Senate

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Education, the Honourable Dan Tehan MP)

Schedule 2 - Amendments relating to ensuring the integrity of the child care subsidy system

Summary

This Schedule brings the requirements for the approval of child care providers and services into closer alignment with related state and territory laws, and enhances the Commonwealth's child care subsidy payment integrity framework.

The amendments include ensuring that where an approved provider or child care service is suspended or cancelled under the National Law, access to Commonwealth child care subsidies will be automatically suspended or cancelled. The amendments also include a capacity for child care providers to request voluntary suspension of their Commonwealth approval in appropriate circumstances.

The Schedule also contains administrative and technical amendments that bring clarity to policy intent and address unintended consequences.

Detailed explanation

Provider or service approval may be voluntarily suspended

Under the National Law, approved providers may, upon request, have their provider or service approvals voluntarily suspended for a defined period of time. This suspension of approval allows the provider to cease operating one or more of its child care services for a period of time without being in breach of the requirements for approval under the National Law. These types of voluntary suspensions are commonly granted so that providers may carry out building improvements or other capital works on their premises.

However, the Family Assistance Administration Act does not contain equivalent provisions to allow approvals under the Family Assistance Law to be voluntarily suspended.

Item 17 addresses this and ensures consistency between the Family Assistance Law and the National Law. This is achieved by introducing section 197AA into the Family Assistance Administration Act to allow a provider's approval to also be voluntarily suspended under the Family Assistance Law (primarily in situations where they are also voluntarily suspended under the National Law). This also applies to providers that are approved under the Family Assistance Law but are not required to be approved under the National Law.

Section 197AA introduces a power that the Secretary may suspend a provider's approval, or a provider's approval in respect of one or more of its services, if the provider makes the request in writing.

Subsection 197AA(2) specifies that the written request must:

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be given in a form and manner approved by the Secretary;

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specify a proposed start day for the suspension to take effect;

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specify a proposed end day for the suspension to cease to have effect (which must not be longer than 12 months from the start day); and

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contain any other information prescribed by the Secretary's rules.

Subsection 197AA(3) provides that the Secretary may suspend the approval if the Secretary agrees with the proposed start and end days set out in the application, and is satisfied that the suspension is reasonable in the circumstances.

Subsection 197AA(4) provides that if the Secretary suspends the approval, the Secretary must give a notice to the provider specifying the day the suspension takes effect, and the day the suspension ceases to have effect.

Importantly, the Secretary has the power to specify a start day that is earlier than the day the notice is given, to ensure that the date of effect of a suspension granted under this section may be aligned with any voluntary suspensions already granted under the National Law.

Subsection 197AA(5) provides that the Secretary may revoke the suspension if the Secretary is satisfied it is reasonable in the circumstances to do so. If the suspension is revoked, the Secretary must give notice to the provider of the day the revocation takes effect (which must not be earlier than the day the notice was given).

Items 19 and 20 are consequential amendments to sections 197F and 197G to ensure that the cancellation powers under these sections are not inadvertently triggered where the Secretary has approved a voluntary suspension under section 197AA.

Date of effect of approval

Current subsections 194B(5) and 196B(3) of the Family Assistance Administration Act provide that the date of effect of a provider's approval must be:

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a Monday (or another day the Secretary deems appropriate); and

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not earlier than the date the application for approval was given.

Items 13 and 15 amend subsections 194B(5) and 196(3) to remove the default requirement that the date of effect of approval must be a Monday. Instead, the only requirement will be that the date of effect must not be earlier than the date the application for approval was submitted.

The default requirement for the date of effect of approval to be a Monday is not necessary and imposes unnecessary inflexibility in the Family Assistance Law. This amendment will also allow families to more easily and quickly access CCS or ACCS through newly approved child care providers.

Working with children checks

Section 195D of the Family Assistance Administration Act provides that it is a condition for continued approval of a provider that, for each individual required to hold a working with children card (under a law of the state or territory the service is located in) in relation to care provided by a child care service of the provider, the provider gives the Secretary details of the card issued to the individual.

The provision, as it is currently drafted, has resulted in some ambiguities in its interpretation. The requirement that individuals hold a working with children "card" is unable to be applied consistently across different states and territories. Some states and territories issue physical working with children cards, while others electronically register individuals required to have working with children checks.

Further to this, current section 195D actually only requires approved providers to give the Secretary details of working with children cards, but doesn't impose the far more important requirement of approved providers ensuring that care is only ever provided in a safe setting, by individuals who hold current working with children checks.

The safety of children is of paramount importance, and the amendments to section 195D ensure that this principle is clearly and unambiguously expressed in the Family Assistance Law, by requiring approved providers to ensure that individuals who are providing care on behalf of the provider hold current working with children checks.

Accordingly, item 14 amends section 195D, so that approved providers must ensure that each individual who is required to hold a working with children check in relation to care provided by a child care service of the provider, has a current working with children check. This clarifies the policy intent behind section 195D and also removes the ambiguous requirement that a working with children card must be provided in order to comply with this condition for continued approval.

In addition to this, section 204F of the Family Assistance Administration Act also enables the Minister's Rules to require approved providers to notify the Secretary of certain matters, which extends to notification about the working with children check status of individuals engaged by the provider to provide care to children.

Suspension, cancellation or variation for multiple infringement notices

Section 197B of the Family Assistance Administration Act provides that the Secretary may suspend a provider's approval or a provider's approval in respect of one or more of its services if, within 12 months, the provider has been given 10 infringement notices or 5 unpaid infringement notices (which are issued under Part 5 of the Regulatory Powers Act). Under section 197B, the Secretary does not have the power to cancel or otherwise vary a provider's approval where the provider has been issued with multiple infringement notices.

Item 18 amends section 197B to expand and simplify its operation, and provide that where an approved provider has been given 10 infringement notices within a 12 month period (whether paid or unpaid), the Secretary may do one or more of the following:

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suspend the approval of the provider;

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suspend the provider's approval in respect of one or more services;

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cancel the approval of the provider;

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vary the provider's approval so that it is no longer approved in respect of one or more of its services.

Under amended section 197B, a provider will no longer be subject to suspension under the section if it has been given 5 infringement notices in the previous 12 months which go unpaid.

If the Secretary suspends approval under section 197B, the Secretary must give the provider notice of the day the suspension takes effect (which must not be earlier than the day the notice is given). The Secretary may also revoke the suspension by giving notice to the provider of the date the revocation takes effect (which may be earlier than the day the revocation is done).

If the Secretary cancels the provider's approval under section 197B, the Secretary must give the provider notice of the day the cancellation takes effect (which must not be earlier than the day the notice is given).

Importantly, and prior to any decision being able to be made under amended section 197B, the Secretary must follow the show cause requirements in section 199A, thereby affording the provider procedural fairness. This is given effect at item 24.

The effect of this amendment is that the Secretary will have the unambiguous power to respond to providers who are consistently non-compliant with the Family Assistance Law, as demonstrated through the accumulation of infringement notices issued against them in a period of 12 months. The amendments also strengthen the capacity of the Commonwealth to effectively respond to providers who demonstrate persistent non-compliance, thereby helping to ensure the integrity of the CCS payment framework.

Items 25 and 26 amend section 199B of the Family Assistance Administration Act to enable certain details about suspension or cancellation decisions made under section 197B to be published by the Secretary. This amendment ensures section 199B operates consistently across compliance type decisions under the Family Assistance Law.

Suspension, cancellation or variation if approval suspended / cancelled under National Law

Approval under the National Law relates to the capacity of a child care provider to be able to operate a child care service, and provide care to children. Where approval under the National Law is suspended or cancelled, it follows that the child care provider is not able to operate a child care service or provide care to children.

Given the safety of children is of paramount importance, it therefore follows that where a child care provider no longer holds approval under the National Law (either through suspension or cancellation of that approval), the capacity of that provider to be able to administer CCS automatically ceases.

Item 17 inserts section 197AB into the Family Assistance Administration Act. Section 197AB has the effect that if an approved provider is suspended (or the approval of a child care service of the provider is suspended) under the National Law, the approval of the provider (or a child care service of the provider) under the Family Assistance Law is also taken to be suspended for the matching period under the National Law. If approval is suspended under section 197AB, the Secretary must give the provider notice of the suspension. The operation of section 197AB is by law, and therefore does not require a decision to be made to give effect to its operation.

Section 197AB does not apply where a provider or service approval has been voluntarily suspended under sections 37 or 85 of the National Law. This is addressed by section 197AA of the Family Assistance Administration Act enabling voluntary suspension of approval on request.

Item 16 contains a consequential amendment to the heading of section 197A to clarify that a suspension under section 197A may only occur after the Secretary makes a decision to that effect, and which may be distinguished from a suspension under section 197AB, which occurs by operation of law.

Item 23 inserts section 197L into the Family Assistance Administration Act. Section 197L has the effect that if an approved provider's approval (or the approval of a child care service of the provider) is cancelled under the National Law, the approval of the provider (or child care service of the provider) under the Family Assistance Law is also taken to be cancelled (or varied in respect of the child care service of the provider) on the same day the National Law cancellation takes effect. If approval is cancelled or varied under section 197L, the Secretary must give the provider notice of the cancellation or variation. The operation of section 197AB is by law, and therefore does not require a decision to be made to give effect to its operation.

Section 197L includes a note that provider and service cancellations under the National Law may occur for a number of reasons, including where provider or service approval is surrendered. It is intended that section 197L will also apply to cases where approvals are surrendered.

Items 25 and 26 amend section 199B of the Family Assistance Administration Act to enable information about a suspension or cancellation under sections 197AB and 197L to be published.

Item 2 contains a consequential amendment by inserting subsection 71G(1) into the Family Assistance Administration Act. This amendment ensures that if any payments are made to a provider after sections 197AB and 197L apply by operation of law to that provider, then those payments can be fully and directly recovered from that provider by the Commonwealth. This is because after sections 197AB or 197L apply to a provider, no payments should have been made in respect to the provider for the period after section 197AB or 197L applies. For clarity, the intention of this amendment is that all such payments are fully and directly recovered from the provider, and not from any individual accessing care from that provider.

For example: Provider A's provider approval is cancelled under the National Law on 1 November 2019. However, the Commonwealth is not notified of this until 15 November 2019. In the intervening period, Provider A submits attendance reports for care purported to have occurred between 4 November to 15 November 2019. Because the Commonwealth had not been notified of Provider A's cancellation under the National Law, payments of CCS are inadvertently made with respect to those attendance reports. Subsection 71G(1) makes clear that such payments are a debt due to the Commonwealth by the provider because those payments should not have been made from the day Provider A's provider approval was cancelled under the National Law.

Cancellation for ceasing to operate a child care service

Section 197H of the Family Assistance Administration Act provides that the Secretary must cancel the approval of an approved provider if the provider ceases to operate all of the approved child care services of the provider. Likewise, section 197J provides that the Secretary must vary the approval of an approved provider so that it is not approved in respect of one or more of its services, if the provider ceases to operate those services. These are effectively mandatory decisions which the Secretary must make once the "cease to operate" requirement is met. That is, once a provider "ceases to operate" one or more, or all, of its child care services.

However, the term "ceases to operate" is currently not defined in the Family Assistance Law. As a consequence, there is some ambiguity about its meaning and therefore when the mandatory decision-making requirement under sections 197H and 197J is triggered.

Items 21 and 22 amend sections 197H and 197J to clarify this ambiguity, by providing that "ceases to operate" has the meaning given to it in the Minister's Rules.

Items 9 and 10 amend section 138 of the Family Assistance Administration Act, so that a provider whose approval has been cancelled or varied under sections 197H or 197J, is not able to apply to the AAT for single review of that decision.

Under the Family Assistance Administration Act, as it existed prior to the Jobs for Families Package amendments which came into effect on 2 July 2018, a decision made under subsection 202(4A) (which was the equivalent provision under the old law to current sections 197H and 197J), was not reviewable by the AAT through operation of section 138 as it existed at the time. It was not intended for these kinds of decisions to be reviewable by the AAT, noting also that these decisions are not discretionary, and therefore these amendments correct this oversight. As such, these amendments correct this omission and bring them into line with the legislation as it existed before 2 July 2018. It is important to note that these amendments do not, in any way, impact any decisions made under sections 197H or 197J and which are already on review at the AAT on commencement of these amendments, which is given effect by item 29.

52 week limit for review of provider debt decisions

Items 5 to 8 amend sections 109DA and 111A of the Family Assistance Administration Act, in order to impose a 52 week time-limit for child care providers to seek internal review and review by the AAT of decisions relating to the raising of a debt.

These amendments ensure that where a child care provider wishes to apply for a review of a debt raised against it, the Family Assistance Law provides a clearly defined time-limit for that application. The amendments will facilitate access to accurate and relevant information to inform reviews and subsequent avenues of appeal.

Item 4 inserts a note at the end of subsection 109D(6) to provide that applications by providers for review of decisions made under Division 2 of Part 4 (i.e., debt decisions) relating to CCS or ACCS are subject to the time limits set out in section 109DA.

Item 28 inserts an application provision to provide that the 52 week time-limit only extends to child care provider debts that are raised after the commencement of the amendments to sections 109DA and 111A.

Simplifying recovery of public funding where provider at fault

Item 2 replaces section 71F so that if:

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an individual is paid an amount of CCS or ACCS; and

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all or part of that amount (attributable amount) is paid because a provider made a false or misleading statement, or otherwise failed to comply with the Family Assistance Law; and

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the individual incurs a debt under section 71B or 71C which is wholly or partly comprised of the attributable amount;

then the individual is taken not to have incurred a debt equal to the attributable amount, and the attributable amount is instead a debt due to the Commonwealth by the provider.

The effect of this amendment is to simplify the recovery of overpayments of public funding, where the reason for that overpayment is the fault of a child care provider. Importantly, this amendment does not expand the existing operation of section 71F with respect to the grounds for which a child care provider is considered at fault, but rather enables recovery of overpayments of public funding from child care providers without first needing to have a separate determination by the Secretary in place.

This amendment also ensures that individuals do not, inadvertently or otherwise, have debts incurred and raised against them for overpayments that are the fault of a child care provider. In such circumstances, section 71F will by default ensure that such debts are debts due by the provider instead of those individuals.

This amendment also further assists in the timely recovery of small overpayments of public funding each CCS fortnight, which are often primarily based on inaccurate attendance reporting by child care providers under section 204B of the Family Assistance Administration Act.

Recovery of public funding arising from certain reviews of decisions

Current section 73 of the Family Assistance Administration Act provides that if a person applies to the AAT for second review of a decision, and the AAT orders that decision to be stayed, then any amounts paid to the person under the Family Assistance Law during the stay period and which ultimately should not have been paid (for instance, because the AAT affirms the decision) is a debt due to the Commonwealth.

Item 3 amends section 73 so that it also applies to decisions on AAT single review. This amendment enhances the operation of section 73, by extending its scope to include decisions impacting the approval of child care providers and which are subject to AAT review. The amendment ensures that where the AAT grants a stay of a decision impacting the approval of a child care provider, but later the AAT affirms that decision, payments of public funding made to the provider in the intervening period are able to be fully and directly recovered by the Commonwealth. This is an important integrity measure, ensuring that where public funding has been expended in circumstances where, ultimately, it should not have been expended, that public funding can be recovered.

For clarity, the intention of this amendment is that all such payments are fully and directly recovered from the provider, and not from any individual accessing care from that provider.

It is important to note that, in relation to the recovery of any amounts of public funding under the Family Assistance Law, there are a range of write-off and waiver provisions which may apply in certain circumstances. These provisions are contained in Division 4 of Part 4 of the Family Assistance Administration Act. This includes, but is not limited to, the waiver power of the Secretary under section 101 of the Family Assistance Administration Act, which could apply to amounts due under section 73 in special circumstances.

Item 27 is an application provision to ensure that the amendment to section 73 will only apply where the AAT grants a stay order with respect to a decision under AAT single review on or after commencement of the amendment. This application provision does not, in any way, interfere with the continued operation of section 73 with respect to any decisions on AAT first review. This also ensures that all interested parties are given an opportunity to be made fully aware of the operation of amended section 73 prior to any stay order being made by the AAT.

Technical amendments

Item 11 repeals subsection 161(1B) of the Family Assistance Administration Act, which defines the Education and Care Services National Law. Item 1 will instead insert the definition of the Education and Care Services National Law as it existed under subsection 161(1B) into the definitions section of the Act (at subsection 3(1)).

Item 12 amends paragraph 162(2)(dae), which sets out the specific purposes for which protected information may be disclosed, to include the words "for the purposes of" in front of "the Education and Care Services National Law". This amendment corrects a drafting error which initially omitted those words.