Department investigates 40 individuals for alleged fraud in $22bn childcare sector
Forty individuals are under investigation as search warrants target suspects in a childcare fraud scandal hitting the $22bn industry. All while families remain in the dark.
“High profile” providers and persons connected to the $22bn childcare industry are among the 40 individuals under investigation for alleged fraud and “nefarious activities”.
On Thursday, Department of Education officials confirmed they had executed “several search warrants in multiple jurisdictions” since October.
Greens Senator Steph Hodgins-May described the alleged fraud as a “public outrage” and said it was a symptom of the pursuit of profit in the sector.
Department assistant secretary of child integrity Brendan Moon told Senate estimates on Thursday the matter was now with the Director of Public Prosecutions.
He told estimates the department’s prime concern was investigating providers “fitness and propriety”.
“Certainly, where we see large sums of money moving around, it gives rise to whether or not the right governance is in place in the service, the right accounting for money, and all of those sorts of things,” he said.
“Most commonly, where it ends up on the really pointy end of things, it is indications of tie-ins to other nefarious activity.
“Where these matters come to a head, we would take the most extreme action that we take under the child care subsidy, which would relate to suspension or cancellation of services.
“Certainly, where we’ve taken that action, we do advise families of the action we have taken.”
An auditor-general’s report into the $14.5bn child care subsidy (CCS) scheme released in June found 3.6 per cent of CCS payments, or $484m was lost to incorrect payments, including fraud and noncompliance in 2023-24.
This figure is down from the $684.2m lost in 2021-22 for the same reasons.
But the same report showed the department forked out $73.6m to fight fraud in the industry in 2024-25.
Senator Hodgins-May said the problem mainly lay with for-profit providers and called for greater transparency.
“The execution of search warrants and the referral of 40 fraud cases to the Director of Public Prosecutions confirms what we’ve been saying: the system is in crisis due in large part to the dominance of for-profit providers,” she said.
“When the investigation concludes, families deserve to know the names of every operator found unfit and improper.
“This is what happens when you treat children as revenue streams, not as young people deserving of quality care and education.”
Early Education Minister Dr Jess Walsh said her government was cracking down on fraud in the sector.
“There is no place in the early learning sector for providers who want to rip off taxpayers,” Dr Walsh said.
“We are strengthening the early education and care sector, and we take all allegations of fraud and non-compliance seriously.
“The Australian Government uses sophisticated data and intelligence techniques to monitor for and prevent fraud, and we will take action to ensure the integrity of government payment programs.”
Opposition early learning spokesman Julian Leeser said child safety should continue to be the number one concern.
“If there are conclusive findings in a court, they should absolutely be made public. Parents deserve that transparency,” he said.
“In the meantime, the question on my mind is this: are the children safe and well looked after while these in investigations are going on?
“The number one focus in childcare policy must always be the child.”
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Originally published as Department investigates 40 individuals for alleged fraud in $22bn childcare sector
