Fraudulent behaviour uncovered among family day care co-ordination (FDC) services across Australia by a federal government anti-fraud team could be the tip of the iceberg.

Tony Abbott’s new Child Care Compliance Taskforce, which is based in the federal Education Department, has uncovered 24 miscreant child care providers, 22 of these being family day care co-ordination services. The investigation resulted in 256 fines totalling $1.74 million and some operations being restricted or suspended.

Most of the rorting appears to be around fees charged by co-ordination units, whether to the government or parents. These units – rather than individual educators – are legally responsible for setting child care fees and for monitoring enrolments, hours of care and attendance.

One family day care coordinating service in Melbourne’s western suburbs, which had 226 educators working across NSW, ACT, South Australia and Victoria, was found to be charging low income parents studying or training and in receipt of Jobs Education Training Child Care Fee Assistance (JETCCFA) almost double the normal fee.

The service was slapped with 63 infringements notices totalling more than $250,000 for its taxpayer-funded transgressions.

Another Brisbane service was fined $100,000 after it was found to be overcharging parents receiving the Grandparents Child Care Benefit and 13 FDC services had upwards of 500 more educators on their books over the legal limit.

But the 22 family day care units that have been shamed (but not named) since the three-unit Taskforce started operating in July, could be only the beginning.

The Australian Children’s Education and Care Quality Authority puts the number of FDC services in Australia at 802(NQF Snapshot August 2014). The units are responsible for carrying out home risk assessments, checking educators’ qualifications and taking responsibility for the quality of care they provide. Each unit must be an approved provider in order to receive Child Care Benefit and Child Care Rebate.

Leanne Gibbs, CEO Community Child Care Co-operative NSW, said had been an explosion in the number of private providers entering the sector in the last year.

“Part of the problem is that there has been an exponential increase in family day care,” Ms Gibbs said.

“It goes without saying that there has been an exponential increase in fraudulent behaviour going on and I guess it’s starting to cost government a great deal. I think it’s much more at the co-ordination level (not individual educators).”

Meanwhile, Ms Gibbs said council and community-run units were stepping away from the sector because they could not cover their costs.

“The expansion has been private providers. You won’t find councils and community-based providers setting up family day care. It’s just not profitable unless you’re being fraudulent!”

But it appears that it’s not just taxpayers and parents who are being scammed by these units. Allegations surfaced on Family Day Care Australia’s Twitter account in June that some units were charging their educators excessive fees.

One man, who said he worked in a well-run FDC co-ordination unit in Melbourne, claimed he knew of units who squeezed their educators for every cent they could.

“I can list up to 10 providers which I have to deal with that have educators consistently complaining that their admin levies are close to $2,000 or more, the joining fees are close to $500, and registering a child into the system is $150 to $200, amongst a myriad of other ways they are scamming innocent educators and ripping them off (and unfortunately – this is all legal),” he said.

A Family Day Care Australia (FDCA) spokeswoman said the organisation did not believe there should be tighter rules governing the fees coordination services charged educators.

“Much of the success of family day care has come from the sector having the flexibility to operate in line with the specific needs of its families and communities,” the spokeswoman said.

“The different operational and service delivery methods have afforded family day care educators choice and diversity and FDCA encourages educators to review and understand the options available to them before registering with a service. “

She said the organisation was aware that the Taskforce had uncovered ‘a small minority of family day care services’ which may not be meeting their obligations under Family Assistance Law.

“We must emphasise that the vast majority of family day care service providers and educators are doing the right thing,” the spokeswoman said.

“FDCA continues to work with the Department of Education and with services to increase awareness with regard to services’ obligations and responsibilities, and FDCA supports any compliance activities undertaken by the Department to ensure services meet their obligations under all relevant legislative structures.”

The administration of child care assistance and the licensing and assessment of family day care service providers is the responsibility of the state and federal authorities.

You can dob in a dodgy provider using the Department of Education’s tip-off line on 1800 664 231 or email tipoffline@education.gov.au