The New South Wales Education Department has been warning the Federal Government about “fraudulent and criminal behaviour” in the family day care (FDC) system for years, confidential documents show, according to the ABC 7.30 program.
Departmental staff noted in August last year that despite the evidence and their concerns, the Commonwealth continued to “pay for fraudulent FDC claims”.
7.30 has obtained a cache of briefing papers and letters under Freedom of Information which show the staggering size of the problem in NSW.
The NSW Education Department first noticed the problem in May 2014 and hired an expert consultant to review 41 family day care applications, 28 of which were red-flagged for possible fraud.
Operators were found to be using fake identification and qualifications, and charging for children not in their care.
The NSW Education Department referred the FDC program to the Independent Commission Against Corruption (ICAC) and approached the Australian Federal Police (AFP).
In November 2014 then-state education minister Adrian Piccoli wrote to Federal Justice Minister Michael Keenan asking for the AFP to investigate and warning of “evidence of possible organised and systemic fraudulent activity”, “potentially national in scope”.
It is estimated fraud has cost the Federal Government more than a billion dollars as the number of FDC centres rose dramatically — in NSW the growth was more than 300 per cent between 2012 and 2016, according to one internal NSW Education Department paper.
“The potential income for FDC providers is significant, with each child attracting approximately $200 per week in Commonwealth payments,” the report said.
“A provider with 60 educators who each claim for seven children per week would gross $84,000 per week, or $4.03 million for a 48-week year.
“The potential to raise large amounts of public funds, in the environment of inadequate probity checking, has led to unscrupulous operators entering the market, exposing both children and departmental staff to increased risk.”