at page 177 of the T documents) were identified in detail. This revealed the requirements of section 10 of the Assistance Act, which prescribes the circumstances when an initial 42 day absence may be reported in attendance reports given under section 219N may be claimed, were not complied with. The Respondent contends that this establishes that the reports given to the Respondent were not accurate. They were also inaccurate because an absence day cannot be reported after a child ceases attending a service (let alone sessions of care after the child has ceased care.)

24. In the correspondence by way of response that has been referred to throughout these reasons once again the explanation offered does not deny the allegations of the Respondent. It has largely been put in terms of the fact that such children were expected to return to the service after the period of absence. However, the parents did not inform the Applicant of their decision not to return. By reason of this fact there was an acknowledgement by the Applicant that sessions had been incorrectly reported. It was then contended that its procedures had changed including the implementation of an internal audit on a monthly basis in order to eliminate future occurrence of this type of non-compliance.

25. In the witness box Mr Al-Hifadhi (and in his submissions from the bar table) did not seriously contest these allegations.

26. There is no evidence that gives the Tribunal reason to doubt them and they are established as a breach of condition as contended for by the Respondent.

    Late enrolments and attendance reports

27. The Respondent identified 190 instances where the Applicant failed to submit reports as required in accordance with section 219 of the Administration Act. (Details of those instances when attendance data was not submitted within the required timeframe are also to be found in document T9 of the T documents commencing at page 182).

28. Also, the Respondent identified 130 instances when enrolment data was not submitted within the required timeframe. Several of these notifications took place more than 50 days outside the time requirement. (Details of those instances when enrolment data was not submitted to the Respondent within the required time frames can be found in document T9 of the T documents commencing at page 186).

29. Again, in the written responses of both 20 June 2017 and 22 September 2017 together with the evidence from the witness box of Mr Al-Hifadhi, the Applicant did not deny the allegations but sought to explain them away in several ways. These explanations included the fact that the parents of the children were predominantly immigrants who had difficulty filling forms. Another explanation was that it took time to get the information required from Centrelink. It also contended that it had introduced remedial measures to ensure that it would not happen again.

30. The explanations provided really avoided the fact that ultimately the Applicant is responsible to adhere to the conditions imposed by the applicable legislation. It was a recurring theme both in the written material before the Respondent and the Tribunal not to mention the oral evidence of Mr Al-Hifadhi. It does pose serious questions about the suitability of the Applicant to be registered as an approved child care provider.

31. The Tribunal finds that this ground of non-compliance relied upon by the Respondent has been established.

    More than seven children in care

32. The Respondent identified 8,649 one hour periods concerning 15 educators where the Applicant gave attendance reports in purported compliance with its obligations under section 219N for more children than allowed under the National Law (Regulation 1 to 4 of the Education and Care Services National Regulations). For the sake of completeness it should be noted that that regulation prescribes as a child welfare measure that care cannot be provided by an educator to more than seven children at any one time or four children who fall within the definition of preschool age. (Details of these 8,649 sessions of care where an educator has provided a service to more than seven children are found in document T9 of the T documents commencing at page 208).

33. Again in the written responses of 20 June 2017 and 22 September 2017 together with the oral evidence of Mr Al-Hifadhi, this evidence was not denied. Indeed, when one looks at the letter at 22 September 2017 the non-compliance is admitted and said to be due mainly to errors arising due to the manner in which some educators filled in the timesheets. It was stated that the matter and been addressed through training services provided by Rabaale Business Consulting Services (Mr. Al-Hifadhi) on 15 and 17 July 2017. Emphasis was placed on the fact that there was said to be no risk to the well-being of children and that all necessary adjustments had been made and monies refunded to the Department. It also asserted there had been no further non-compliance on the part of the Applicant since the training referred to.

34. The Tribunal accepts that there was a breach of the National Law as contended for. It also accepts that the attendance reports concerning these one hour periods were inaccurate. Therefore, the ground of breach of condition relied upon by the Respondent has been established.

    SANCTION

35. The presumption in favour of cancellation that was referred to above in the Breach Determination is repeated.

36. The Respondent identifies several grounds upon which it relies to justify the decision to cancel the Applicant’s approval.

37. The first ground is seriousness. It is contended that misreporting of thousands of sessions of care is a serious matter leading to significant overpayments of the Child Care Benefit and the Child Care Rebate. A session of care is the period of time that a service charges a fee for childcare (Section 6 of the Child Care Benefit (Session of Care) Determination 2016). Frequently, the whole day’s session of childcare provided to working parents can be for periods of up to 8 to 10 hours. The extent of the breaches of conditions is broad and it is contended justifies cancellation. The Tribunal agrees with this contention.

38. The second ground is the frequency or repeated pattern of non-compliance with conditions. The Tribunal agrees with this contention. The provision of non-compliant reports has taken place over several years and involved a sustained pattern of conduct. This pattern and frequency of non-compliance is all the more amplified when one considers that the 2013/2014 compliance review resulted in the “Notification of Non-Compliance with Conditions for Continued Approval” which was sent by the Respondent to the Applicant on 10 July 2014 together with the attached document entitled “Attachment A-Compliance Issues Summary”, including an email from Simon Verbeek, Compliance Team Leader, of the Respondent and a further letter from him dated 10 September 2014 headed “Notice of Outstanding Non-Compliance Issues”. Also accompanying the letter was “Attachment B-Proposed Process Summary”. These documents provided an extensive blueprint to enable the Applicant to get its house in order. Such material was also followed as noted earlier in the outline of facts, by the 2014 compliance review and follow-up documentation that was forwarded in a similar form to that following the 2013/2014 compliance review. There was a constructive effort by the Respondent regulator to help the Applicant become compliant. It is telling that it did not take advantage of the constructive processes and benevolence of the Respondent to its established non-compliance. In the face of these opportunities for reform the failure of the Applicant in such a large and serious way does not give the Tribunal confidence in the capacity of the Applicant to remain compliant in the future.

39. Were the breaches and cases of misreporting more limited or perhaps ad hoc and punctuated by lengthy periods of compliance this ground would be of less concern however overall the sustained pattern of breaches does trigger the presumption of repeated breaches contained in clause 4A(2)(a) and (b) of the Breach Determination. This leads to a conclusion that cancellation is the appropriate sanction in the circumstances.

40. The third ground relied upon by the Respondent is the question of the safety of children for whom care is provided. The poor management practices, a business model not capable of providing adequate supervision of the Applicant’s educators, its concession of little or no knowledge of whether care was or was not being provided and a suggestion that its own staff were colluding with parents to misreport childcare for the purposes of obtaining childcare payments, do raise questions about whether the safety of the children for whom care is being provided is the Applicant’s paramount consideration. This also, it is contended by the Respondent, gives rise to concerns that should the Applicant continue to provide such care there may be a risk that the children in care would not be appropriately looked after. This is because of the systemic failures on the part of the Applicant to oversee childcare that it had undertaken to provide as a condition of its approval. The breach of the educator to child ratios in regulation 124 of the Education and Care Services National Regulations is a serious breach of such child safety measures. The Tribunal accepts this contention.

1. The observation made above concerning the construction and application of clause 4A of the Breach Determination giving rise to a presumption in favour of cancellation is repeated. As noted, the Tribunal accepts that the serious and repetitive nature of the breaches justify the sanction that the Respondent regulator has imposed.

2. The matters referred to above are repeated. Also it is recorded that there have been 2420 sessions of care identified as being incorrect. This is resulted in an overpayment of $88,777.61. There have been over 1,608 sessions of care where either the educator or the child was overseas such that the contravention involved providing false or misleading or otherwise inaccurate information. This resulted in Child Care Benefit and Child Care Rebate payments being made of $40,987.94. They are serious infractions of the conditions for which the Respondent was obliged to act. The sanction of cancellation was fully justified.

   DECISION

3. For these reasons the Tribunal confirms the sanction of cancellation of the Applicant’s approval as a childcare provider under the family assistance law. The decision of the Authorised Review Officer made on 16 October 2017 is affirmed.

90.     I certify that the preceding 89 (eighty-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member R Cameron

...........................[sgd].............................................

Associate

Dated:  6 December 2018

Date of hearing:	14 August 2018
Applicant:	Self-represented (Mr Ayad Al-Hifadhi)
Advocate for the Respondent:	Mr Ben Dube
Solicitors for the Respondent:	Sparke Helmore