Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training
[2018] AATA 1463
•28 May 2018
Sunrising Family Day Care Pty Ltd and Secretary, Department of Education and Training [2018] AATA 1463 (28 May 2018)
Division:GENERAL DIVISION
File Number: 2017/2873
Re:Sunrising Family Day Care Pty Ltd
APPLICANT
AndSecretary, Department of Education and Training
RESPONDENT
DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:28 May 2018
Place:Sydney
The Tribunal affirms the decision under review.
.............................[SGD]...........................................
Chris Puplick AM, Senior Member
CATCHWORDS
CHILDCARE – education and care services national law – family assistance law – child care benefit – continued approval of a service – breach of conditions of provider approval – failure of governance arrangements – repeated non-compliance – recklessness – fraud – suitable person to operate a child care service – appropriate penalty – decision affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 (Cth) ss 10, 43
A New Tax System (Family Allowance) Administration Act 1999 (Cth) ss 3, 50Z, 174, 176, 195, 195A, 196, 200, 205, 219AC, 219F, 219N,
A New Tax System (Family Assistance) (Administration) (Child Care benefit – Record Keeping) Rules 2006 s 6
Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2000 (Cth) cl 4
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) ss 7, 10, 11, 16
Child Care Benefit (Session of Care) Determination 2000 (Cth) s 7
Children (Education and Care Services National Law Application Act) 2010 (NSW) ss 15, 32, 48, 158, 176, 178,Criminal Code Act 1995 (Cth)
CASES
Browne v Dunn (1893) 6 R. 67 H.L.
Shi v Migration Agents Registration Authority [2008] HCA 31
SECONDARY MATERIALS
Education and Care Services National Regulations under the Education and Care Services National Law – The Ministerial Council for Education, Early Childhood Development and Youth Affairs, 9 December 2011.
REASONS FOR DECISION
Chris Puplick AM, Senior Member
28 May 2018
ISSUE
This matter relates to an appeal by Sunrising Family Day Care Pty Ltd[1] (the Applicant) against a decision made by the Department of Education and Training (the Respondent) on 10 May 2016, and affirmed on 24 February 2017 by a Delegate of the Respondent, to cancel its service approval to operate as a provider of family day services.
[1] ACN 156 512 846 / ABN 90 156 512 846. Registered 27 March 2012. ASIC website.
RELEVANT QUESTIONS
Was the Respondent correct in finding that the Applicant was not suitable person to operate a family day care service?
In the event that it was, was the imposition of the penalty of cancellation of its approval to continue to operate the appropriate penalty given that other penalties were available?
In the event it was not, what alternative orders, if any, should the Tribunal make?
PART ONE: THE OPERATION OF SUNRISING FAMILY DAY CARE PTY LTD FROM INCORPORATION TO CESSATION OF OPERATIONS.
Narrative
It is important to set out the narrative of events leading to the cancellation of the Applicant’s licence and the lodging of this appeal, especially as some of the matters in contention are very much time-related.[2]
[2] Extracted from the Respondent Statement of Facts, Issues and Contentions dated 5 October 2017 and Affidavit of Mr Abdulkadir Hussein Olow dated 13 September 2017.
·27 March 2012: Sunrising Family Day Care (the Applicant) incorporated. Mr A H Olow as Director;
·29 August 2012: The Applicant is granted Provider Approval for education and care of children and granted Service Approval under ss 15 and 48 of the Children (Education and Care Services National Law Application) Act 2010 (NSW) (the National Law);
·10 September 2012: The Applicant is granted child care benefit approval under s 195 of A New Tax System (Family Allowance) (Administration) Act 1999 (the Administration Act);
·17 April 2013: the Respondent issued the Applicant with a Notice of Non-Compliance with conditions for continued approval (the First Non-Compliance Notice);
·10 March 2015: Second Non-Compliance Notice issued by the Respondent with repeated conditions for continued approval (the Second Non-Compliance Notice);
·7 April 2015: the Respondent advised that it had completed a Compliance Review and advised of steps needing to be taken by the Applicant to ensure ongoing compliance;
·15 May 2015: Mr Olow attended a workshop with Yassco consultants related to health and safety obligations of family day care centres. Other staff employed by the Applicant were present at this training session but it is unclear who they were or whether they attended other Yassco sessions;
·June and July 2015: the Respondent conducted a series of on-site inspections of units/registered premises where family day care services were being provided and also visited the homes of a number of registered educators;
·10 November 2015: The Department of Education, Regulatory Authority of NSW (the National Regulator) issued the Applicant with two Compliance Directions under the National Law (s 176);
·10 November 2015: the National Regulator issued the Applicant a Show Cause Notice to Suspend (National Law s 178(2));
·9 December 2015: The Respondent issued the Applicant with a statutory Notice of Intention to Impose Sanctions and sought further submissions from the Applicant;
·19 February 2016: the Applicant responded to the Respondent’s notice of 9 December 2015;
·16 March 2016: the National Regulator issued the Applicant with a Caution Letter;
·7 April 2016: the Applicant submitted a further letter in relation to the Respondent’s intention to impose sanctions;
·21 April 2016: the Applicant submitted a third letter of similar intent;
·10 May 2016: the Respondent notified the Applicant of its intention to cancel the service’s approval to operate;
·16 May 2016: the cancellation issued on 10 May came into effect;
·16 May 2016: shortly after this date the Applicant ceased providing services and, within a two week period, 97 of the Applicant’s educators left his employment and some 500 students moved to other providers;
·2 June 2016: Mr Olow attended a further session with Yassco consultants;
·7 June 2016: Applicant requested an internal review of the Respondent’s decision to cancel the service’s approval;
·16 June 2016: Mr Olow attended a course provided by Rabaale Consulting related to “compliance and accountability training”;
·November 2016; Mr Olow attended a workshop at Bankstown with a family day care consultant (“Nadia”) related to family assistance law and compliance issues;
·24 February 2017: the delegate of the Respondent notified the Applicant that the cancellation decision had been reviewed and affirmed;
·February 2017: Mr Olow attended a further course with Rabaale Consulting;
·8 May 2017: the National Regulator issued a Show Cause Notice regarding cancellation of provider approval under the National Law (s 32);
·17 May 2017; the Applicant applied to this Tribunal for review of the delegate’s affirmatory decision of 24 February (being affirmation of the decision of 10 May 2016);
·June 2017: Mr Olow attended a workshop conducted by the “Commonwealth Department of Education” regarding “legislative changes in effect from 1 July 2018 relating to child care benefits”.
The Respondent’s case
In support of its decision to cancel the Applicant’s operational licence the Respondent stated:
…[C]ancellation of the approval of the Applicant’s service under section 200(1)(e) of the Administration Act[3] was a reasonable and proportionate sanction to impose based on the evidence adduced through the investigations of compliance officers at both the Commonwealth and state levels having regard to:
(a)the extensive and ongoing history of non-compliance;
(b)the clear evidence of poor governance and maladministration;
(c)conceded deficiencies in the Applicant’s oversight and management of its educators including the Applicant’s admission that the educators were engaged in fraudulent collusion with parents;
(d)the ongoing risk that such non-compliance would continue; and
(e)the attendant risk of such non-compliance adversely affecting the safety of children.[4]
[3] A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).
[4] Respondent Statement of Issues, Facts and Contentions dated 5 October 2017 at [48].
From this the Respondent adduces that the Applicant is not a “suitable person” to operate such a service. The definitions of suitability will be outlined subsequently.
The Applicant’s response
The Applicant, while making certain concessions (see below), submits that a penalty less than outright cancellation is appropriate and that:
“It is submitted that:
(a)The experience gleaned through having operated a service through a period of rapid growth, that at its peak engaged 180 odd educators and 900 odd children in care (Eligibility Determination cl 7(2)(a)); and
(b)The Applicant’s enhanced understanding of the obligations that apply to it under the family assistance law, gleaned via the various consultations and investigations that it has undertaken in order to investigate errors in its reporting, and to refashion its operations as outlined in its Submissions in the Show Cause and internal review processes, and via the training Mr Olow has undertaken with various external consultants (Eligibility Determination cl 7(2)(d)); and
(c)The Applicant’s refined and improved business model, governance framework (including via the Audit policy is has embraced), and its detailed policies and procedures (Eligibility Determination cl 7(2)(c)); and
(d)The Applicant’s clear commitment to complying with its obligations under the family assistance law (tangibly demonstrated in the efforts it has made to continually improve its operations) (Eligibility Determination cl 7(2)(d)),
weigh strongly in favour of a conclusion that the Applicant is, despite its admitted record of non-compliance with some of its reporting obligations (Eligibility Determination cl 7(2) (e)), a suitable person to operate a child care service.”[5]
[5] Applicant Outline of Submissions Undated. Tribunal Exhibit A6 at [51].
The legislative framework
It is necessary, because of the complexity of this matter and the fact that numerous breaches are alleged by the Respondent, both of the National Law and the Administration Act and of various Eligibility Rules and Determinations, to set out the legislative framework in considerable detail.
Part 8 Division 1 of the Administration Act provides the legislative scheme for the approval of child care services by the Commonwealth. The continued approval of child care services is contingent upon the child care service meeting conditions listed in this Division.
If the Respondent is satisfied that an approved child care service has not complied, or is not complying, with a condition then it may impose one or more of the sanctions listed in s 200(1) of the Administration Act.
The Administration Act
Section 196 of the Administration Act states:
Eligibility requirements
1It is a condition for the continued approval of an approved child care service that the service satisfies any eligibility rules that are from time to time applicable to the service under paragraph 205(1)(b).
Compliance with family assistance law
2It is 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 (whether or not such a contravention constitutes an offence or is of a civil penalty provision).
Note: Enforcement under this Division of this and other conditions is not limited or affected by other compliance measures in this Act (for example, infringement notices, proceedings for civil penalty orders and prosecutions).
…..
Compliance with Commonwealth, State and Territory laws
3It is a condition for the continued approval of an approved child care service that:
(a)the operation of the service; and
(b)the provision of care by the service; and
(c)the construction of the premises of the service; and
(d)the equipment at the premises of the service;
comply with all applicable requirements imposed by a law of the Commonwealth or a law of the State or Territory in which the service operates.
Subsection 196(1) of the Administration Act provides that a child care service must comply with any determined eligibility rules. The Child Care Benefit (Eligibility of Child Care Services for Approval and Continued Approval) Rules 2017 (Cth) ( the Eligibility Determination) holds eligibility rules that are required to be satisfied under s 196(1).[6]
[6] The Eligibility Determination was remade in substantively identical terms as the 2000 instrument sunsetted on 1 October 2017.
The term 'family assistance law' (family assistance law) is defined in s 3 of the Administration Act as:
(a)this Act;
(b)the Family Assistance Act;
(c)any instrument (including regulations) made under this Act or the Family Assistance Act;
(d)Schedules 5 and 6 to the A New Tax System (Family Assistance and Related Measures) Act 2000.
The obligations imposed on a service under s 196(2) include the additional obligations outlined in Part 8A of the Administration Act, which includes s 219N, as well as other obligations that apply under the family assistance law including those that are also dealt with by offences or civil penalty provisions (as made clear in the parentheses at the end of s 196(2)).
Section 219N of the Administration Act requires child care service operators to provide accurate reports detailing the provision of sessions of care and payments relating to those sessions of care to the Respondent. This obligation is an integral one because child care payments are paid on the basis of information contained in these reports (see section 50Z of the Administration Act).
Providing false statements or documents is an offence under s 174(1) of the Administration Act:
1A person contravenes this subsection if:
(a)the person makes a statement or presents a document to an officer or an approved child care service exercising powers, or performing duties or functions, under the family assistance law; and
(b)the statement or document is false in any particular; and
(c)the person is reckless as to whether the statement or document is false in any particular.
Obtaining payments or fee reduction through fraudulent documents or statements is also an offence under s176(3) of the Administration Act:
3A person contravenes this subsection if:
(a)the person makes a statement; and
(b)the statement is false or misleading; and
(c)the person is reckless as to whether the statement is false or misleading; and
(d)as a result the person obtains:
(i) a payment of family assistance; or
(ii) fee reductions; or
(iii) in the case of an approved child care service—an amount is paid under section 219Q or subsection 219QA (2) in respect of fee reduction, under section 219QC or subsection 219QD (2) in respect of child care rebate or under section 219RA as an enrolment advance; or
(iv) in the case of an approved child care service—a payment under section 219RD (business continuity payments).
If the Respondent is satisfied that a child care service has not complied with, or is not complying with, any condition placed on its continued approval then the Respondent may impose any of the following sanctions listed in s 200(1) of the Administration Act:
Sanctions
1If 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;
(i)suspend, for a maximum of 3 weeks, payment under section 219QC or subsection 219QD (2) in respect of child care rebate.
Subsection 200(4) of the Administration Act provides that the Respondent must have regard to any ministerial determination made under s 200(5) when exercising a power under subsection 200(1) to sanction an approved child care service. The Child Care Benefit (Breach of Conditions for Continued Approval) Determination 2000 (Cth) (Breach Determination)[7] has been made for this purpose and relevantly states in relation to decisions to impose a sanction:
[7] The Breach Determination was remade in substantively identical form as the 2000 legislative instrument sunsetted on 1 October 2017.
4Factors to be taken into account in applying sanctions
The following factors are to be taken into account by the Secretary in considering whether to impose sanctions on a child care service under subsection 200(1) of the Act (consequences of breach of conditions for continued approval), and if so, which sanctions to impose:
(a)whether, in the opinion of the Secretary, the breach of conditions for continued approval is minor or serious;
(b)whether the service has breached any conditions of continued approval before, and if so, how often; and
(c)whether the breach may threaten the safety of children for whom care is provided.
The Eligibility Determination
The Eligibility Determination is made under s 205(1) of the Administration Act. Compliance with the Eligibility Determination is a condition of approval of a child care service.[8]
[8] A New Tax System (Family Allowance) Administration Act 1999 (Cth) s 196(1).
The Eligibility Determination is divided into two key parts: Part 2, which deals with conditions that need to be met at initial approval for a child care service; and Part 3 which sets out conditions of continued or ongoing approval. All conditions of approval in Part 2 that relate to “suitability” apply also as conditions of continued approval.
Subsection 16(1) of the Eligibility Determination (in Part 3) states that an operator of an approved child care service must continue to be a suitable person to operate a service.
Section 7 of the Eligibility Determination provides the criteria against which the suitability of an approved child care service applicant can be determined:
Suitability of applicant
1The applicant must be a suitable person to operate a child care service.
2In 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);
Matters relevant to capacity to comply with all laws and standards
(d)the applicant’s understanding of obligations that would apply to it under the family assistance law, and commitment to complying with these obligations;
(e)the applicant’s record of compliance with any laws of the Commonwealth or a State or Territory;
(f)the applicant’s record of compliance with any quality standards relating to child care services;
…
Relevantly, paragraph 7(2)(c) of the Eligibility Determination provides for the Respondent to consider the governance arrangements of the service in making a determination of suitability.
The Education and Care Services National Regulations 2011 (NSW)
Requirements under the National Law, which is mirror legislation that applies in each state and territory including New South Wales, are also incorporated as conditions of approval under the family assistance law per s 196(3) of the Administration Act and s 11 of the Eligibility Determination.
Concessions made by the Applicant
The Applicant did not seek to deny that it had, on several occasions, breached the requirements of the legislation and the rules. These concessions appear through the Applicant’s written and oral submissions.
By way of example, in the Applicant’s principal Submission it asserts that “…despite its admitted record of non-compliance with some of its reporting obligations…” however it asserts that its culpability is at a lower level than that asserted by the Respondent. [9]
[9] Applicant Outline of Submissions Undated.(Applicant Submission) Tribunal exhibit A6 at [51].
Similarly in the Affidavit of Abdulkadir Hussein Olow dated 13 September 2017 (Affidavit of Mr Olow) he acknowledges that:
“I understand the gravity of dealing with government funds, and believe that a large part of the issues faced in the past were as a result of the Applicant having more educators and children than it was adequately equipped to deal with.”[10]
[10] Affidavit of Abdulkadir Hussein Olow dated 13 September 2017 at [86].(Affidavit of Mr Olow)
Since significant matters turn on the capacity of the Applicant to manage effectively and account for the growth in numbers of children in receipt of care services, it may be useful to outline what the apparent growth of the business was between its opening in September 2012 and its ceasing operations after May 2016.
Table showing growth in operations: September 2012 – September 2016
Date Source in Tribunal documents* Educators Children Staff Ratio Educators to Children 10.09.12
Opening
Olow(T) 14
18
49
2
2.72
Sept 2013
A2
121
567
17
4.68
Sept 2014
A2
185
919
26
4.96
Sept 2015
A2
163
817
23
5.01
12.12.15 Notice to cancel issued
Olow (A) 16
120
600
“approx.”
unstated
16 May 2016
Cancellation notice issued
Olow (A) 17
97
500
“approx.”
unstated
Sept 2016
A2
81
425
14
5.24
[* Olow (T) = Transcript of Mr Olow’s evidence at hearing (26 March 2018). Olow (A) = Affidavit of Mr Olow (13 September 2017). A2 = Tribunal Exhibit A2 (25 March 2018)]
It is not clear from the documentation as to the status of operations after 16 May 2016. In the Table provided by the Applicant,[11] the figures of 81 educators/425 children/14 staff are shown in a table cell labelled “Sep 2015 – Sep 2016”. However in the Affidavit of Mr Olow he states: “In the two weeks after the decision in May 2016, all 97 of the Applicant’s educators left the Applicant, and approximately 500 students moved to other providers.”[12] Nevertheless I take it that the business ceased to operate within a few weeks of the cancellation notice of 16 May 2016.
[11] Tribunal Exhibit A2.
[12] Affidavit of Mr Olow at [18].
The starting point
It is perhaps not unexpected that in an area as complex as this, replete with the need to complete multiple reporting forms and submit claims on a regular, indeed ongoing basis, that there will be administrative slip-ups/errors made from time to time.
The key question then becomes what was the response of any non-complying party once this is drawn to their attention. Hence in this determination the logical point to start is with the Applicant’s response to the first Non-Compliance Notice of 17 April 2013. This is only some seven months after the Applicant commenced operations. It was an early-warning sign. This date is also approximately three years prior to the final Cancellation Notice of 16 May 2016.
The first Non-Compliance Notice 17 April 2013
On 17 April 2013 a Senior Compliance Officer of the Department of Education, Employment and Workplace Relations wrote to Mr Olow, addressed to the Applicant’s offices in Granville. The Compliance Officer noted that this letter was the result of a compliance review of the Applicant which had been undertaken by departmental officers on 4 April 2013.
The letter indicated that:
“The review has established that the service is not compliant with conditions for continued approval for the purposes of the family assistance law.”
In particular, a number of non-compliance issues were identified which “require your action and/or attention.”[13]
[13] Tribunal Documents at [82].
The following matters were listed:
·Reporting attendance or absences where no care was or would have been provided;
·Reporting incorrect session times;
·Reporting attendance when the child was absent (or vice versa);
·Missing attendance records;
·Full day sessions reported when child attends school;
·The timing of Before School Care or After School Care sessions is wrong.
The letter went on to provide Attachments indicating what remedial action was required by the Applicant; details of possible penalties for infringements, including a Notice that “the Department may also impose a sanction which could include suspension or cancellation of your service’s Child Care benefit approval”; and an invitation to discuss matters with the letter’s author.[14]
[14] Tribunal Documents at [83].
The Applicant could thus have been left in no doubt of the extent of the Department’s concerns, nor about the potentially grave consequences of any failure to rectify the identified deficiencies.
The Applicant’s response to this Notice was in the first instance to dismiss 15 educators and to make changes in the administrative staff.[15]
[15] Applicant Outline of Submissions Undated. Tribunal Exhibit A6 at [39]
In fact only one member of the administrative staff was changed – a timesheet processor (Mr Omar Sidiq). He was not replaced after he had been on holidays.
Counsel for the Applicant described the steps undertaken by the Applicant after the April Notice as follows:
“Mr Olow will give some evidence about what happened in response to the two earlier warning notices, the April 2013 warning notice and the March 2015 warning notice, but I don’t think it’s an exaggeration to say that it substantively revisited its policies, procedures and governance framework after it got the notice of intention to cancel in December 2015. It certainly did some things prior to that, but its substantial revisitation of its policies, procedures and the like comes after the December 2015 notice.”[16]
[16] Transcript of evidence, 26 March 2018 at page 7
In response to questioning by his Counsel, Mr Olow answered:
“What, if any, review of your policies did you do at that stage?---We just do when we have to. We created a receipt book for the educators at that time and that we also created that we have to go regularly, sometimes on-spot visit of the educators. Sometimes, yes.”[17]
[17] Transcript of evidence, 26 March 2018 at page 12
The Tribunal cannot be satisfied that the Applicant’s response to the First Non-Compliance Notice of 15 April which listed numerous instances of non-compliance and mentioned the possibility of severe sanctions was in any way adequate when it amounted to dismissing some educators, removing one staff member, creating a receipt book and sometimes undertaking spot visits.
The fact that Counsel admits that there was no significant change in the Applicant’s policies at this stage, indeed not until some two years later, is revealing. Equally significant is that the First Non-Compliance Notice and the Applicant’s responses to it is not mentioned at all in Mr Olow’s Affidavit.
The second Non-Compliance Notice: 10 March 2015
On 10 March 2015 a Senior Investigations Officer of the Department of Social Services wrote to Applicant with a further Notice of Non-Compliance with conditions for continued approval. On this occasion the non-compliance matters were identified as:
·Reporting attendances or absences before care starts;
·Reporting attendances or absences after care ceases.[18]
[18] Tribunal Documents at [108].
These are alleged contraventions of s 10 of A New Tax System (Family Assistance) Act 1999 (Cth) (the Family Assistance Act) and s 219N of the Administration Act.
Neither the Applicant’s principal Submission to the Tribunal, nor the Affidavit of Mr Olow address directly the matters raised in the Second Non-Compliance Notice, nor indicate any steps taken to address the Department’s concerns.
This matter was dealt with at some length when Mr Olow gave evidence.
Mr Olow was asked by his Counsel about the steps taken in response to the Second Non-Compliance Notice. The Applicant’s response was to engage a consultancy firm to provide some staff training.
“MR HOWELL: What, if any, steps did the applicant take to address the matters identified in that notification after it was received in March 2015?---We conduct a training to the staff and educator as well with the consultant called Yassco Consultants and he conduct in May 2015, a workshop with staff as well as the educators to address that issue we have.
Did you, yourself, attend that training?---Yes, I did.”[19]
[19] Transcript of evidence, 26 March 2018 at p 12.
There were minor staff changes, and Mr Sadiq was re-employed:
“MR HOWELL: That’s good, thank you. We had gotten to the point where you had engaged Yassco; you’d done some training in May 2015. In addition to that training with Yassco, what, if anything else, did the applicant do after it received that notice of 10 March 2015 relating to alleged non-compliance for sessions of care absence or attendance before care started and after care started? What else was done, if any?---We change the staff as well. We get former staff who was on holidays, we call him back and he come back to work as well and Omar Sadiq.
Mr Sadiq?---Sadiq, yes.
When do you say he came back?---Came back in April, May, May ’15.”[20]
[20] Transcript of evidence, 26 March 2018 at p 15.
The Respondent’s representative sought to establish the extent to which the First and Second Non-Compliance Notices had caused the Applicant to make any changes in its policies and governance arrangements.
“MR HURTZBERG: So when you found out afterwards. Mr Olow, the Department conducted a range of compliance – gave you some warning notices in 2013, 2015. There were compliances in mid-2015. The notice of intention to cancel was provided in 9 December 2015. Now, you’ve described to us a range of governance measures and new policies that you want to implement. It looks to me like all of those new policies were suggested to the Department after the notice of intention to cancel. Is that correct?---No.
No?---I put the policy and the procedure and the notice – I mean, when we got the letter from the Department on March ‘15, we conduct training. We changed the staff who was doing the time sheets. This is the one – I know we did in Sunrising Family Day Care. Furthermore, we implement a phone policy, and we implement for two weeks a visit. This is an ongoing improvement plan. Any issue that comes, we have to deal with it.”[21]
[21] Transcript of evidence, 26 March 2018 at p 35.
In relation to the training undertaken by Mr Olow and some of his staff with Yassco, the Tribunal itself put some questions to Mr Olow.
“SENIOR MEMBER: Okay, all right. Now, you received the first notice of non-compliance of 17 April 2013, there was a further notice on 10 March 2015, and then on 7 April 2015, there was advice about the necessary steps taken to comply. On 15 May, you attended a workshop with Yassco. This is the first of these arrangements, because you attend another workshop with Yassco a bit later. Tell me a bit about Yassco? ---Yassco is – because sometimes especially the director has got experience for the education sector, he was working with Victoria education Departments. Also, he worked financial consultant, financial assistant in here, in Victoria, and also overseas in Malaysia. So, he’s got quite a long time experience financially and education system.
SENIOR MEMBER: Now, I looked this up on the ASIC website.
This is a company that has been operating in Victoria since 2012. We’re previously known as Chico Family Day Care Service. [22]
And you say to me they provide specialist training and information about the management of Family Day Care and Childcare services in general?---I (indistinct) the idea that Family Day Care, but he was – before he came into the 2012, he was overseas for 10 years.
Yes?---But he may work and support them, but he came back.
Okay, now you had two sessions with them?---Yes.
You had that session which was in May 2015, and you had another session with them which was in June 2016. What did those sessions focus on?---The first session, was May ’15, it covered the area where education – safety and wellbeing for the kids, and how they are regulated, the Department of Education and the state, as well as the federal, how they differentiate and something to do with the timesheets and the parents, gap fee, you know, that they have to pay to the educators or to a scheme. He mainly goes deeply to the CCP, how it works.”[23]
[22] Transcription errors for “They were” and ChlCHO Family Day Care Service
[23] Transcript of evidence, 26 March 2018 at p 43.
The Tribunal has no solid evidence before it as to the competence of the Yassco consultants, nor the quality of their training material, however it is clear that the Applicant made an effort to engage with this company and benefit from its advice. The Company (which at March 2018 was not registered for GST) appears to be the operators of both Yassco Training Institute (from 26 November 2014) and ChlCHO Family Day Care (from 10 May 2013).[24]
[24] ABN Lookup Current details for ABN 38 161 772 774. Accessed 20/03/18.
However no evidence was presented as to what, if any, changes were implemented as a result of the Yassco training.
Training aside, there is also little or no evidence of serious or significant changes made in terms of the development and implementation of comprehensive new policies or governance arrangements arising immediately after the Second Non-Compliance Notice. The “phone policy” to which reference is made appears to be simply a series of random calls to educators to check that they are providing services, a system which would be easy to deceive (especially if the telephone number were a mobile phone) if not backed up by contemporaneous physical visitation/inspection of premises.
Compliance review and monitoring: April to July 2015
On 7 April 2015, nearly two years since the First Non-Compliance Notice was issued, the Respondent notified the Applicant that it had completed a compliance review. The Respondent had identified numerous breaches of reporting requirements, including that over 1000 sessions of care were incorrectly reported, involving some 77 children. The Respondent indicated remedial steps which the Applicant needed to take as a result of these findings.[25]
[25] Supplementary Tribunal Documents at [124]-[129]
On four separate occasions in June and July 2015 the National Regulator conducted compliance inspections of the Applicant’s registered premises and visited a number of its registered educators. [26]
[26] In this instance the Department of Education, Regulatory Authority of NSW.
The National Regulator found:
(a)“sessions of care reported by the service which attributed the provision of care to particular educators, for dates when those educators were overseas;
(b)significant discrepancies between the attendance reports submitted by the service and the information obtained during visits to educators’ homes;
(c)significant discrepancies between the attendance reports submitted by the service and the information provided by parents;
(d)the reporting of absences before the care of a child had commenced, and absences after the care of a child had ceased;
(e)attendance reports not given, and enrolments of children not notified, within the required timeframes;
(f)numerous contraventions of the Education and Care Services National Law (the National Law) and the Education and Care Services National Regulations (the National Regulations), which had been reported by the NSW Regulatory Authority.”[27]
[27] Respondent Statement of Facts, Issues and Contentions at [10].
In addition, the inspectors identified a number of alleged breaches of both the National Law and The Education and Care Services National Regulations 2011 (NSW) The Education and Care Services National Regulations 2011 (NSW) (the National Regulations). These included:
(a)Breach of regulation 103 (to maintain premises, furniture and equipment in safe, clean and good condition): In 4 family day care premises under the Applicant’s supervisory direction and control, deleterious risks to the health and safety of children were identified by compliance officers, including non-secure fencing, medication accessible in the fridge, razor blades in the bathroom, unsecured pallet as a side barrier to premises, accessible electronic cords, exposed cat food and broken fencing, toys stored in piles blocking the entrance to the day care premises, uncleaned tables and left over food on plates in children’s room.
(b)Breach of regulation 154 (record of day care coordinators and family day care educator assistants): 5 educators had adults assisting them in transporting children to school with no records to indicate they were approved family days care assistants by the Applicant service.
(c)Breach of regulation 170 (policies and procedures to be followed): 14 educators were found by authorised officers of the National Regulator to have minimal understanding of critical policies and procedures including those relating to injury, trauma, illness, emergency and evacuation and providing a child safe environment.
(d)Breach of regulation 117 (glass): 12 educators failed to demonstrate how the approved provider failed to maintain appropriate records to demonstrate the glass areas in the residences of 12 educators accessible to children were maintained in accordance with specified requirements.
(e)Section 169 (Harms and Hazards): 1 educator was found to be driving children between her home and the service holding an expired drivers licence.[28]
[28] Supplementary Tribunal Documents at [29]-[36] and [37-57].
There does not appear to have been any immediate notification to the Applicant of the result of these inspections or findings.
They do however appear to be the basis upon which recommendations were made to the relevant officer of the Respondent that he consider issuing a Notice of an Intention to Impose Sanctions on the Applicant.[29]
[29] Tribunal Documents at [116]-[122].
Compliance Directions and Intention to Impose Sanctions: November-December 2015
On 10 November 2015 the National Regulator issued the Applicant with two Compliance Directions under s 176 of the National Law. These related to the alleged failure of the Applicant to ensure the appropriate emergency procedures training of some of its educators and to properly inform others of their obligations related to mandatory reporting requirements under child protection law.
The letter concerned, addressed to Mr Olow, contained the following paragraph:
“Please provide a compliance plan to the Department outlining how you plan to meet the Children (Education and Care Services) National Law and Regulations by 7 December 2015. The compliance plan will be added to the Department's records and will be considered in future compliance and assessment activities. Education and care services are regularly monitored by authorised officers and should similar non compliances be identified at your service in the future, enforcement action may result.”[30]
[30] Supplementary Tribunal Documents at [4].
There is no evidence before the Tribunal of the Applicant’s specific response to this notification by the National Regulator. The visits of the inspectors are recorded in Mr Olow’s Affidavit (at para 10) but no response specifically addressing the National Regulator’s concerns is recorded. These Compliance Directions are not mentioned in the Applicant’s principal Submission, nor were they raised in the hearings. There does not appear to be a “compliance plan” submitted to the National Regulator in response to the instruction to provide one.
The Tribunal is unable to ascertain from the material before it whether or not the Applicant took steps to address and rectify the serious matters which Compliance Direction brought to the Applicant’s attention. However it does not appear that it did so.
On the same day, the Applicant was served with two Notices under s 178(2) of the National Law wherein the National Regulator indicated its intention to issue directions to suspend a number of educators for failing to meet various requirements under that Law. In total there were 11 educators (one person appearing on both lists).[31]
[31] The Notices appear in the Supplementary Tribunal Documents at [17] and [19].
The proposed suspensions were resultant from failures to meet requirements which had previously been drawn to the attention of the Applicant.
On 9 December 2015 the Respondent sent to Mr Olow a formal Notice of the Intention to Impose the Sanction of Cancellation. This was based on “non-compliance with one or more conditions for continued approval of a child care service.”[32] This Notice was given under s 200(1) of the Administration Act. This section also provides that the Applicant must be given the opportunity to respond to the Notice, and outlines a range of sanctions available to the Respondent including variation of conditions of operation; suspension; withholding of payments or cancellation (s 200(1)(d)). The gravamen of findings against the Applicant were stated to be:
(a)reported sessions of care had been provided by educators who were overseas;
(b)reported sessions of care before a child commenced care, or after the care of a child ceased;
(c)discrepancies between attendance reports and information provided by educators.
[32] Tribunal Documents at [122].
An important part of the Respondent’s letter reads as follows:
“Set out below and in Attachment 1 are specific details of the contraventions of the family assistance law by the Service. I note that more than one contravention has been identified of more than one obligation. There are details regarding the contraventions by the Service of its obligations under sections 176, 219N and 219A of the Administration Act.
I further note that the department sent letters to the Service in April 2013 and March 2015 describing the department’s concerns about numerous apparent contraventions by the Service of a number of its obligations under the family assistance law.
Despite these letters from the department, I do not see any evidence that the Service’s compliance with the family assistance law is improving.
Accordingly, I do not consider the operator has adequate governance arrangements relating to ensuring compliance with the family assistance law, and as such, I do not consider that the operator is a suitable person to operate a child care service.”[33]
[33] Tribunal Documents at [125].
The Department’s letter is not just couched in general terms. Attached to it is documentation which reveals that the Applicant had submitted:
·131 reports of attendance after actual child care had ceased;[34]
·18 reports of attendance prior to child care commencing;[35]
·1020 late reports on attendance;[36] and
·378 late reports on enrolment.[37]
[34] Tribunal Documents at [137]-[139].
[35] Tribunal Documents at [140].
[36] Tribunal Documents at [141]-[172]: including 19 reports more than 60 days late.
[37] Tribunal Documents at [173]-[184].
The Applicant’s responses to the threat of cancellation
The Applicant responded to the Notice of Intended Cancellation by making a series of written submissions on 19 February 2016; 7 April 2016 and 21 April 2016.[38] Each of those responses will be considered individually.
[38] Respectively at Tribunal Documents [194]-[258]; [263]-[265] and [266].
19 February 2016
This response was in the form of a submission from the Applicant’s legal representatives, Birchgrove Legal. In essence this submission:
(d)“accepts that the investigation (by the Department) has revealed a number of areas in its reporting mechanisms the Service must address”;
(e)“denies any contravention of s. 176 of the Administration Act”;
(f)“accepts the statements identified by the Department appear to have been incorrect. However, the Service denies that it was reckless as to whether those statements were false or misleading”;
(g)“submits … that it has put, or in in the process of putting in place, all reasonable measures to ensure that the reports it submits to the Secretary are in accordance with s 219N and that it complies with its obligations to notify the Secretary of enrolments under s 219A”[39];
(h)States that “particular vulnerabilities in the Service’s systems have been highlighted by the Department’s investigation” and that “the Services has had difficulties in ensuring that educators comply with their obligations.”[40]
[39] Tribunal Documents at [195].
[40] Tribunal Documents at [196].
The Submission goes on to outline both the (then) current governance arrangements and those which are proposed for implementation. The Applicant admits that “the Service has had difficulties in ensuring that educators comply with their obligations.”[41]
[41] Tribunal Documents at [196].
The key proposals outlined by the Applicant to improve its governance arrangements were:
·To implement regular compliance/monitoring calls to educators during peak holiday seasons and introduce reminders to educators about their reporting obligations;
·To introduce a receipt issuing system to prevent gap fees being paid by parents to educators;
·To take steps to ensure that educators are not simply delivering transport services and then claiming for the provision of other supervisory services;
·Improvements in data entry management;[42]
·The Service acknowledged that 131 absence sessions were recorded after a child had ceased care and 18 absence sessions were recoded before a child had commenced care, and that this constituted erroneous reporting but that this was being addressed by new plus for control and checking of time-sheets. It further indicated that some of these reports/claims were being cancelled and that others would be resubmitted;
·Staff members were being warned about making false or misleading claims and reports;
·After claiming that some of the reporting delays were due to failures on the part of Centrelink, the Service “acknowledges that there may have been instances where the submission of attendance reports and notices of enrolment were delayed as a result of factors not related to Centrelink delays” but that these deficiencies were being addressed by improvement in administrative processes;[43]
·To provide a monthly audit routine to ensure compliance by individual educators and enhance educator/staff training.[44]
[42] Tribunal Documents at [197]-[198].
[43] Tribunal Documents at [200].
[44] Tribunal Documents at [201]-[202].
In conclusion, the Applicant:
“40…..submits that it has satisfied all items contained in the Department’s Notice by addressing the concerns raised and undertaking all reasonable measures to prevent future contraventions and meeting the conditions for continued approval under the Administration Act.” and that
“42 …the Service does not believe that any sanction is warranted under the Administration Act.”[45]
[45] Tribunal Documents at [202]-]203].
The Applicant attached a table analysing 38 specific instances which had been identified by the Department and refuting their conclusions about each of them.[46]
[46] Tribunal Documents at [205]-[233].
Not all of these were subject to further consideration in evidence before the Tribunal but in relation to the very first of them, where the Applicant claimed that the reason for a child’s non-attendance was that it was the first day of Ramadan, the Respondent demonstrated in cross-examination that this was in fact not the case and that the Applicant’s stated date of the start of Ramadan was incorrect.[47]
[47] Transcript of evidence, 26 March 2018 at p 32.
7 April 2016
This response (again submitted as a letter from Birchgrove Legal) merely states that the Applicant had cancelled and resubmitted reports, which the Respondent had identified in its earlier documentation as being defective, as it had promised to do in its earlier response of 19 February 2016.[48]
[48] Tribunal Documents at [263].
21 April 2016
This response (again submitted as a letter from Birchgrove Legal) addresses none of the substantive issues but formally sought a meeting with the Department to:
·Update the Department on their client’s (i.e. the Applicant) progress;
·Take note or clarify any outstanding concerns of the Department; and
·Provide the Applicant’s “perspective on issues within the industry.”[49]
[49] Tribunal Documents at [266]. The request for a meeting was formally declined by the Department on 28 April 2016 see Tribunal Documents at [303].
National Regulator Caution letter: 16 March 2016
While the Applicant was in the process of making its responses to the Respondent (above) the National Regulator issued a Caution Letter to the Service. This letter informed the Applicant that the National Regulator had received information from the Respondent that the Applicant was aware that certain educators engaged by it, had used educator assistants to care for children while they were travelling overseas. It noted that the Applicant had failed to inform the Respondent of this in contravention of the offence provision contained in s 174(2) of the National Law.[50]
[50] Supplementary Tribunal Documents at [21].
The Caution letter named the educators concerned but indicated that “On this occasion no further action will be taken in relation to the alleged offences.”[51]
[51] Idem.
The Cancellation Decision: 10 May 2016
On 10 May 2016, a delegate of the Respondent notified the Applicant of the decision to cancel the Service's approval under s 200(1)(e) of the Administration Act.[52] The Respondent's delegate was satisfied that there had been serious non-compliance with conditions of approval by the Applicant over a considerable period of time. Additionally, the delegate concluded that the efforts by the Applicant to improve its governance arrangements were inadequate and the service had not complied with its conditions for continued approval. After detailed consideration of the Applicant’s submissions and available evidence, the delegate found:
(a)the Applicant had repeatedly failed to comply with its obligations to provide accurate information to the Department in its reports under s 219N of the Administration Act;
(b)the Applicant had made numerous false statements in its reports under s 219N, and the circumstances giving rise to those false statements indicated at least recklessness on the part of the service as to the accuracy of the reports, contravening ss 174(1) and 176(3) of the Administration Act; and
(c)the Applicant was not a suitable person to operate a child care service, therefore failing to demonstrate continued compliance of the Service with the Eligibility Determination and in particular, s 16(1) thereof.[53]
[52] Tribunal Documents at [276]-[286].
[53] This section provides a definition of the term “suitable person” and the criteria for assessment.
The Notice specified that the cancellation took effect from 16 May 2016 and was signed by Sharron Hawkins as the Delegate of the Secretary.
The Applicant’s response to the Cancellation Decision
The Applicant submitted several submissions to the Department and to the internal reviewer in response to the Cancellation Notification.
7 June 2016 submission
By letter dated 7 June 2016 (submitted as a letter from Birchgrove Legal), addressed to the Department, the Applicant responded to the Cancellation Notice. In the first instance the Applicant applied for a formal internal review of the decision and also drew attention to other powers available to the Department to impose sanctions which fell short of outright cancellation of its registration.[54]
[54] Tribunal Documents at [292]-[299].
The letter also responded to the principal findings of the Department. While conceding that “there were some errors in its reports” it contended that “there is significant practical difficulty in regulating the conduct and reports of its educators” when they fail to notify that they are travelling overseas and that “the Service has to place a level of trust in its educators providing accurate reporting of their holiday intentions and not lodging timesheets while overseas.”
The Applicant denied that any of its actions were “reckless” and that most of the breaches could be ascribed to “human error.”
The Applicant indicated that staff had received some training about their obligations, although the details of this were not specified. However, the Service reported that “As of February 2016, the Service trained its staff in the informal enrolment process and issues such as those outlined… should not occur in the future.”
The training referred to was provided by Rabaale Business Consulting Services who had been engaged for a 12 month period to provide comprehensive training covering a range of services provided by the Applicant.
Again, the Tribunal is in no position to assess the quality of this training. Rabaale appears to be a business run by a sole trader[55] as was confirmed in questioning by the Tribunal of the Applicant as follows:
SENIOR MEMBER: Yes. And the third of these, you had two sessions with Rubale Consulting?---Rabale[56], yes.
Tell me about those?---Rubale is – - -
Well, tell me first, who or what is Rubale Consulting?---Rubale is accountant, Sydney accountant. Used to work with Melbourne University and he established his own consultant as tax agents and later on he is consulting with family day cares. He specialises in CCB and CCR, mainly.
Yes. And he is this Mr Abdullah Ishaq Ahmed?---Abdullah Ishaq Ahmed.[57]
Yes, and he provided the training?---He provided the training.[58]
[55] Rabaale Business Consulting Services ABN 28 047 953 371. Originally registered 3/11/2014 at Reservoir, Victoria in the name of Abdullahi Sheikhahmed. ASIC Website accessed 23/03/21018.
[56] Error in transcription – should read “Rabaale”.
[57] Transcription error. Should read “Abdullahi Sheikhahmed”.
[58] Transcript 26 March 2018 at [44].
Finally the Applicant noted that as of May 2016 the number of children receiving services from the Applicant was 435 and that 84 educators were employed. In this respect the Applicant asserted that: “the number of instances of inaccurate reporting represents a small fragment of the total sessions of care provided by the Service.”
29 July 2016 submission
This submission (per Birchgrove Legal) was addressed to Shane Williams (Mr Williams) who had been appointed by the Department to conduct the internal review of the cancellation decision which had been requested by the Applicant.
The lengthy submission outlined a “further significant review of its internal processes with the objective of ensuring the accuracy of all future attendance records submitted to the Department”. An attachment to the letter outlined the revised processes being implemented by the Applicant covering verification of reports, submission of timesheets, registration of educators, provision of more information for families and regular audits.[59]
[59] Tribunal Documents at [307]-[326].
It enclosed a personal declaration from Mr Olow in which he stated:
“Although, mistakes have been made in the past, I and my staff have only grown more committed to following the legislation. We understand the seriousness of protecting tax-payer’s money and would like to continue being a part of educating those in our communities who are disadvantaged, to reach their full potential too (sic) as contributing members of Australian society.” [60]
[60] Tribunal Documents at [316].
8 December 2016 submission
A final submission (per Birchgrove Legal) was addressed to Mr Williams on 8 December 2016.[61] Separately, Mr Olow also wrote directly to Mr Williams on 18 November 2016 seeking his sympathetic consideration of the Applicant’s request for internal review.[62]
[61] Tribunal Documents at [327]-[371].
[62] Tribunal Documents at [372].
The December submission refers to a letter from Mr Williams to the Applicant’s legal representatives dated 23 November 2016 which apparently informed:
‘the Service of further information that the Department has become aware of that was not included in the original decision. You have since given the Service the opportunity to respond to this additional information.”[63]
[63] Tribunal Documents at [327].
The letter from Mr Williams is not in evidence before the Tribunal and there is no reference to it in the Respondent’s Statement of Facts, Issues and Contentions.
As such the Tribunal is not in a position to comprehend fully what may have been contained in that letter or what the “further information” may have been.
The December submission canvasses some of the ground already covered in the original June submission and outlines specific cases where ”administrative error” had resulted in the submission of inaccurate reports.
In addressing the issue of alleged collusion between parents and educators whereby “gap” payments were made (either in cash or in kind)[64] or fraudulent entries were made by educators, the submission states that: “This fraudulent activity has been outside the scope of supervision of the Service.” Furthermore, “the Service is not capable of identifying every circumstance where its educators act in an illegal or fraudulent manner.”
[64] The “gap” fee is money paid to the provider by the parents, being the differential between the fee charged by the operator and the childcare rebate provided by Centrelink. The discussion of payment “in kind”, specifically a grandparent being paid by their son for the care of their child is at Transcript of Hearings, 26 March 2018 at page 29. Affidavit of Mr Olow at para 80N.
Future strategies are outlined to combat false reporting, including arrangements for random visits to the educator’s premises on a fortnightly basis and the checking of educator’s timesheets by calling parents to cross-check on the delivery of services.
The submission attaches some 38 pages of records of children overseas covering some 1670 instances of provision of care and highlighting those where some error has been identified.
The Cancellation Decision affirmed
All of this material was before the Internal Reviewer (the Reviewer) who, on 24 February 2017, notified the Applicant of his decision to affirm the original Cancellation Decision.[65]
[65] Tribunal Documents at [373]-[393].
The Reviewer’s determination is thorough, comprehensive and meticulous. It addressed all of the matters raised in the submissions provided by the Applicant and reviews each of the disputed reporting claims made by the Applicant to the Department.[66]
[66] Tribunal Documents at [379].
In his determination, the Reviewer found that the Applicant had contravened the Family Assistance Law as follows:
(a)reporting attendances or absences where no care was or would have been provided in contravention of s 10 of the Family Assistance Act;
(b)failure to create a liability for sessions of care in contravention of s 43 of the Family Assistance Act;
(c)failing to keep attendance records in contravention of s 219F of the Administration Act and s 6(b) of the A New Tax System (Family Assistance) (Administration) (Child Care benefit – Record Keeping) Rules 2006 (Record Keeping Rules)
(d)reporting incorrect session times in contravention of s 219N of the Administration Act;
(e)reporting sessions of care when no care was provided in contravention of s 219N of the Administration Act;
(f)reporting attendance when the child was absent in contravention of s 219N of the Administration Act;
(g)full day sessions reported when a child attends school in contravention of s 219N of the Family Assistance Administration Act and s 7 of the Child Care Benefit (Session of Care) Determination 2016 (the Session of Care Determination);
(h)incorrect reporting of before school care and after school care sessions in contravention of the Session of Care Determination;
(i)reporting attendance late in contravention of s 219N(5) of the Administration Act;
(j)reporting enrolment late in contravention of s 219AC(1A) of the Administration Act;
(k)failure to accurately identify the educator who provided the session of care (overseas educators) in contravention of s 10(1)(g) of the Eligibility Determination.
Section 7(2)(b) relates to the Applicant’s ability to meet and provide the appropriate quality of child care. The failures exposed by the various inspections of the services provided and the exposure of children to possible harm and danger demonstrate that the Applicant does not meet this qualification.
Section 7(2)(c) relates to the Applicant’s governance arrangements. I believe I have said enough to demonstrate that I do not find these to be in any way adequate.
Section 7(2)(d) relates to the Applicant’s understanding of its obligations under the Family Assistance Law and compliance with these obligations. In my view the weight of evidence before the Tribunal demonstrates that the Applicant does not fully appreciate the burden of these obligations and has failed to comply with them.
Section 7(2)(e) relates to the Applicant’s record of compliance with any laws of the Commonwealth, State or Territory. This is not prospective; it is a matter of the past record. The past record clearly demonstrates frequent non-compliance with laws at both the Federal and State level.
Section 7(2)(f) relates to the Applicant’s record of compliance with quality standards in the provision of child care services. I refer again to the various reports of inspectors about quality standards.[103] To the Tribunal these clearly indicate a failure to meet this requirement.
[103] Supplementary Tribunal Documents at [29]-[36] and [37]-[57].
Section 7(2)(g) relates to the management of financial affairs. It is clear that the Applicant does not in any way fail to meet the requirements of subsections 7(g)(i) or 7(g)(ii). However matters were raised in relation to 7(g)(iii) touching on the administration of public funds. In particular questions were raised related to remittances by the Applicant to the Commonwealth.[104] As already stated I have not given detailed consideration to these complex transactions in coming to any conclusion on this matter, and so I do not make any adverse finding in relation to the Applicant’s standing under section 7(g) generally.
[104] Transcript of hearings 27 March 2018 at p 77. See also paragraph 155 (above)
Nevertheless it will be clear that I am satisfied that the Applicant fails the test set out in s 7 of the Eligibility Rules 2017 and that, as a result, the Applicant is not a suitable person to operate a child care service.
There are several further observations to be made.
In the first instance it is clear that throughout the operational life of the Applicant there has been a lack of clear governance and administrative soundness. All actions taken to make improvements have been responsive. All have flowed not from the initiative of the Applicant, but in response to warnings and threats from the Respondent and the National Regulator. The required compliance plans have not been forthcoming and where action has been taken it has been minimal and tardy.
Mr Olow himself demonstrates a lack of understanding and acceptance of his personal responsibilities. Section 195A of the Administration Act imposes direct and personal liabilities on him. However when challenged about the failures of the Applicant to comply his response is invariably to cast responsibility onto others. For example:
“I was not directly involved in administrative and clerical tasks.”[105]
“It takes time to train staff and implement policies.”[106]
“There is a failure of educators to “comply with their obligations.”[107]
“This fraudulent activity (i.e. between parents and educators) has been outside the scope and supervision of the Service.”[108]
Delays in the process of enrolment of children has been caused by faults in the activities of Centrelink.[109]
[105] Affidavit of Mr Olow at [22].
[106] Ibid at [73].
[107] Tribunal Documents at [196].
[108] Tribunal Documents at [329].
[109] Tribunal Documents at [199].
This failure to appreciate that a leader of an organisation such the Applicant must make it his business to be properly in control of the governance and management is striking.
The lack of awareness perhaps most clearly manifests itself in the Applicant’s submission to the Secretary on 19 February 2016 where, after the prolonged history of non-compliance being drawn to its attention, and after conceding a number of failures, it submits:
“Although the Service does not believe that any sanction is warranted under the Administration Act…”[110]
[110] Tribunal Documents at [203].
For the reasons stated above I have come to the conclusions that the Applicant is not a suitable person to operate a child care service; that the Applicant has committed numerous and repeated breaches of its statutory obligations; that as a result it should be subject to sanction and that because its proposed “new business model” is so seriously defective as to provide no basis for it to be allowed to continue operation, that sanction should be cancellation.
The decision under review is affirmed.
I certify that the preceding 196 (one-hundred-ninety-six) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member
...........................[SGD]............................................
Associate
Dated: 28 May 2018
Date(s) of hearing: 26 and 27 March 2018 Counsel for the Applicant: Anthony Howell Solicitors for the Respondent: David Hurtzberg
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