PANAGA Pty Ltd and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS - [2010] AATA 757

Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 757
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/5210

GENERAL ADMINISTRATIVE DIVISION )

Re PANANGA PTY LTD

Applicant

And

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Deputy President P E Hack SC; M J Carstairs, Senior Member
Date5 October 2010
PlaceBrisbane

Decision The decision under review is affirmed.

.................Signed..............
Deputy President

CATCHWORDS
SOCIAL WELFARE – cancellation of approval of child care service – failure of child care centre to utilise Child Care Management System (CCMS) – Tribunal satisfied that Centre had not complied with conditions for its continued approval – Centre did not give notices to Secretary required by ss 219A and 219AA of the A New Tax System (Family Assistance)(Administration) Act 1999 (Administration Act) in respect of children enrolled at “application day” in manner prescribed by Secretary – Centre did not give similar notices required in respect of new enrolments – power to impose sanctions under s 200 of Administration Act properly enlivened – decision under review affirmed
A New Tax System (Family Assistance)(Administration) Act 1999, Part 8, Division 1, ss 3(1), 108(1)-(2), 109A, 144(1), 196(2), 200, 219A, 219AA, 219N
Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007, Schedule 1, items 82, 94, 96
Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-86) 161 CLR 24
REASONS FOR DECISION

5 October 2010 Deputy President P E Hack SC; M J Carstairs, Senior Member

Introduction

The applicant, Pananga Pty Ltd, is the operator of a child care service called “Kindy Land Pre-School and Child Care Centre” (the Centre). The Centre was, until 21 August 2009, “an approved child care service” for the purposes of the A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act). On that day a delegate of the Secretary, Department of Education, Employment and Workplace Relations cancelled the approval.
It will suffice for present purposes to say that the approval was cancelled because the Centre, by its controlling mind, Mr Peter Jockel, refused to provide in an electronic form the information about enrolments and the like that the Secretary requires to administer payment to the Centre under the Administration Act.
Pananga seeks a review of the cancellation decision. It contends that cancellation was not justified.
Background
The Centre has operated for a number of years. It is licensed (pursuant to Queensland legislation) to provide child care to up to 50 children per day. The Centre does not maintain, and has never maintained, a computer system or an internet connection and its staff lack the skills necessary to operate in an electronic environment. The Centre’s records are maintained manually.
Parents of children at the Centre pay fees weekly in advance by cash or cheque. The Centre does not offer the option of payment by credit card. Some parents are eligible for family assistance. Family assistance can be paid to eligible parents by payment of child care benefits where care is provided by an approved child care service. Between 2007 and 2009 the Secretary’s administration of child care benefits was altered from a paper based system to an on-line system called Child Care Management System (CCMS). The Centre lacks the electronic facilities and expertise to utilise CCMS.
The change from a manual system to CCMS was supported, legislatively, by the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007[1] (the CCMS Act). We examine the detail of the CCMS Act below however it allowed the Secretary to determine an “application day”, that being the day from which information was to be provided to the Secretary by an approved child care provider in electronic form.
[1] No 118 of 2007.
By letter dated 15 December 2008 the Secretary notified the Centre that the application day for the Centre was Sunday 1 March 2009. Thus, the letter said, the Centre’s “transition date”, the date from which the Centre was required to commence operating and transacting via CCMS, was Monday 2 March 2009. The Centre did not do so.
On 24 July 2009 a decision was made to impose a sanction, constituted by the cancellation of approval for family assistance law purposes, on the Centre with effect from 21 August 2009. That decision was said to be based upon the Centre’s failure to utilise CCMS. The decision was affirmed on internal review on 2 October 2009.
The legislation
Division 1 of Part 8 of the Administration Act deals with the approval by the Secretary for the purposes of the family assistance law of a variety of types of child care services. The Centre had such an approval. By virtue of s 196(2) of the Administration Act it was a condition for the continued approval of an approved child care service,
“that the service not contravene an obligation imposed on the service by the family assistance law …”
The expression “family assistance law” is defined in s 3(1) of the Administration Act in terms that include the Administration Act.
The CCMS Act[2] inserted into the Administration Act obligations to notify the Secretary of enrolments, and provided for the manner of notification, in these terms:
[2] Item 82 of Schedule 1.
“219A Obligation to notify Secretary of enrolment of a child by an individual
(1) An approved child care service must notify the Secretary of the enrolment of a child by an individual for care by the service.
(2) A child is enrolled by an individual for care by an approved child care service if the individual enters into an arrangement with the service for the provision of care to the child by the service.
Note: If 2 individuals each enter into an arrangement for the provisions of care to the child by the service, each enrolment will need to be notified to the Secretary.
(3) If:
(a) an individual enters into an arrangement for the care of a child by an approved child care service (the original arrangement); and
(b) the enrolment of the child by the individual for care by the service ceases under section 219AD; and
(c) a session of care is, or sessions of care are, later provided to the child by the service under the original arrangement;
the individual is taken to enter into new arrangement for the provision of care to the child by the service at the time the session, of the first of the sessions, of care is provided.
Note: As a result, there will be a new enrolment which will need to be notified to the Secretary.
219AA Obligation to notify Secretary of enrolment where approved child care service eligible
(1)If an approved child care service is eligible under section 47 of the Family Assistance Act for child care benefit by fee reduction for a session or sessions of care provided by the service to a child at risk during a period:
(a)for which the service has given a certificate under subsection 76(2) of that Act; or
(b)during which a determination by the Secretary under subsection 81(4) of that Act in circumstances mentioned in subparagraph 81(4)(b)(ii) of that Act is in effect;
the service must notify the Secretary of the enrolment of the child for care by the service.
(2)The child is taken to be enrolled for care by the service when the session, or the first of the sessions, of care begins.
219AB When and how notice to be given
(1) A notice under section 219A or 219AA must:
(a)be given in the form, and in the manner or way, approved by the Secretary; and
(b)contain any information required by the Secretary.
(2) Subject to subsection (3), the notice must be given no later than:
(a)if the child is enrolled after the day on which the Secretary approves the service–the last day of the week immediately following the first week in which care is provided as a result of the enrolment; or
(b)if the child is enrolled before that day, but after the day from which the approval is expressed to operate–7 days after the day on which the approval is given.
(3) If:
(a)a child care service’s approval is suspended at the time a child is enrolled by an individual for care by the service; and
(b) that suspension is later revoked;
the service must give notice of the enrolment under subsection (1) within 7 days after the suspension is revoked.”
Item 94 of Schedule 1 to the CCMS Act imposed an obligation to notify the Secretary of existing enrolments on the application day in these terms:
“If a child is already enrolled for care by an approved child care service on the application day for the service:
(a) the service must give the Secretary notice of the enrolment in accordance with sections 219A to 219AB, inserted by item 82, within 7 days after the application day; and
(b) the amendments made by this Schedule otherwise apply in relation to the enrolment in the same way as they would apply if it had taken place after the application day.”
The obligation to report new enrolments, that is, enrolments after the application day, and the form and manner of that notification, is dealt with by s 219N of the Administration Act in these terms:
“(1) For each week in which a session of care is provided by an approved child care service to a child in relation to whom an enrolment has been:
(a) notified to the Secretary in accordance with sections 219A and 219AB; and
(b) confirmed by the Secretary in accordance with section 219AE;
the service must give the Secretary a report in accordance with this section;
(2) For each week in which a session of care is provided by an approved child care service to a child in relation to whom an enrolment has been:
(a) notified to the Secretary in accordance with sections 219AA and 219AB; and
(b) confirmed by the Secretary in accordance with section 219AE;
the service must give the Secretary a report in accordance with this section.
(3) The report must be made in the form, and in the manner or way, approved by the Secretary.
(4) The report must include:
(a) any information required by the Secretary that is relevant to:
(i) determining whether a fee reduction is applicable in relation to the care and, if so, the rate and amount of that fee reduction;
or
(ii) making a determination of entitlement, or no entitlement, in relation to the care under Division 4 of Part 3; and
(b) any other information required by the Secretary.
(5) The report must be given no later than:
(a) if the week in which the session of care was provided fell wholly before the day on which the enrolment was confirmed–the period of 7 days after the day on which the enrolment was confirmed; and
(b) otherwise–the end of the second week immediately following the week.
(6) An approved child care service commits an offence if:
(a) the service is required to give a report under subsection (1) or (2); and
(b) the service does not give the report in accordance with this section.
Penalty: 60 penalty units.
(7) An approved child care service may:
(a) substitute the report with an updated report at any time; or
(b) if the report was given in circumstances where it was not required to be given–withdraw the report.”
Unsurprisingly, the CCMS Act contained a regulation making power[3] which permitted the making of regulations,
[3] Item 101 of Schedule 1.
“prescribing matters of a transitional nature (including prescribing any saving or application provisions, and prescribing any modification or adaption of this Act, …) relating to the amendments made by this Act.”
The Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009 modify Item 94 of Schedule 1 of the CCMS Act. It provides:
“2.1 Modification of Amendment Act – children already enrolled on application day (item 94)
(1) For item 101 of Schedule 1 to the Amendment Act, item 94 of that Schedule is modified in relation to the amendments made by the Amendment Act as set out in this regulation.
(2) Item 94 applies as if the words in paragraph (a):
“the service must give the Secretary notice”
read:
“it is a condition for the continued approval of the service that the service give the Secretary notice”.”
Item 96 of Schedule 1 to the CCMS Act dealt with the obligation under s 219N of the Administration Act to provide weekly reports to the Secretary. The obligation to
give reports to the Secretary for sessions of care before the application day imposed by Item 96 of Schedule 1 of the CCMS Act, has been modified in a similar way by the Regulations so that compliance with s 219N “is a condition for the continued approval of the service”.
Section 200 of the Administration Act deals with the consequences of a breach of conditions for continued approval. It provides, so far as is presently relevant:
“Sanctions
(1)If the Secretary is satisfied that an approved child care service has not complied, or is not complying, with a condition for the continued approval of the service, the Secretary may do one or more of the following:
(a)vary the conditions for the continued approval of the service imposed under subsection 199(2);
(b)impose additional conditions for the continued approval of the service under subsection 199(2);
(c)reduce the number of any child care places allocated to the service under section 207;
(d)suspend the service’s approval;
(e)cancel the service’s approval;
(f)withhold the payment of enrolment advances to the service under section 219RA;
(g)require the remittal to the Secretary of enrolment advances paid to the service under section 219RA;
(h)suspend, for a maximum of 3 weeks, payment under section 219Q or subsection 219QA(2) in respect of fee reduction.
…
Secretary to have regard to any Ministerial determination
(4)The Secretary must have regard to any determination under subsection (5) in exercising a power under subsection (1) or (3).
Ministerial determination
(5)The Minister may, by legislative instrument, determine:
(a)factors to be taken into account by the Secretary in applying subsection (1) to approved child care services; or
(b)factors to be taken into account by the Secretary in specifying the date of effect of a revocation of a suspension under subsection (3).”
The Administration Act sets out procedures to be taken by the Secretary before taking any of the steps in s 200(1)(a) to (h). Nothing turns on those procedures in these proceedings.
The determination contemplated by s 200(5) of the Administration Act has been made. In s 4 of the Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2000 the Minister has specified that the following factors are to be taken into account in considering the imposition of sanctions:
“The following factors are to be taken into account by the Secretary in considering whether to impose sanctions on a child care service under subsection 200(1) of the Act (consequences of breach of conditions for continued approval), and if so, which sanctions to impose:
(a) whether, in the opinion of the Secretary, the breach of conditions for continued approval is minor or serious;
(b) whether the service has breached any conditions of continued approval before, and if so, how often; and
(c) whether the breach may threaten the safety of children for whom care is provided.”
Finally, it is necessary to notice the power to review decisions made under the family assistance law. Section 108(1) of the Administration Act gives a right of internal review of any decision of an officer under the family assistance law unless subject of an exception under s 108(2). None of the exceptions are relevant. The right to external review by the Tribunal is expressed more narrowly. Section 144(1) of the Administration Act specifies various decisions, including, relevantly,
“(c) a decision under subsection 200(1) to do one or more of the things mentioned in paragraphs (a) to (h) of that subsection in relation to an approved child care service”,
in respect of which application may be made to the Tribunal for review provided the decision has been reviewed internally under s 109A and affirmed, varied or set aside. But the effect of s 144 is that only decisions of the type set out in s 144(1)(a) to (p) are reviewable in the Tribunal.
The present application
In form, Pananga’s application seeks a review only of the decision made under s 200(1)(e) of the Administration Act to cancel the Centre’s approval but in substance, as the Secretary’s submissions point out, it is an application that puts in issue the Secretary’s decision on the form and manner of the notices permitted by ss 219A and 219AA of the Administration Act and the Secretary’s earlier determination of the application date for the Centre. Neither of these decisions is set out in the list, in s 144(1) of the Administration Act, of the decisions, in relation to which, application may be made to the Tribunal.
We proceed then on the basis that the form and manner of notices and the application date are not capable of being put in issue in these proceedings.
As the matter was put by Mr Hackett, counsel for Pananga, in the course of the hearing, in circumstances where the fact of continuing breach of the conditions of approval is not disputed, the essence of Pananga’s case is that no sanction, or some other sanction from the range in s 200(1) of the Administration Act, was more appropriate than cancellation of the approval.
Consideration
We ought record that we are satisfied that the Centre has not complied with conditions for its continued approval in the following respects:
(a) it did not give notices to the Secretary required by ss 219A and 219AA of the Administration Act in respect of the children enrolled at the application day in the manner prescribed by the Secretary;
(b)it did not give the similar notices required in respect of new enrolments i.e. after the application day.
Those obligations were imposed upon the Centre by the Administration Act and thus were obligations imposed by the family assistance law. In consequence, the Centre has not complied with a condition for continued approval of a child care service and the power to impose sanctions under s 200 of the Administration Act was properly enlivened.
Where, as here, legislation does not prescribe matters to be taken into account in the exercise of a discretion, the exercise of the discretion is unconfined except in so far as the subject-matter, scope and purpose of the statute suggest to the contrary[4]. In that context the submissions of the Secretary draw attention to the Explanatory Memorandum to the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Bill 2007 and the second reading speech of the responsible minister in support of that Bill as emphasising an unambiguous legislative intention to replace a paper based system with an entirely electronic system.
[4] Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-86) 161 CLR 24, 40
In the former, the purpose of the amendments proposed by the Bill are described in this way:
“Amendments are made to the family assistance law for the purposes of a new online-based Child Care Management System (CCMS). The CCMS will standardise and simplify child care benefit administration, reduce the time required for making payments to approved child care services, reduce the administrative burden on services and improve the management of child care information relevant to the determination of individuals' child care benefit entitlement.”
The Explanatory Memorandum went on to describe as one of “the main features of CCMS” that child care services would be required as a condition of their continued approval for family assistance purposes to provide relevant child care information using a purpose-built electronic facility (an electronic interface). The relative merits of continuing with the status quo, limited action or development and implementation of the CCMS were considered and discussed in the Explanatory Memorandum but the possibility of continuing the status quo was firmly rejected.

There can be no doubt that the legislative intention was to replace the paper based system with an electronic system. Pananga has been given every opportunity to change its systems to the electronic system required by the legislation. It was offered financial assistance to meet the cost of complying with the requirements of the CCMS but it did not accept that assistance. It did not suggest, at the time of cancellation (or now), that it would, in the future, comply with the conditions of its approval by discharging the obligations imposed by the Administration Act in the form and manner imposed by that Act. It acknowledges that it was in continued breach of its conditions for approval. A breach which is constituted by a wilful refusal to provide information electronically cannot be regarded as anything other than serious and Pananga was in breach of the conditions of its approval continuously from the application date to the date of cancellation. There was, however, no suggestion that the breach might threaten the safety of children for whom care was provided.
We do not regard it as appropriate to vary the conditions of approval or impose additional conditions in a manner that would allow Pananga to continue to provide the information required by the Administration Act manually. We doubt whether it would be a proper exercise of discretion to impose a condition that sets at naught the clear statutory scheme. Nor is the matter one where a reduction in the number of child care places would be warranted. The options under paragraphs (f) to (h) of s 200(1) of the Administration Act are not apt for the present circumstances. In reality, cancellation or suspension of the approval are the only options realistically open. An undertaking from Pananga that it would comply in the future might have required consideration of the power to suspend pending compliance however no such undertaking was offered. In these circumstances we are of the view that cancellation was entirely warranted.
We would then affirm the decision under review.
I certify that the preceding 26 paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC and M J Carstairs, Senior Member
Signed:         ..............Signed....….................................................
  Associate
Date of hearing  19 July 2010
Date of last submissions          6 August 2010
Date of decision  5 October 2010
Counsel for the applicant          Mr PW Hackett
Counsel for the Respondent     Miss E Ford
Solicitors for the Respondent    Department of Education, Employment and Workplace Relations

GENERAL ADMINISTRATIVE DIVISION		)
Re		PANANGA PTY LTD