Addressing the Problems in Childcare

In my previous post, What is Going Wrong with Childcare in Australia?, I outlined concerns about the number of incidents that are occurring in childcare related to children’s health, safety and wellbeing. The ABC has highlighted the problem but its reporting has been predominantly in relation to incidents in NSW, so I would be cautious to conclude that the same types incidents are common and/or occurring across all jurisdictions. However, all of the incidents on which the ABC have been reporting about should not have happened at all including the most recent ones reported on. Such incidents are unacceptable regardless of their prevalence.

How Do we Stop These Incidents from Happening in Childcare?

To answer that we need to ask another question: why are these incidents occurring? Some have suggested that a Royal Commission is required to find out. But I think the problem is too urgent for that (bearing in mind how long such inquiries take) and it will just confirm what we already know: the Productivity Commission have already published the data, the media has highlighted the issues, and court and tribunal cases have shown there is a serious problem. The reporting by the ABC and the article in The Conversation by Professors Marianne Fenech and Gabrielle Meagher suggest that it is because the For Profit providers, which dominate the childcare sector these days, are primarily concerned with profits. That is probably a factor but doesn’t entirely explain why these incidents are continuing to happen. Nor is it a basis on which to address the problem as it is unlikely governments would be willing to completely fund childcare (as is the case with public schools). In addition, the recent proposed changes to the National Law and Regulations, in response to the ACECQA Child Safety Review, will not address the problem (see my previous post and I will provide comment on the proposed changes in a future post).

I believe the primary reason why there is a problem is a lack of focus on compliance activities - an issue I raised in an article in The Sector back in 2019. Compliance, in the context of education and care services, is abiding by the requirements of the Education and Care Services National Law and Regulations. This refers to the responsibility of approved providers, nominated supervisors, and educators, to comply with the specific requirements of the National Law and Regulations that apply to them. Such a focus is even more important in a sector dominated by For Profit providers. Under Section 260(c), National Law, Regulatory Authorities (in each state and territory) have the function to monitor and enforce compliance with the National Law. Complying with the requirements of the National Law and Regulations is important for number of reasons:

• To ensure the safety, health and wellbeing of children.

• To improve the educational and developmental outcomes for children.

Simply, the National Law and Regulations are in place to protect children. Compliance activity supports that and includes unannounced visits to premises (monitoring), investigating complaints and notifications, and enforcement (sanctions for breaches of the National Law or Regulations).

The childcare sector is not in the same position as the Aged Care sector was before their Royal Commission. The National Law and Regulations provide a robust regulatory framework with extensive investigative and enforcement powers.

What has gone wrong then? I think some Regulatory Authorities have taken their eye off the compliance ball because of competing demands. Up until recently (when the Commonwealth finally took more compliance action against CCB fraud) they had to deal with challenging and resource draining issues in relation to Family Day Care licensing and enforcement. However, I believe, the main issue has been they have prioritised the assessment and rating process over compliance activities (sometimes as a consequence of political pressure). The whole assessment and rating process is very resource intensive. Authorised Officers (that is, in common parlance, “inspectors”) are required to prepare extensively prior to assessments, visit services over a number of days, write comprehensive ratings reports, and then they have to deal with Approved Providers who often challenge the content of those reports. Moreover, the assessment and rating process is not a good vehicle for compliance: visits are announced and assessments infrequent.

What is to be Done?

The obvious solution is simply increased funding for Regulatory Authorities to ensure there is a greater focus on compliance. As the Productivity Commission in its most recent report recommended (recommendation 8.3):

The Australian Government should provide additional funding to the state and territory regulatory authorities that administer the National Quality Framework, to allow sufficient monitoring of quality and support for quality improvement.

This should be guided by an independent review to determine a regulatory resourcing standard sufficient for effective quality regulation.

However, there are other important changes that should occur to support compliance activities which I outline below.

Implement a National Approach to Addressing Non-compliance

While each jurisdiction has some form of regulatory and enforcement policy it is not consistent across jurisdictions, with some jurisdictions taking a “risk based” approach and/or basing their compliance activities on the concept of “earned autonomy”. Many of these policies reflect the good practice principles of responsive regulation. However, in practice many jurisdictions take a very light handed approach to compliance (with the major exception of Western Australia), This is indicated by the few enforcement activities undertaken (particularly prosecutions, see my previous post for the enforcement data). The recognised approach to compliance is best summarised by the phrase (used in the book Responsive Regulation: Transcending the Deregulation Debate by I. Ayres and J. Braithwaite): “talk softly but carry a big stick” – and I would add the words “and be prepared to use it”). Compliance could be improved by adopting a consistent compliance and enforcement approach across all jurisdictions that reflects good regulatory practice as outlined in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry’s findings. Although the Royal Commission looked at misconduct in another sector, the findings identified the dangers of not following through to the full extent of the law, and therefore not making others in the sector aware of the consequences which may occur as a result of failing to comply (pp.432-3):

All of these considerations show that improving compliance with financial services laws cannot be achieved by focusing only on negotiation and persuasion. Compliance with the law is not a matter of choice. The law is, in that sense, coercive and its coercive character can be neither hidden nor ignored.

Negotiation and persuasion, without enforcement, all too readily leads to the perception that compliance is voluntary. It is not. All financial services entities must obey the law, not just those who are willing to do so. And all financial services entities must comply with all the laws that apply to them, not just with those bits of the law that they find to be commercially acceptable. (pp.424-5)….

Breach of the law carries consequences. Parliament, not the regulators, sets the law and the consequences. There are cases where there is good public reason not to seek those consequences. Prosecution policies have always recognised that there may be good public reasons not to pursue a particular case. But the starting point for consideration is, and must always be, that the law is to be obeyed and enforced.

The regulatory pyramid [i.e. responsive regulation] to which so much reference has been made in evidence and submissions, reflects two very practical observations: not all contraventions of law are of equal significance; and regulators do not have unlimited time or resources. But it is wholly consistent with the analyses that are expressed by the metaphor of the regulatory pyramid, that serious breaches of law by large entities call for the highest level of regulatory response. And that is what has been missing. 

The Productivity Commission expressed a similar view in its most recent report on the childcare sector (volume 1, p.26):

The regulatory system has adequate tools to deal with serious breaches of safety, but it rarely takes proactive action against services that are repeatedly found to be ‘Working Towards the NQS’. ACECQA and the state and territory authorities should clarify their standards to state that repeatedly not meeting the NQS is not acceptable. ECEC services that receive a ‘working towards’ rating for the first time should develop a comprehensive quality improvement plan and receive support to implement it. If they fail to demonstrate improved quality after three consecutive assessments, the service should face compliance action, which should include a cancellation of service approval if other measures are unsuccessful. Regulatory authorities may also need to use a greater range of penalties and enforcement tools to address concerns about persistently poor quality.

The ABC in one of its reports detailed actions taken by the NSW Regulatory Authority against educators. In one case an educator admitted inappropriate contact with a child including grabbing the child's face and kissing them on the lips during an excursion. They were given an enforceable undertaking which involved the educator admitting to the breach and signing an undertaking that committed to following policies around respectful conduct and protecting the dignity and rights of children. In my view for such incidents, or any that involve intentional abuse or assault of children, the only appropriate response is a notification to police and the issuing of a prohibition notice against the educator.

Unsurprisingly then, jurisdictions have their own separate approaches to recording non-compliances (breaches of the National Law/Regulations). In relation to the data on confirmed breaches in the childcare sector the Productivity Commission in the latest Report on Government Services made this comment:

Confirmed breaches data should be interpreted with caution as jurisdictions operate different regulatory and compliance systems. A high number of breaches may not necessarily indicate a lower quality of services, but may indicate more intensive regulatory practice (for example, more frequent regulatory visits or a higher propensity to investigate complaints)….Data is not comparable across jurisdictions due to differences in administrative and reporting procedures. For example, similar incidents may be investigated and entered into the NQA ITS {a database] as a breach in one jurisdiction, but referred for administrative action without being recorded as a breach in another.

This makes accurate assessments about the effectiveness of compliance improvement measures difficult to assess and to consequently develop a compliance strategy that works for the sector nationally. Common approaches to addressing and, consequently, recording breaches would help address this issue and enhance compliance.

Improve the Compliance Framework

There are a number of changes that could be made to better support compliance. The recent Productivity Commission made some minor recommendations in this area (recommendations 8.5-8.9). In addition, consideration should be given to:

• A focus by Regulatory Authorities on sanctioning nominated supervisors where there is a breach in their service in addition to action against educators and approved providers. Much of the media reporting has focussed on educator training and pay. However, nominated supervisors and approved providers have a responsibility for what occurs in their services. Nominated supervisors (which are usually the Centre Directors in long day care) are well paid and qualified and have primary responsibility to supervise educators and other staff. While it may be an educator that has done something wrong, the nominated supervisor is responsible for training and supervising them. A greater focus on sanctioning nominated supervisors, as well, will send a message to services about the importance of compliance. The National Law already imposes compliance requirements on nominated supervisors (e.g. for breaches of sections 165, 166 and 167). Consideration should also be given to adding compliance requirements in the National Law to persons in charge of services who are not nominated supervisors or approved providers, i.e. a person in day-to-day charge of the service (“responsible person” as defined in section 162A, National Law).

• Financial penalties in the National Law and Regulations should be reviewed to ensure that financial penalties for breaches reflect that many of the approved providers are large corporations. Anecdotally, some approved providers regard financial penalties as simply a business cost. Some options include increasing financial penalties, introducing graduated penalties (penalties that increase for subsequent offences) and/or financial penalties based on financial turnover of the approved provider.

• Adoption in all other jurisdictions of the Western Australia Discipline proceedings process, before a civil tribunal, as an alternative to criminal prosecution before a court. This would make it more practical for Regulatory Authorities to take serious enforcement action as civil processes are quicker and the standard of proof lower. See the article by David Oliver in The Sector that explains the WA process. Criminal prosecutions are complex and resource intensive. Therefore, Regulatory Authorities are, currently, reluctant to undertake them for breaches of the National Law.

  
  

Increase Transparency of Enforcement Actions

There needs to be greater transparency in relation to enforcement actions taken. In a previous article for The Sector I outlined the importance of publishing enforcement actions. State or Territory Regulatory Authorities under the National Law may publish information about enforcement action taken against approved providers, services, and educators, relating to breaches of the National Law and Regulations (under section 270(5)). Most of the Regulatory Authorities publish such information. However, the information is selective, difficult to find on their websites, is often not published in a timely fashion, not updated frequently, is published in different formats, or does not include sufficient details of the facts underpinning the enforcement action. The exception is the West Australian Department of Communities who publish all their enforcement actions in a timely manner providing the relevant facts behind the enforcement action as well as issuing a media release for major enforcement actions. Such “naming and shaming” serves a broad number of important purposes, it:

• acts as an additional sanction; damaging the offender’s reputation and perhaps their financial position.

• provides parents (and prospective parents) with information about the performance of services. Although assessment ratings primarily perform that role, they only reflect a snapshot in time. Enforcement action usually is taken where there is a risk to the health, safety or wellbeing to children and/or there is ongoing non-compliance with the National Law and Regulations and usually follows an unannounced visit(s) to the service. It is important parents have as much information as possible about the performance of services given the major users of the service are young children who are unable, unsurprisingly, to provide informed assessments of the quality of the service provided.

• acts as an embarrassment to such an extent that it deters future breaches across the sector.

• supports those complying with their legal obligations by showing that the Regulatory Authority is prepared to take action against those breaching the law. It gives confidence to the “good guys” about the efficacy of the regulatory regime and complying with the law. It supports confidence in the regulatory system by all those involved in the childcare sector and the public in general.

• plays an educative role. It provides examples or case studies to the sector about where there are risks and where breaches can occur so they can review their processes and address any shortcomings. It also performs the function of disseminating information about the content and application of the National Law and Regulations, supporting future compliance.

It would also be useful if more data on visits, notifications and complaints was published to get a better picture of compliance activity in general. The Productivity Commission in its most recent report had as one of its recommendations (8.1):

To improve the transparency of the ECEC regulatory system, all regulatory authorities should publish an annual report detailing progress against key objectives in the previous 12-month period, including metrics on the:

• number of service assessments performed

• average time to conduct an initial assessment on a new service and average time between reassessments of services

• proportion of services with a rating and the proportion of services assessed

• proportion of services that received a visit from the regulatory authority

• number of complaints and the average time taken to investigate a complaint

• total funding for the regulatory authority

• the number of dedicated staff and number of authorised officers within the regulatory authority (vol. 1, p.89).

Reduce Red Tape

My submission to the recent Productivity Commission review made a number of suggestions to reduce red tape in the sector. By doing this, administrative burden on approved providers and services would be reduced, improving the focus on the most important thing: protection of the safety, health and wellbeing of children.

These are just some suggestions, from a compliance point of view, to address childcare safety. Training for Regulators, approved providers, nominated supervisors and educators would also be required to support the suggestions outlined. Of course I would welcome any views on the issues raised.