$1bn cut to dodgy daycare services

Almost $1 billion in subsidies for family daycare centres has been stopped in the latest crackdown by the federal government.

Victoria continues to perform the worst of any jurisdiction in its regulation of daycare centres.

Almost $1 billion in taxpayer money that was due to go to 151 dodgy family daycare centres has been stopped after the daycare services had subsidies cancelled or suspended in the latest crackdown by the federal government.

The four-year mission by Education Minister Simon Birmingham to stop rorting in the sector has so far cut childcare fee assistance by $2.4bn through auditing of family daycare operators.

Before the Coalition came to power, $2bn flowed to rorting daycare centres, allowing them to flourish; some set up “shadow” outfits with no children enrolled that went on to collect subsidies.

In the two years to June 2013 there were no cancellations and only two fines issued. The former Labor government carried out only 423 compliance checks in its last year in power. During this ­financial year, Senator Birmingham’s department has conducted 4500 compliance checks.

As loopholes were closed, ­operators became more sophisticated. The Australian understands many of the 151 services in this round of cancellations and suspensions were otherwise legitimate services with real children who “exaggerated” the total number of care hours or charged too much for the grandparent childcare benefit.

Victoria continues to perform the worst of any jurisdiction in its regulation of centres, with 78 services having their funding cut in the past six months and another 12 with suspended subsidies. (Oversight of services is a state responsibility while the federal government funds the subsidies.)

The key hot spots in Melbourne were in the southeastern Dandenong region and Footscray in the western suburbs.

Only 36 services in NSW lost funding, and four were hit with suspensions. There were nine cancellations in Queensland and six in Western Australia. Each of these states had one service ­suspended.

“We have been relentless in our pursuit of those who break the rules and rip off taxpayers. We won’t stop in our effort to improve the integrity of the entire childcare system to protect taxpayers and families,” Senator Birmingham said.

“Family daycare providers who doctor paperwork, exaggerate the hours of care or even claim subsidies for ‘invisible’ children will be caught and we will throw the book at you.’’

Family daycare operators have been prosecuted for fraud in the past but the Department of Education treats the cancellation of subsidies as a first step in stopping fraud before assessing whether individuals should be ­referred to the Australian Federal Police or state authorities.

One service in western Sydney, which had its subsidies cancelled in February, is alleged to have been paid $5.4 million in government fees in just 14 days, more than half of which was transferred to another account. This case ­remains before the courts.

Melissa Higgins, of the NSW border city of Albury, was found guilty of a $3.6m fraud involving a similar scheme in November 2016 after investigations into her family daycare business.

Senator Birmingham said the extra $2.5bn in support should go to hard-working families, not ­rorters.

“Our childcare reforms aren’t just about more support for more families, we’re also boosting the integrity of the system against rorters,” he said.

“One of the key elements of our childcare overhaul is improved access to better data and compliance powers, including the ability to pause the subsidy ­approvals of high-risk services.”