Nouh Family Day Care Pty Ltd and Secretary, Department of Education
[2019] AATA 4797
•19 November 2019
Nouh Family Day Care Pty Ltd and Secretary, Department of Education [2019] AATA 4797 (19 November 2019)
Division:GENERAL DIVISION
File Number: 2019/1951
Re:Nouh Family Day Care Pty Ltd
APPLICANT
AndSecretary, Department of Education
RESPONDENT
DECISION
Tribunal:Ms Anna Burke AO, Member
Date:19 November 2019
Place:Melbourne
The Tribunal affirms the decision under review.
.........................[sgd]...............................................
Ms Anna Burke AO, Member
Catchwords
CHILD CARE – family assistance law – child care benefit – cancellation of approval as an approved child care service – breach of conditions of provider approval – over charging fees in excess of hourly rate – child swapping – claiming sessions of care for children 14 years older or at secondary school – overseas educators – late reporting and enrolments – overlapping sessions – absences before and after care – exceeding educator to child ratios – appropriate sanction – decision affirmed
Legislation
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
A New Tax System (Family Assistance) Act 1999 (Cth)
Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (Cth)
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Determination 2000 (Cth)
Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (Cth)
Child Care Subsidy Minister's Rules 2017 (Cth)
Child Care Benefit (Session of Care) Determination 2016 (Cth)
Education and Care Services National Law Act 2010 (Vic)
Education and Care Services National RegulationsFamily Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 (Cth)
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
Child Care Provider Handbook, Version 2, June 2019
REASONS FOR DECISION
Ms Anna Burke AO, Member
19 November 2019
INTRODUCTION
The application by Nouh Family Day Care Pty Ltd (“Nouh FDC”) is for review of a decision made by the Authorised Review Officer (“ARO”) of the Respondent, the Secretary, Department of Education (“the Department”), on 25 March 2019. That decision affirmed the decision of the delegate dated 6 September 2018 taking effect on 21 September 2018, which cancelled the provider approval of Nouh FDC under the family assistance law pursuant to section 195H(1)(b) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the “Administration Act”).
Nouh FDC sought further review by the Administrative Appeals Tribunal on 29 March 2019. Nouh FDC stated in the application:
The Decision maker did not have regard to the submissions made in response to the Cancellation Decision. The Decision is manifestly harsh and is not proportional to the breaches identified in light of the mitigating circumstances noted in the submissions, consequently did not have regard to the submissions. The Decision maker has failed to properly regard the mitigating circumstances in applying the sanction when considering the liability of the breaches on the newly appointed officeholders of the company.
Nouh FDC was represented by Mr Asad Rana of Ammanah Legal. The Secretary of the Department was represented by Mr Tom Galvin, instructed by Ms Eileen Murphy of the Department.
BACKGROUND
On 29 January 2014 Nouh FDC was registered as a proprietary company in Victoria; the sole director and company secretary at the time was Mr Ali Nuh.
On 15 July 2015 Nouh FDC was granted service approval under section 48 of the Education and Care Services National Law Act 2010 (Vic) (the “National Law”) as a Family Day Care provider. On 29 April 2016 approval for Child Care Benefit (“CCB”) under s 195 of the Administration Act was granted with a start date of 18 April 2016.
On 4 July 2017 Ms Safaa Hamieh was appointed a Director of Nouh FDC. Subsequently on 13 July 2017 Mr Nuh ceased being a Director and the company secretary and on the same day Ms Hamieh became the sole Director and company secretary of Nouh FDC.
On 20 April 2018 a delegate of the Respondent advised Nouh FDC, in a letter addressed to the Property Officer attention Mr Nuh that a delegate of the Secretary of the Department was considering imposing the sanction of cancellation on the service, as the service had not complied with conditions of its approval. The Department identified numerous eligibility rules where the operator of the service was non-compliant. It found that Nouh FDC was not a suitable person to operate a child care service, as the service had not provided complete and accurate reports to the Secretary of the Department.
On 18 and 19 May 2018 Mr Rana, the Applicant’s legal representative and principal of Ammanah Legal, responded to the Department’s notice of intention to impose the sanction on Nouh FDC. The responses addressed the three issues of concern identified in the notice to impose the sanction of cancellation; namely, fees in excess of hourly rate, child swapping and apparent child in secondary school/children 14 years of age or older. In the response, the Applicant argued that:
(a)cancellation of the license should always be a measure of last resort used only in extreme cases;
(b)alternative penalties and sanctions were available to the Department; that the issues raised were solely administrative and there has never been any notable instances of a risk to a child under care; and
(c)the volume and pattern of breaches did not justify the most serious sanction of cancellation.
On 6 September 2018, a delegate of the Secretary of the Department decided to cancel Nouh FDC’s approval. Nouh FDC was found to have failed to comply with one or more conditions for continued approval, including the condition to remain a suitable person to operate a child care service for the purposes of the family assistance law. As a result, the Delegate decided that cancellation was the appropriate sanction. The delegate identified the following failures of Nouh FDC:
·failure to update in respect of changes to key personnel – that Nouh FDC had not notified the Department in accordance with rule 19(2) of the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (which are made under s 196(1) of the Administration Act) of the change of key personnel and address of service until 4 and 8 May 2018 respectively. This was beyond the 14 day timeframe provided by the rules;
·failure to comply with undertakings with respect to older children – that Nouh FDC failed to properly maintain a register of information and documentary evidence in relation to care provided to a child who is 14 years of age or older or who attend secondary school;
·failure to comply with undertakings with respect to child swapping – that Nouh FDC did not maintain a register of information regarding whether care is being provided to a child of an individual who also works as a family day care educator; and
·failure to comply with the obligation to provide attendance report – that Nouh FDC submitted attendance reports for child care fee assistance on behalf of families for care that was not a session of care in three areas: the service had charged in excess of the maximum amount of the grandparent child care benefit rate (“GCCB”), the care involved child swapping, and the care was for older children.
On 10 September 2018 Mr Rana requested an internal review of the decision of the delegate to cancel Nouh FDC’s provider approval. Mr Rana stated that the decision was “manifestly harsh and not proportional to the breaches identified”.
On 25 March 2019 an ARO affirmed the original decision to cancel Nouh FDC’s provider approval. The ARO determined the sanction of cancellation was appropriate due to the seriousness, frequency and ongoing nature of the provider’s non-compliance. The ARO found that Nouh FDC had failed to comply with the requirements of the family assistance law in the following areas:
·fees in excess of maximum hourly rate – Nouh FDC had charged in excess of the maximum hourly fee for care provided to children who were eligible for the GCCB. As such, these sessions could not be considered sessions of care and no amounts of child care subsidy could be paid;
·child swapping – Nouh FDC had reported attendances when no child was eligible. This is because they had been involved in the practice referred to as child swapping where a Family Day Care educator or their partner receives child care subsidies from the Commonwealth for a session of care provided to their own child on the same day that they themselves provide care for another child;
·children 14 years of age or older or who attend secondary school – under the family assistance law, parents of children who are 14 years or older or who apparently attend secondary school cannot receive Commonwealth child care fee assistance unless specific circumstances apply. As Nouh FDC had submitted insufficient documentary evidence to support that the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 (“No-One is Eligible Determination”) had been met, with the exception of one child, it had improperly received payments in relation to numerous children who were 14 years and older;
·failure to notify the Department – Nouh FDC had failed to notify the Department of the changes to key personnel or their address within the required 14 and 30 days, respectively; and
·suitable person – Nouh FDC was not a “suitable person” to operate a child care service as it had poor governance arrangements and a record of non-compliance with both the family assistance law and the national laws and regulations.
In summary, Nouh FDC had submitted 6,019 inaccurate reports to the Department, thus breaching the family assistance law. It also received child care subsidies that could not be passed on to the relevant families. In total this represented a debt to the Commonwealth of $151,926:
Non-compliance identified in Review Decision
Contravention
Quantity of instances e.g. sessions
Approximate CCB & CCR paid
Exceeding the maximum hourly rate for GCCB
1,325
$65,435
Child Swapping
244
$13,962
Older Children
4,450
$72,529
Total
6,019
$151,926
On 6 June 2019 the Department advised Nouh FDC of further instances of possible non-compliance and provided them with the opportunity to respond. The Department identified the following areas of non-compliance in sessions: where the educator was overseas; absences before care commenced and absences after care ceased; late enrolments; educators’ details missing; and educator to child ratio breached:
Additional non-compliance
Contravention
Quantity of instances e.g. sessions
CCB/CCR/CCS
Overseas Educators
6
$184
Older Children – 14 years of age and over
1,166
$12,565
Secondary school child
931
$13,977
228
$4,324
Overlapping Sessions (unconfirmed)
656
$2,689
Absences before care commenced
1
$31
Absences after care ceased
2
$74
Late attendances
3
30
Late enrolments
131
17
Fees higher than maximum amount
224
$12,051
Educator details missing
30,456
Educator to child ratio > 7 children
109
12
Educator to child ratio pre school
1,093
Educator to child ratio > 7 children two educators same address
Unable to ascertain
Care in own home
335
$13,962
Working With Children Card
3,333
Rejected Enrolments
7
Total
38,740
$59,857
LEGISLATIVE FRAMEWORK
The Respondent provided an extensive overview of the legislative framework and provisions relevant to this review at the commencement of the hearing. As they are extensive, the Tribunal will not reproduce the relevant legislation in its decision. It should also be noted that given the time period over which the alleged breaches occurred, the Tribunal has considered the relevant legislation in force at the time of the alleged breaches.
The family assistance law, as it relates to child care fee assistance, is wholly directed to supporting eligible individuals (for example, parents/guardians) 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.
What is known as the "family assistance law" comprises two statutes being A New Tax System (Family Assistance) Act 1999 (the “Assistance Act") and the Administration Act. The family assistance law has created a system that provides several entitlements including those known as the child care benefit ("CCB") and the child care rebate ("CCR"), now replaced by the child care subsidy (“CCS”). These benefits are payable subject to satisfaction of certain conditions contained in the family assistance law, in respect of child care sessions provided by an approved child care service. Payments are only payable in respect of child care sessions provided by an approved child care service. Throughout the determination regardless of the timeframe in which the payment occurred, the Tribunal will refer to all payments as CCS.
Anyone seeking to operate a child care service may apply for approval as an approved child care service for the purpose of claiming benefits under the family assistance law.[1] When approval is granted to the operator of a child care service under Division 1 of Part 8 of the Administration Act, the approval is subject to conditions that the approved child care serve must comply with at all times. 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 child care placement limits and compliance with conditions imposed by the Minister and/or the Secretary.
[1] A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 194 (‘Administration Act’).
The central requirement of the family assistance framework is that child care service operators must report fully and accurately to 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, when 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.
Section 195A of the Administration Act (section 196 of the Administration Act as in effect from 1 July 2017 to 30 April 2018 (the “Old Administration Act”)) provides that there are three conditions for continued approval under the family assistance law. Among others, they are:
(a)Eligibility rules that are set out in a legislative instrument made under subsection 205(1) of the old Administration Act.[2] The applicable instrument for the purpose of this review is the Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (Cth) (the “Eligibility Rules");
(b)Requirements imposed under the family assistance law,[3] including conditions for continued approval referred to in Part 8 of the Old Administration Act (Part 8 of the current Administration Act), the obligations set out in Part 8A of the Old Administration Act (Part 8A of the current Administration Act), and any other provision that imposes an obligation on a child care service under that law; and
(c)Other child care laws that relate to the operation of the service, the provision of care and its construction and equipment,[4] including the National Law and the Education and Care Services National Regulations (the “National Regulations").
[2] Administration Act s 195A(1) (Administration Act s 196(1) as in effect from 1 July 2017 to 30 April 2018).
[3] Administration Act s 195A(2) (Administration Act s 196(2) as in effect from 1 July 2017 to 30 April 2018).
[4] Administration Act s 195A(4) (Administration Act s 196(3) as in effect from 1 July 2017 to 30 April 2018).
The Secretary can only approve a child care service if the Secretary is satisfied that the service satisfies the eligibility rules made under Part 8 of the Administration Act.[5] Part 2 of the Eligibility Rules provides an overview of the issues before the Tribunal in this matter:
[5] Administration Act s 194D(g) (Administration Act s 195(1)(c) as in effect from 1 July 2017 to 30 April 2018).
7 Applicant to be a suitable person
(1)The applicant for approval of a child care service must be a suitable person to operate the service.
(2)In making an assessment for subsection (1), the Secretary may consider the following matters:
Matters relevant to management of child care services
(a)the applicant’s expertise and experience in providing child care;
(b)the applicant’s ability to meet and provide the appropriate quality of child care;
(c)the applicant’s governance arrangements, including:
(i)any arrangements with other persons for the management or supervision of the child care service; and
(ii)any arrangements to ensure compliance by the applicant, or any person the applicant is, or will be, responsible for managing, with the laws and standards mentioned in paragraphs (d) through to (f);
…
10 Undertakings as to operation of child care services—general
…
(1A)The applicant for approval of a family day care service must undertake that:
(a)most of the children to be provided with care by the service will attend the service at least one day a week; and
(b)the service will operate on all normal working days in at least 48 weeks of the year; and
(c)the service will be available to provide care for any particular child for at least 8 continuous hours on each normal working day on which it operates; and
(d)where a child attends a session of care, the service will not prevent the child from attending any part of that session; and
(f)if a service approval has been granted in relation to the service under the Education and Care Services National Law, the service will comply with any conditions imposed by the Regulatory Authority (within the meaning of that Law) to which the service approval is subject; and
(g)the service will ensure that:
(i)each of its FDC carers is listed as ‘service personnel’ and is assigned a unique alphanumeric identifier (Service Provider Personnel ID) in its registered software; and
(ii)in each report given by the service in accordance with subsections 219N(1) or 219N(2) of the Family Assistance Administration Act, the service includes the Service Provider Personnel ID for the FDC carer who provided the session or sessions of care that is or are the subject of the report; and
(h)the service will ensure that, for each of its FDC carers that has a CRN, the CRN is entered in its registered software.
…
10A Additional undertakings as to operation of family day care service—monitoring compliance with section 8 of the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015
(1A)The applicant for approval of a family day care service must undertake to do the things set out in this section.
(1)Within 7 days of the date on which a child is enrolled by an individual for care by the service, the service will ensure that:
(a)each eligible individual is asked whether the eligible individual or the eligible individual’s partner is an FDC carer; and
(b)each eligible individual is asked to inform the service if, in the future, the eligible individual or the eligible individual’s partner becomes an FDC carer.
(2)If the service becomes aware (because of subsection (1) or for any other reason) that an eligible individual or their partner is an FDC carer, the service will, within 7 days of becoming aware, request the information or documents set out in subsection (4) from the eligible individual, if the eligible individual informs the service that in relation to one or more sessions of care the service has provided, is providing, or will provide, to the FDC child of the eligible individual or the eligible individual’s partner any of the following provisions in the Child Care Benefit (Children in respect of whom no-one is eligible) Determination 2015 apply:
(a)the FDC child is an eligible disability child;
(b)the FDC child is a remote area child;
(c)paragraph 8(2)(c) of the Child Care Benefit (Children in respect of whom no-one is eligible Determination) 2015 applies to the FDC carer in relation to sessions of care provided to the FDC child;
(d)paragraph 8(2)(d) of the Child Care Benefit (Children in respect of whom no-one is eligible Determination) 2015 applies to the FDC carer in relation to sessions of care provided to the FDC child.
(3)If the service becomes aware (because of subsection (1) or for any other reason) that an eligible individual or their partner is an FDC carer and the service is aware that, in relation to one or more sessions of care the service has provided, is providing, or will provide, to the FDC child of the eligible individual or the eligible individual’s partner, the child is an eligible ISP child, the service will:
(a)request from the eligible individual the information or documents set out in paragraphs (4)(a) to (g) and record the information or documents in the register mentioned in subsection (6); and
(b)record, in the register mentioned in subsection (6), documentary evidence that the child is an eligible ISP child.
(4)The information or documents are:
(a)the name of the eligible individual and the eligible individual’s partner (if any); and
(b)the name of the FDC carer; and
(c)the CRN (if any) of the FDC carer; and
(d)the CRN (if any) of the eligible individual, if the eligible individual is not the FDC carer; and
(e)the CRN of the FDC child of the eligible individual, or of the eligible individual’s partner; and
(f)the name of the approved family day care service where the FDC carer works (regardless of whether this is the service or another approved service); and
(g)the days and times of sessions of care that the FDC carer ordinarily provides at the approved family day care service where the FDC carer works (regardless of whether this is the service or another approved service); and
(h)where relevant, documentary evidence that the FDC child is an eligible disability child; and
(i)where relevant, documentary evidence that the FDC child is a remote area child; and
(j)where relevant, documentary evidence that:
(i)paragraph 8(2)(c) of the Child Care Benefit (Children in respect of whom no-one is eligible Determination) 2015 applies; or
(ii)paragraph 8(2)(d) of the Child Care Benefit (Children in respect of whom no-one is eligible Determination) 2015 applies.
(5)If the service requests that an eligible individual provide information or documents to the service under subsection (2) or paragraph (3)(a), the service will also request:
(a)that the individual inform the service of any change in circumstances which would result in the individual providing information or documents different from those provided under subsection (2) or paragraph (3)(a); and
(b)within 7 days of the change in circumstances, that the individual provide to the service the different information or documents.
(6)The service will record any information provided in response to a request mentioned in subsection (2), paragraph (3)(a) or subsection (5) in a register in the form approved by the Secretary, and also record in the register the following information in relation to each entry:
(a)the day on which the service enters the information in the register; and
(b)the day on which the service is given or sees documentary evidence provided under subsections (2) or (5).
(7)The service will, within 7 days of being notified that funding under the Inclusion Support Programme is no longer being paid in relation to a child to whom subsection (3) applies, or applied, record that fact and any other relevant information in the register mentioned in subsection (6).
(8)The service will keep:
(a)any documents provided in response to a request mentioned in subsections (2) or (5); and
(b)if applicable:
(i)a copy of the documentary evidence mentioned in paragraph (3)(b); and
(ii)any notification of the kind mentioned in subsection (7).
(9)The service will request that an individual who provides information or documents to it under this section will authorise the service, in writing, to disclose the information and documents to the Secretary.
Under section 195H of the Administration Act, if the Secretary or their delegate is satisfied that an approved operator of a child care service has not complied, or is not complying, with a condition for the continued approval of the service, the Secretary may impose sanctions upon it. The sanctions that may be imposed by the Secretary are prescribed in section 195H(1) of the Administration Act. The range of sanctions that can be imposed are extensive. They include measures such as variation of conditions, reduction of any child care places allocated to the service, and suspension or cancellation of the service's approval. Specifically, under section 195H(1)(b) of the Administration Act, the Secretary may cancel the approval of a child care service.
The Secretary is required under section 195H(2) of the Administration Act to have regard to any matters prescribed by the Minister’s rules, when applying any of the sanctions contained in subsection (1).
For the purposes of subsection 195H(1), section 52(3) of the Child Care Subsidy Minister’s Rules 2017 (the “Minister’s Rules”) prescribes the following factors, among others, that are to be taken into account by the Secretary in considering whether to impose sanctions, and if so, which sanctions to impose:
(a)whether the breach of conditions for continued approval is minor or serious;[6]
(b)whether the service has breached any conditions of continued approval before, and if so, how often;[7] and
(c)whether the breach may threaten the safety of children for whom care is provided.[8]
[6] Child Care Subsidy Minister’s Rules 2017 s 52(3)(f) (‘Minister’s Rules’) .
[7] Minister’s Rules s 52(3)(a).
[8] Minister’s Rules s 52(4)(b)(iv).
It should be noted that the sanction of cancellation does not necessarily mean that the child care business must cease operation. The consequence of cancellation of approval under the family assistance law is that the Child Care Subsidy is not payable to parents/guardians for any child care provided by that service. The child care service concerned is still able to commercially function subject to it holding the requisite approval as an "Education and care service". This approval comes 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 National Law.
ISSUE
The Tribunal needs to consider:
(a)Whether Nouh FDC 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.
EVIDENCE
The evidence before the Tribunal included documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T‑documents”), additional non-compliance material and a bundle of relevant legislation. Solicitors for Nouh FDC tendered further documentation and Ms Safaa Hamieh, Director of Nouh FDC, gave evidence in person at the hearing. Given the volume of the evidence in respect of individual children before the Tribunal, no individual child has been referred to in the decision.
Ms Hamieh outlined her qualifications — she is currently completing her bachelor’s degree in early childhood education — and extensive experience working in the child care sector. She highlighted her experience within the family day care sector, first as an educator and then coordinator. She advised the Tribunal that she felt her qualifications and experience made her amply qualified to take on directorship of her own Family Day Care services and having heard that Nouh FDC was for sale, she sought to buy the business. She engaged lawyers to undertake the due diligence before sale to ensure the business was sound, but they had not reviewed whether the current owners were compliant with all the legislative requirements. Once all the relevant background checks were undertaken she purchased the business for $90,000.00. Ms Hamieh advised the Tribunal that she felt she would struggle to pass the tests required to be a registered provider and felt it would be easier to purchase the business and then to seek to be registered as a family day care provider in her own right.
Ms Hamieh advised the Tribunal that when she purchased the business of Nouh FDC, it was utilising the Harmony database, which was a product that the Department listed as one providers could consider utilising. She advised that she had explored other software packages which could be utilised in respect of child care requirements, but determined Harmony was the only one capable of meeting her compliance requirements for family day care providers. She had only undertaken one online training session on Harmony and relied upon the system that had been set up by the previous owner of Nouh FDC.
Ms Hamieh advised the Tribunal that she understood the previous owner had submitted the transfer of business notification to the Department to indicate she was now the proprietor of Nouh FDC. She had completed all the registration requirements in accordance with state legislation to transfer the ownership of the business from Mr Nuh to herself.
Ms Hamieh advised the Tribunal that she did not understand why she was being punished for the breaches of the former owner; she felt that the bulk of the non-compliance issues had occurred before her purchase and that many of the breaches which occurred subsequent to her ownership had been a result of issues with the computer system Harmony.
Ms Hamieh advised the Tribunal that she believed she had the capacity and ability to run a successful FDC business and has engaged business consultants to ensure she would be fully compliant with all requirements into the future.
Overcharging of fees in excess of hourly rates
Section 12 of the Child Care Benefit (Session Of Care) Determination 2016 (the “Session of Care Determination”) provides that care provided by a family day care service is not a session of care for the purposes of the GCCB rate if the hourly fee reported for that care exceeds the maximum amount which was $12.67 per hour at 13 March 2017 and $12.84 per hour at 1 July 2017. The Child Care Provider Handbook outlines the Additional Child Care Subsidy (grandparent) as follows:
Additional Child Care Subsidy provides additional fee assistance to support vulnerable or disadvantaged families and children. This support recognises the preventative and protective influence of quality child care on a child's health, wellbeing and development; and the importance of continuity of care.
There are four different payments under Additional Child Care Subsidy:
…
·Additional Child Care Subsidy (grandparent)—to help grandparents on income support who are the principal caregiver of their grandchildren.
…
Providers will be advised of individuals using their service who are receiving these other payments. A provider must not charge an individual who is eligible for Additional Child Care Subsidy a higher fee than they would ordinarily charge for an individual who is eligible for Child Care Subsidy. [9]
[9] Department of Education, Child Care Provider Handbook (Australian Government, 2nd version, 2 June 2019), app B, 84 <>
The Respondent contends that for the period 3 July 2017 to 7 April 2018, Nouh FDC reported a total of 1,549 sessions of care in respect of three children where that hourly fee exceeded the maximum fee prescribed in section 12 of the Session of Care Determination and was overpaid a total of $77,486 in CCS.
Child Care Management System (CCMS) reports generated by the Department and cited by the Tribunal indicate that for the period 3 July 2017 to 7 April 2018 Nouh FDC charged an hourly rate of $13.60 in respect of three children who were eligible for GCCB in excess of the capped hourly fee which was $12.67 between 13 March and 20 June 2017 and $12.84 thereafter.
The representative for Nouh FDC contended in his written submission that this issue was a technical mistake of the provider and there was never a deliberate action to overcharge. The submission also stated that the mistakes had been rectified so that no future errors will occur and had only impacted four children in the service’s care. The Applicant argued that the service had been provided to the children in question and that the charging of an extra $0.76 per hour was not an act to deliberately gain financial benefit by deception, but rather a result of technical difficulties.
Ms Hamieh advised the Tribunal that when she had entered the fee on the Harmony system she had been charging $12.60 per hour, and she therefore understood that she was inside the rate cap for GCCB. She was unaware that the administration fee of $1 per hour claimed by the Nouh FDC was added to each child’s hourly rate, taking the fee charged above the capped amount. Her understanding was that the administration fee had been absorbed in the charges and not added to the fee. In fact, her understanding was that she was actually charging below the capped rate. She stressed that this was exacerbated by the lack of calculation transparency provided by the system she had to utilise to submit reports to the Department.
Ms Hamieh advised the Tribunal that she had engaged Vertex Consulting & Compliance Group (“Vertex”) to undertake an independent review of Nouh FDC’s management operation and its governance systems, for the purposes of effecting business risks and management controls. The review identified gaps in operational management, governance systems, risk management, internal procedures and processes, and had made recommendations that Ms Hamieh can implement to close any identified gaps. One such gap was inefficient recordkeeping and understanding of systems. Ms Hamieh and her representative strongly contended that they had now put in place systems to ensure non-compliance would not happen again, and that Nouh FDC would continue to utilise the services of Vertex into the future to monitor and review all activities of the business.
The representative for Nouh FDC contended that in respect of all the breaches identified by the Respondent, Ms Hamieh was at a complete disadvantage and prejudiced by the whole process. He argued that when Ms Hamieh purchased the business, the solicitor acting for her and the solicitor acting for the seller had advised that Nouh FDC was compliant with all its state and federal obligations. This was compounded by the fact that the Department of Education had not brought the breaches to the attention of the former owner or taken action against Mr Nuh. As a result, the representative argued that this imposed an undue burden on Ms Hamieh, as she purchased the business unaware of outstanding significant compliance issues.
The representative for Nouh FDC contended that Ms Hamieh was completely unaware that the problem of overcharging had occurred, and took immediate action to rectify the situation when she became aware of the issue. He argued that the overcharging was in respect of three to four children out of the hundreds that the operator cared for and should have resulted in a penalty or rectification notice, not cancellation.
The Respondent argued that the effect of the Session of Care Determination was that any amount of overcharging results in no amount of child care subsidy being payable as if no session of care has taken place. This resulted in the total amount of child care subsidies being an overpayment to Nouh FDC, not simply the difference between the capped fee and what Nouh FDC charged.
The Respondent contended that it was not appropriate for Nouh FDC to seek to blame the overcharging on the technology, as it was the responsibility of the provider to understand and comply with the law. The Respondent argued that Ms Hamieh seemed unaware that any overcharging was considered not to be a session of care and therefore did not fully appreciate her legal obligations as a provider.
The Respondent submitted that accurate reports are mandatory for a well-functioning subsidy system to operate, and it was a requirement for all providers to ensure they reported accurately. They argued that it was Nouh FDC’s responsibility to ensure any system utilised was fit for purpose, and that it was the proprietor’s responsibility to ensure they were utilising the system correctly. The Respondent also submitted that each breach was a contravention and this had resulted in over 1,500 contraventions, which the Tribunal should view as significant.
Child Swapping
'Child swapping' is the practice where a family day care educator, or their partner, receives child care payments from the government for a session of family day care provided to their child on the same day that they themselves provide family day care for another child. The practice involves family day care operators in essence 'swapping' their children between each other to receive child care payments from the government.
The Respondent contends that Nouh FDC, for the period 20 June 2016 to 14 December 2017, reported a total of 244 sessions of care for which there was no liability to pay CCS. The Respondent argued that this constituted a contravention of section 219N of the Old Administration Act and section 10A of the Eligibility Rules, and an overpayment of a total of $13,962 in CCS.
CCMS reports generated by the Department and cited by the Tribunal indicate that for the period 9 May 2016 to 11 February 2018, four educators and/or their partners provided care for children registered with Nouh FDC on the same day that their child received care from the service.
Ms Hamieh advised the Tribunal that she understood the rules in respect of child swapping and had ensured all her parents had provided statements which included the following:
I understand and accept that I, as a parent (mother, father or guardian), must not place my own child/children in FDC on a day that I work as a FDC educator now or in the future, unless exempted in writing by the approved provider Nouh Family Day Care by signing this declaration.
While Ms Hamieh conceded that she did not completely understand the requirements of the statutory declaration, she believed she had undertaken all necessary steps to ensure her service was compliant with the regulations. Further, she stated that she was limited in what she could ask the parents, or their partners, and educators — stating she could not put cameras into their homes.
Ms Hamieh and her representative argued that it was beyond the scope of the provider to investigate whether a parent or their partner was also an educator; they were not private investigators, did not have access to Centrelink information and such inquiries would be intrusive. Ms Hamieh believed that her service had fulfilled its obligations by seeking parents to declare whether they or their partners were also educators.
Ms Hamieh advised the Tribunal that many of the educators had left the business when she had purchased it, and they were not interested in assisting her with gathering information to refute the Department’s allegations. Additionally, she had been unable to make any inquiries in respect of educators since Nouh FDC’s registration had been cancelled, as the educators were simply not willing to speak to her. Further, she advised the Tribunal that she could not be held accountable for actions undertaken by educators or parents prior to her purchase of the business.
Ms Hamieh’s representative argued that there was only a handful of instances where the Department had identified breaches in this regard and that Ms Hamieh, with the help of Vertex, had ensured that going forward she had the necessary tools and resources to verify the veracity of the claims of parents within her service.
The Respondent recognised that it was possible for a parent to engage in child swapping without the service or its operator being aware of the practice, but it was nevertheless the operator’s obligation to take steps to prevent child swapping through the implementation of an ongoing process of questioning the parents that utilise their service. Further, Nouh FDC had taken no steps to investigate the claims raised by the Department, and claims made by the operator indicated an inadequate understanding of their obligations under the family assistance law.
Children 14 years older / children in secondary school
Section 9 of the No-One is Eligible Determination provides that sessions of care provided to a child who is 14 years of age or older or who attends secondary school are not entitled to CCS payments unless there are special circumstances. The Child Care Provider Handbook outlines the age requirements as follows:
Children must:
·be aged 13 years or under, and
·not attend high school (secondary school).
Providers can provide care for children who do not meet these conditions, but they should be aware that Child Care Subsidy will not be payable unless there are specified circumstances.
For example, some older children with disability and children attending secondary school at a young age may be eligible on a case-by-case basis if they have a legitimate need to access subsidised care and cannot be left unsupervised…[10]
[10] Department of Education, Child Care Provider Handbook (Australian Government, 2nd version, 2 June 2019) 76–7 < 14 Years of Age or Older
The Respondent contends that Nouh FDC, for the period 13 March 2017 to 1 July 2018, reported a total of 3,669 sessions of care in respect of nine children for which there was no liability to pay CCS. The Respondent argued that this constituted a contravention of section 219N of the Old Administration Act, and an overpayment of a total of $54,915 in CCS.
CCMS reports generated by the Department and cited by the Tribunal indicate that for the period 13 March 2017 to 1 July 2018, Nouh FDC provided 3,669 session of care for 10 children who were 14 years of age or older.
Children at Secondary School
The Respondent also contends that Nouh FDC, for the period 13 March 2017 to 24 February 2018, reported a total of 2,878 sessions of care for which there was no liability to pay CCS. The Respondent argues that this constituted a contravention of section 219N of the Old Administration Act and was overpaid a total of $44,156 in CCS.
CCMS reports generated by the Department and cited by the Tribunal indicate that for the period 13 March 2017 to 24 February 2018 Nouh FDC provided 2,878 session of care for 11 children who were at secondary school.
Ms Hamieh and her representative argued that Nouh FDC had provided all relevant details in respect of all the children in question. They contended that this meant that in all instances the parents or child met the specific requirements to be eligible to receive CCS payments. Ms Hamieh and her representative contended that they had demonstrated that each of the children met one or more of the following criteria under section 9 of the No-One is Eligible Determination:
·could not reasonably be left alone in all circumstances
·no individual over the 18 could provide suitable care to the child in the circumstances
·the child had an eligible disability
·the parent was working at least five hours of paid work on the day in question
Ms Hamieh advised the Tribunal that it was her understanding that, had the information she provided to the Department in respect of each child in question been backdated, signed by a Justice of the Peace and accompanied by medical evidence, it would have been acceptable to the Department and exemptions would have been granted. Ms Hamieh and her representative reiterated to the Tribunal that she had not clearly understood the legal requirements of statutory declaration when she had utilised forms provided by the previous owner, to ascertain whether circumstances existed for children to be eligible for care if they were 14 years older or in secondary school.
Ms Hamieh acknowledged that one of the children in question was her own daughter, but was adamant her daughters’ mental health issues meant that she could not be reasonably left alone in the circumstances.
The delegate had determined that sessions of care for one of the children aged 14 or older may have been accurately reported by Nouh FDC. This is because the child’s circumstances met the requirements: she had a disability, profound hearing loss, and there was no one over the age of 18 who could care for her.
The Respondent argued that the material provided by Nouh FDC in respect of claims for CSS for children 14 years or older or in secondary school regarding nine other children had not demonstrated that the exceptions in s 9(2) of the No-One is Eligible Determination applied. The Respondent further argued that subsequently, no additional information had been provided at the Tribunal hearing to fulfil this requirement.
Educator overseas
“Educator overseas” as the description implies is where the Department of Home Affairs has provided information indicating that care could not have been provided by an educator, as they were overseas at the time the sessions of care were reported.
The Respondent contends that Nouh FDC, for the period 29 July 2016 to 31 July 2016, reported six sessions of care for which there were no liability to pay CCS. The Respondent argues that this constitutes a contravention of section 219N of the Old Administration Act and an overpayment of a total of $184.30 in CCS.
The immigration advice movement data of an educator, sighted by the Tribunal, indicates that the educator departed Australia on 29 July 2016 and returned on 31 July 2016 in a time when she had supposedly provided six sessions of care.
Ms Hamieh advised the Tribunal that when she had purchased the business she had believed that all records regarding the operations of the service had been provided to her, such as timesheets, educators’ information, children’s information, and parents’ information. In her attempt to refute the allegations from the Department, she had discovered that not all timesheets had been provided to her and she was unable to locate all documentation in respect of the period before she purchased the business. Ms Hamieh advised the Tribunal that she had been unable to contact Mr Nuh and it would appear he is no longer operating a FDC service.
Ms Hamieh’s representative advised the Tribunal that this alleged breach occurred well before Ms Hamieh took over the operations of the service and no such breach has been recorded since she has been managing the service.
The Respondent argued that the change of management did not affect Ms Hamieh’s liability for non-compliance with her obligations under the family assistance law. Further, they argued that it would indicate that Nouh FDC had kept inadequate records if they are unable to confirm or deny this instance of non-compliance.
Overlapping sessions of care
“Overlapping sessions of care” is identified by the Department where a child has been reported as receiving a session of care with two providers at the one time. Therefore the educator could not have provided a session of care, as another approved child care service has reported a session of care for the same child.
The Respondent contends that Nouh FDC for the period 9 May 2016 to 1 July 2018 reported a total of 656 hours of care in respect of 17 children for which there was no liability to pay CCS. The Respondent argues that this constitutes a contravention of section 219N of the Old Administration Act and an overpayment of a total of $2,689.73 in CCS.
CCMS reports generated by the Department and sighted by the Tribunal indicate that for the period 9 May 2016 to 1 July 2018, 17 children were also reported as being provided with care at another child care service at the same time.
Ms Hamieh’s representative advised the Tribunal that it was impossible to determine which service had indeed provided the care to the child in this period, and that the records provided by the Department were not a conclusive indicator of which service had provided care to the child at the time. Further, her representative advised that all the identified instances had occurred prior to Ms Hamieh’s ownership of Nouh FDC.
The representative for Nouh FDC reiterated that it was impossible for Ms Hamieh to investigate these claims as they were notified to her after her registration had been cancelled, resulting in educators and parents refusing to provide her with any advice about the veracity of the Respondent’s claims. According to Nouh FDC, the breaches identified were a small portion of the overall service provided and could have arisen out of a simple reporting error.
The Respondent argued that the change of management did not affect Ms Hamieh’s liability for non-compliance with her obligations under the family assistance law, and indicated that some of the compliance had indeed occurred when she was managing the service. The Respondent highlighted that Ms Hamieh had not been able to furnish any records that demonstrated the 17 children had been receiving care from Nouh FDC at the time reported, whilst the Department had signed records from the other providers indicating the child in question was in their care at the time.
Absences before care commenced and after care ceased
Section 10 of the A New Tax System (Family Assistance) Act 1999 determines when a session of care is provided:
Basic rule about when a session of care is provided
(1) For the purposes of this Act and the Family Assistance Administration Act, a child care service provides a session of care to a child if:
(a) the child is enrolled for care by the service and the child attends the session of care or any part of it; or
(b) if the child does not attend any part of the session of care—the service is taken to have provided the session of care to the child under subsection (2) or (3).
(2) A child care service is taken to have provided a session of care to a child on a day in a financial year if:
(a) had the child attended the session of care, one or more of the hours in the session would have been taken into account in accordance with paragraph 4(1)(a) of Schedule 2; and
(b) the day is:
(i) a day on which the child is enrolled for care by the service; and
(ii) after the day the child first attended a session of care provided by the service; and
(iii) before the day the service permanently ceased providing care to the child; …
The Respondent contends that Nouh FDC had reported one session of care on 17 April 2017 for which there was no liability to pay CCS as they had not commenced providing care to the child, thus resulting in an overpayment of $31. Additionally, Nouh FDC reported two sessions of care for the period 9 May 2016 to 1 July 2018 for which there was no liability to pay CCS because they had permanently ceased providing care to two children, thus resulting in an overpayment of $74.
CCMS reports generated by the Department and cited by the Tribunal indicate that on 17 April 2017 a child was absent and care commenced with Nouh FDC for one session of care on 18 April 2017. CCMS reports generated by the Department and cited by the Tribunal indicate that on 6 October 2017 a session of care was claimed for a child who left the service on 5 October 2017 and on 26 January 2018 a session of care was claimed for a child who left the service on 25 January 2018.
Ms Hamieh’s representative contended that these breaches were insignificant, one had occurred before Ms Hamieh had acquired the service, and the breaches had occurred on public holidays, as such they may have been an administrative or technical error involved in respect of these claims. Her representative further contended that Ms Hamieh was again prejudiced as she was unable to investigate the cause for these breaches.
The Respondent contended that CSS could only be claimed on the day the child first physically attends a session of care and on the last day the child physically attended care. The Respondent further contended that as Nouh FDC had conceded that the days claimed were public holidays and therefore care could not have been provided, it is ceded that a breach has occurred. The Respondent argued that fundamentally, Nouh FDC demonstrated by this concession that it misunderstood the operations of the family assistance law and its requirement as an approved provider under the law.
Late attendance reporting care
Section 219N(5) of the Old Administration Act provided that reports to the Secretary must be given no later than a period of seven days after the day on which enrolment was confirmed, if the session fell wholly before the day on which the enrolment was confirmed, and otherwise at the end of the second week immediately following the week. The Child Care Provider Handbook outlines the Reporting sessions of care as follows:
Why is accurate reporting important?
It is vital that a provider submits accurate session reports on time. This enables the Commonwealth to correctly calculate of the amount of Child Care Subsidy or Additional Child Care Subsidy (if any) that is payable for care provided to a child.
Inaccurate reports can result in incorrect Child Care Subsidy and Additional Child Care Subsidy and affect the eligible individuals and children to whom the care relates. Further, under Family Assistance Law, a person may commit an offence and is liable for a civil penalty if a session report is not submitted within the required timeframe (see below) and containing the required information (as set out in Table 7 below), including information needed to determine whether an individual is eligible for, or entitled to be paid, Child Care Subsidy or Additional Child Care Subsidy and, if so, the amount.
How is a session report submitted?
Sessions of care are reported through a provider’s child care software or the PEP. Child Care Subsidy cannot be paid until a session report is received.
A session report must be submitted for each child for each week a session of care has been provided (including absences). It must contain at least one session of care for a week, recorded as either an attendance or absence. It must only include sessions of care for which an individual incurred a genuine fee liability.
Session reports must be accurate. If the Department of Human Services has concerns about the accuracy of session reports, it can stop processing payments until the information has been verified.
When are session reports submitted?
Session reports must be submitted within 14 days after the end of the week when the sessions were provided, except where:
a provider or service was not yet approved, or was suspended, on the day the child’s enrolment started. In this case the session report must be provided within seven days after the end of the week in which the approval was provided or the suspension was revoked
a provider has received business continuity payments because it is unable to provide session reports (such as because its system access is down). In this case, session reports must be submitted within 14 days after it becomes able to submit reports again.[11]
[11] Department of Education, Child Care Provider Handbook (Australian Government, 2nd version, 2 June 2019) 51 <>
The Respondent contends that for the period 9 May 2016 to 1 July 2018 Nouh FDC contravened section 219N(5) of the Old Administration Act as they submitted 33 attendant reports outside of the statutory timeframe.
CCMS reports generated by the Department and cited by the Tribunal support this contention as they indicate, 33 attendance reports were submitted outside of the timeframe prescribed by the Act.
Ms Hamieh and her representative argued that these breaches occurred when Ms Hamieh was not the proprietor of Nouh FDC and thus she was unable to investigate the breaches. They argued that the Department had not taken into account the service’s business hours, as it would appear that the timesheet submitted had been on the Monday because the office was not open over the weekend. Further, they contended that Harmony did not allow timesheets to be submitted other than on a fortnightly basis, and a timesheet could not be submitted unless you had submitted a previous timesheet. They maintained that all these factors had resulted in non-compliance, and that they have evidence from Harmony to show that due to technical inability to enter enrolments, they were delayed in notifying the Department.
In summary, Ms Hamieh and her representative argued that these breaches were beyond her control and insignificant.
The representative for Nouh FDC argued these breaches were not of great issue and should certainly not have resulted in a cancellation of Nouh FDC’s registration.
The Respondent argued that there was no legislative requirement to submit reports on a fortnightly basis, nor is there a requirement to submit reports on the last day of the prescribed period, and it was the obligation of the service provider to comply with the statutory timeframes of the Act.
Care in own home
Section 11(1)(b) of the Session of Care Determination provides that care provided by a family day care service is not a session of care if the care is provided in the child’s own home.
The Respondent contends that for the period 9 May 2016 to 1 July 2018 Nouh FDC reported a total of 335 sessions of care for which there was no liability to pay CCS. The Respondent argues that this constitutes a contravention of section 219N of the Old Administration Act and an overpayment of a total of $13,962 in CCS.
CCMS reports generated by the Department and cited by the Tribunal indicate an educator and 3 children appear to have the same address for the period 23 April 2018 to 29 June 2018; a time in which 335 sessions of care were provided.
Ms Hamieh and her representative provided an educator application form to the Tribunal which indicated that the educator in question resided in a different address to that identified by the Department. Ms Hamieh was unaware of any relationship between the educator and the child in question.
The Respondent argued that there was insufficient documentary evidence before the Tribunal to reach the required level of satisfaction that the educator and child for whom they were providing care did not reside at the same address. Additionally, the Respondent stated that some of the information provided by Ms Hamieh was confusing, as at some stage Ms Hamieh had indicated that the educator had resided at the address in question after her arrival in Australia.
Customer Reference Number of educators
In accordance with the Eligibility Rules, a provider undertakes to report for each of its educators, their Centrelink customer reference number (CRN) if they have one.
The Respondent contends that for the period 9 May 2016 to 7 July 2018 Nouh FDC reported a total of 30,456 sessions of care provided by 17 educators, in circumstances where no CRN was recorded by Nouh FDC despite the educator having a CRN.
CCMS reports generated by the Department and cited by the Tribunal indicate that Nouh FDC had failed to provide the required information to the Secretary for the period 23 May 2016 to 30 June 2018 in respect of 19 educators in this instance, as it had not provided the educators’ CRN and Centrelink’s database indicated the educators had a relevant CRN.
Ms Hamieh and her representative argued strenuously that it was impossible for Ms Hamieh to provide CRNs for educators prior to her taking ownership of the service. They contended that since Ms Hamieh had been managing the service she has requested CRNs from all educators, but unless they provide them to her she is unable to verify if they have a relevant CRN issue due to privacy requirements. Further, the system allowed her to enter an educator’s details without a CRN and did not provide her with some mechanism to identify if the educator did have a current Centrelink CRN.
The Respondent argued that it was critically important for the Department to be informed of an educator’s CRN as soon as possible; it ensured that educators were correctly identified and could be monitored for cases such as educator overseas and child swapping, and to ensure correct eligibility and entitlements were determined. The Respondent argued that it was the responsibility of Ms Hamieh as the proprietor of Nouh FDC to submit accurate records in accordance with the relevant legislation.
Educator to child ratio – primary school age children
Regulation 124 of the National Regulations provides that a family day care educator must not educate and care for more than seven children at a family day care residence or approved family day care venue at any one time.
This includes:
·no more than four children that are preschool age or under; and
·the family day care educator's own children and any other children at the residence, if those children are under 13 years of age and there is no other adult present and caring for the children.
In exceptional circumstances, an approved provider may provide written approval for a family day care educator to educate and care for more than seven children, or more than four children who are preschool age or under.
Exceptional circumstances exist if:
·all the children being educated and cared for are siblings in the same family; or
·a child to be educated and cared for is determined to be in need of protection under a child protection law and the educator is determined to be the best person to educate and care for the child; or
·the residence or approved venue is in a rural or remote area and no alternative education and care service is available.
The Respondent contends that the evidence demonstrated that for the period 9 May 2016 to 1 July 2018 Nouh FDC contravened the allowed limit (prescribed by Regulation 124(2)(a) of the National Regulations), of no more than four children of preschool age or under that may be cared for by a family day care educator at any one time, on 1093 instances. Additionally, for the period 2 July 2018 to 21 September 2018 12 such instances were identified.
Furthermore, the Respondent contends that the evidence demonstrated that for the period 9 May 2016 to 1 July 2018 Nouh FDC contravened the allowed limit (prescribed by subregulation 124(1) of the National Regulations) of no more than seven children cared for by a Family Day Care educator at any one time, on 109 instances.
CCMS reports generated by the Department and cited by the Tribunal indicate that for the period 9 May 2016 to 1 July 2018 Nouh FDC reported more than the allowed limit of four children of preschool age or under on 1093 instances, and more than the allowed limit of no more than seven children cared for by an educator a one time on 109 instances.
Ms Hamieh and her representative argued strenuously that it was impossible for Ms Hamieh to investigate the accuracy of these allegations and was unable to confirm or deny the allegations made. They contended that she was not in a position to determine the number of children who could be educated, if the educator’s own children had been included and the number of adults present. Ms Hamieh demonstrated to the Tribunal her knowledge of the National framework’s educator to child care ratio.
The Respondent contended that Nouh FDC had not provided written approval to allow the educator to child care ratio to be exceeded. The Respondent maintained that no information had been provided to indicate that either the children in care were siblings of the same family, were deemed to be in need of protection under a child protection law, or were in a rural or remote area and no alternative education or care service was available.
The Respondent contended that Nouh FDC’s change in management did not affect its liability for non-compliance with its obligations under the National Regulations, and indeed approximately half the sessions in question had occurred after Ms Hamieh purchased the service.
Notifications
Section 19(1) and 19(2) of the Eligibility Rules provide that an approved child care service must notify the Secretary of certain events:
(1) An approved child care service must give the Secretary written notice of the following at least 30 days before it occurs:
(a) a contract for the sale of premises where the child care service is conducted is entered into;
(b) the lease of the premises where the child care service is conducted is terminated;
(c) the service changes its address.
The Respondent contends that the evidence demonstrates that Nouh FDC has not complied with its obligations under section 19(1) and 19(2) of the Eligibility Rules.
The Respondent provided the Tribunal with the ASIC company extract dated 3 July 2019 which showed a change of company address on 30 January 2018 and a change of company directors from 4 July 2017. Evidence from CCMS records indicate that the Department was not advised of the change of ownership or business address until 8 May 2018, some 3 months after the change, when the Act required notification within 14 days.
Ms Hamieh advised the Tribunal that she had signed change of ownership forms, which she was advised Mr Nuh was required to submit to the Department, and had believed he had undertaken to do so. Further, she indicated that she had entered the change of ownership and the new address on the relevant systems, both state and federal.
Ms Hamieh advised the Tribunal that she was surprised to discover the Department was continuing to address correspondence to Mr Nuh at his premises, and had believed all information had been updated with the Department.
The Respondent argued there was no evidence to demonstrate Ms Hamieh had advised change of ownership or premises to the Department. The Respondent contended that Ms Hamieh displayed key misunderstanding on the relevant law particularly her inability to explain the differences between state and federal jurisdiction, roles and systems and it was a reasonable expectation that approved provider would be able to understand these distinctions.
CONSIDERATION
The Respondent contends that that the evidence clearly demonstrates that Nouh FDC has a significant and frequent history of non-compliance and misreporting, across numerous areas, resulting in a significant number of breaches of its obligations under the family assistance law, National Law and National Regulations. This has subsequently resulted in Nouh FDC submitting thousands of inaccurate attendance reports and thousands of instances where it has claimed child care fee assistance when no one was eligible to receive that assistance, thus resulting in significant over payments of CCS. The Respondent contended that this has resulted in an overpayment of CCS to Nouh FDC of at least $211,783.
Ms Hamieh’s representative argued that Nouh FDC and its operators had not recklessly or intentionally breached the provisions of the Administration Act. Her representative contended that the Department had failed to consider the exceptional mitigating circumstances associated with this matter. Further, they contended that given the service had provided care for hundreds of children during the period and the breaches were in respect of only a handful of the children in its care, this did not indicate that the volume and patterns of breaches resulted in a systemic problem. They asserted that whilst it had tried to explain that some of the breaches had occurred under the previous owner and other breaches were beyond its control, it had at no stage sought to mitigate its responsibility by blaming others such as the previous owner, educator or parents. They accepted that the Harmony system was not an endorsed product of the Department, but a product by which they could access the Department’s various systems in respect of its compliance requirements for family day care.
Nouh FDC’s representative argued that Ms Hamieh had been completely disadvantaged by not being issued with a notice of breach or being allowed the opportunity to rectify any identified breaches. They argued that this was the case particularly as she had only been operating the service for one year, and it was onerous to expect that she could account for breaches that had occurred prior to her purchase of the business. However, Nouh FDC’s representative reiterated that the current owner Ms Hamieh understood she was liable for any contraventions that had occurred, and would ensure that the public purse was recompensed.
Have there been breaches of the conditions for continued approval?
There is no dispute that the day-to-day management requirements to operate a family day care service where care is provided to hundreds of children, not in one large centre but in numerous educators’ homes, is complex and requires the operator to be conversant with multiple state and federal legislative requirements. This can result in providers failing to meet their statutory obligations as a result of administrative or errors, and the willful non-compliance of educators and parents. However, when Ms Hamieh took on ownership of Nouh FDC it was her responsibility to ensure she had the governance, administrative and software systems in place to ensure compliance with all regulations. Indeed Ms Hamieh had advised the Tribunal that she had purchased the business as opposed to seeking registration from the Department in her own right, as she did not believe she would pass the various tests required to become a provider. In this way, Ms Hamieh indicated that she was not capable of operating such a large service.
The evidence before the Tribunal establishes a prolonged, repetitive and serious pattern of non-compliance by Nouh FDC with its statutory obligations under the family assistance law, and in particular breaches of section 219N of the Old Administration Act. The Tribunal is satisfied that the following grounds of non-compliance had been established:
·overcharging of fees in excess of hourly rates breached section 12 of the Session of Care Determination in relation to the GCCB rate;
·Child swapping breached section 219N of the Old Administration Act and section 10A of the Eligibility Rules;
·Instances of 14 years older/children in secondary school breached section 9 of the No-One is Eligible Determination;
·Instances of an educator being overseas breached section 219N of the Old Administration Act;
·overlapping sessions of care breached section 219N of the Old Administration Act;
·absences before care commenced and after care ceased breached section 10 of the A New Tax System (Family Assistance) Act 1999;
·late attendance reporting care breached section 219N(5) of the Old Administration Act;
·care in own home breached section 11(1)(b) of the Session of Care Determination;
·instances where the CRN of educators were not provided breached the Eligibility Rules;
·non-compliance with the educator to child ratio breached regulation 124(1) of the National Regulations; and
·non-compliance with notification requirements breached section 19(1) and 19(2) of the Eligibility Rules.
Whilst the Tribunal found that Ms Hamieh had attempted to explain how the breaches had occurred and had not shied away from her willingness to adhere to strict compliance with the family assistance law, she had demonstrated a naiveté about the requirements of running a complex business.
The Tribunal was not satisfied by the explanations provided by Nouh FDC or its proprietor Ms Hamieh in respect of the significant and numerous breaches, which would provide doubt to the Tribunal that the breaches identified by the Respondent had not occurred. Additionally, Ms Hamieh attempted to explain that some breaches had occurred as a result of the former proprietor, software issues and educator and parent non-compliance. This demonstrated that she did not grasp and understand that she was ultimately responsible for ensuring the strict compliance with statutory requirements. The Tribunal found that this lack of understanding created serious doubt about Ms Hamieh’s suitability to operate an approved family day care service under the Administration Act.
Given the extensive evidence before the Tribunal, it is satisfied that Nouh FDC has demonstrated a significant and frequent history of non-compliance and misreporting, across numerous areas, resulting in a significant number of breaches of its obligations under the family assistance law, the National Law and National Regulations.
Should sanctions be applied to the operator, and if so is cancellation the appropriate sanction?
Nouh FDC contends that it has developed the appropriate governance arrangements to ensure compliance with its obligations under the family assistance law. They argue that this is shown by the steps it has taken to engage Vertex consultants to ensure future compliance. Accordingly, it claims that it is a suitable person to operate a service.
Nouh FDC did accept that the significant non-compliance is a serious issue and argued it has introduced steps to ensure and mitigate against errors occurring in the future. Additionally, they undertook to engage in further extensive training on the Harmony system to ensure no repeat errors in the future, and significant cross checking and auditing to ensure compliance at all times.
Nouh FDC’s representative argued strenuously that cancellation of the service was a severe sanction for the alleged breaches, and that the Department had open to it other measures by which it could address compliance concerns. The representative contended that because the Department had not sought these other reasonable options, their action of cancellation has resulted in the denial of Ms Hamieh and the educators’ potential. More importantly, it has resulted in the denial of provision of care to the children who had relied upon the service. Nouh FDC argued that the operator had done all that she could to ensure Nouh FDC was compliant with the law as it applied at the time, and that breaches which occurred prior to her purchase were beyond her control, particularly in relation to child swapping.
Nouh FDC’s representative argued that Ms Hamieh had accepted responsibility for the breaches and should have been allowed the opportunity to rectify them instead of having her registration cancelled outright. This is because the breaches were not serious, had not occurred previously and did not risk the safety of children in her care.
The Tribunal notes that the operator of Nouh FDC cannot excuse herself from responsibility for non-compliance with the obligations by pointing to the actions of educators, parents, software systems or previous owners. 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).
Section 195A(a) of the Old Administration Act, the law that stood at the relevant time, 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 the operator of Nouh FDC.
Nouh FDC’s breaches are not minor. The overcharging and 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, Nouh FDC received payments of public funding that it should never have received. Further to this, by breaching educator to child ratios, Nouh FDC provided child care in circumstances where it was not lawfully allowed to provide such care, thus giving rise to potential risks to the safety, health and wellbeing of children under its care.
In the circumstances as outlined in its decision, the Tribunal is satisfied that cancellation is the appropriate sanction. The health and safety of children and the quality of the care provided is of paramount concern. Additionally, protection of government subsidies and the blatant disregard of the public purse cannot be ignored. If the Tribunal were not to cancel Nouh FDC’s approval, there is a risk that any child in its care may not be appropriately cared for, given the systemic failure of the service 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 the Tribunal acknowledges that Ms Hamieh 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 Nouh FDC’s governance arrangements are systematically flawed or non-existent. For these reasons I find that cancellation of Nouh FDC’s approval to operate as a family day care service is appropriate.
DECISION
It follows that the Tribunal affirms the decision under review.
125. I certify that the preceding 124 (one hundred and twenty-four) paragraphs are a true copy of the reasons for the decision herein of Ms Anna Burke AO, Member
.................[sgd].....................................
Associate
Dated: 19 November 2019
Date of hearing: 1 and 2 August 2019
Solicitors for the Applicant: Mr Asad Rana
Ammanah LegalAdvocate for the Respondent:
Solicitors for the Respondent:
Mr Tom Galvin
MaddocksMs Eileen Murphy
Department of Education
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