House of Representatives

Explanatory Memorandum

Circulated by authority of the Minister for Education the Honourable Julia Gillard MP

Schedule 4 - Civil penalties and other compliance measures

Summary

New civil penalties scheme

Civil penalties for the child care compliance program were introduced on 1 July 2007 and currently only apply to the approved child care service providers' obligation to report information to the Child Care Access Hotline.

The Bill will amend the Family Assistance Administration Act to extend the civil penalties scheme which will regulate approved child care services and former approved child care services, to ensure that they comply with a range of obligations under the family assistance law (a summary of those obligations are set out below under the heading 'Proposed amendments').

Under the new scheme the Minister will be able to seek a civil penalty order from the Federal Court of Australia or the Federal Magistrates Court, where an approved child care service (or former approved child care service where required) contravenes a civil penalty provision. The civil penalty order will determine that a monetary amount to a specified maximum must be paid by either an individual or a body corporate where relevant.

The civil penalties scheme is intended to operate in conjunction with an improved infringement notice scheme, and the current criminal offence provisions. The extension of the civil penalties scheme is intended to provide the Government with a wider range of options to encourage compliance with obligations under the Family assistance law. Currently the scheme operates in relation to services that are not compliant with obligations to provide information. The wider range of options will apply to individuals and services.

Proposed amendments

The Bill will:

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extend from 1 July 2008 the civil penalty and infringement notice scheme to include a range of obligations where criminal penalties currently apply. The key obligations are to:

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act on notices from the Secretary;

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pass on fee reductions;

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keep appropriate records;

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provide receipts including required information;

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notify the Secretary if the service intends to cease operating; and

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provide reports on child care usage and CCB entitlements for individuals with children attending the service.

These will continue to be offences available for criminal prosecution. The appropriate response (civil penalty or criminal prosecution) will be selected on a case by case basis, as appropriate to the nature of the contravention. For example, where a service was also being prosecuted for fraud, the criminal offences under family assistance may also be pursued where applicable. For example, where a service provider does not keep records relating to provision of care, a civil penalty order can be sought against the provider and the provider can be prosecuted for this offence. Civil offences may be used where the issue is serious, but not considered to be of a criminal nature.

Expanded entry powers

The Bill will expand the purposes for which authorised officers may enter premises of approved child care services.

In undertaking on-site compliance reviews of approved child care services, officers authorised to do so under the family assistance law operate within the framework of monitoring powers in the Family Assistance Administration Act. Authorised officers may only enter with the consent of the service provider or occupier of the premises. A number of offences apply if records are not provided or the occupier fails to provide an authorised officer with all reasonable facilities and assistance.

However the current powers of entry for authorised officers under the Family Assistance Administration Act do not adequately support monitoring of approved child care services for compliance with the conditions for continued approval, as they are empowered to enter only 'for purposes of inspection of records' and nothing more. There are many obligations under the Family Assistance Administration Act that services must meet for continuing approval which cannot be monitored by only inspecting records. For example, it would be unlikely that services subject to rules for the allocation of places would, if in breach of the rules, keep records evidencing the breach.

The Bill will therefore broaden the entry powers to allow authorised officers to enter the premises of an approved child care service for the purposes of monitoring whether the service is operating in accordance with the conditions for continued approval. This includes the power to inspect documents that presently exist, as well as make observations and generally monitor the activities being undertaken in the service in order to determine if the service is complying with the requirements of the family assistance law. The provisions in relation to acquiring requisite consent from the occupier before entering the premises have not been altered.

Explanation of the changes

Part 1 - Amendments

A New Tax System ( Family Assistance ) ( Administration ) Act 1999

Items 1 2, and 3 - Subsection 3(1 )

Section 3 defines certain terms used in the Family Assistance Administration Act. Item 1 inserts a definition of 'civil penalty order', which is already given meaning under subsection 219TSC, into the interpretation part of the Family Assistance Administration Act.

Item 2 repeals the previous definition, which related to only one identified civil penalty in the Family Assistance Administration Act, and inserts a new definition to encompass an expanded range of civil penalties which can be imposed on approved child care services, operators of approved child care services and former operators of approved child care services.

Item 3 inserts a definition of 'penalty unit' as having the same meaning given by section 4AA of the Crimes Act 1914 .

Item 4 - Subsection 196(2 )

Section 196 provides that for continued approval as an approved child care service a number of conditions must be met, such as eligibility rules, compliance with the family assistance law, cooperation with authorised officers, and compliance with other laws relating to child care which may be imposed by the Commonwealth, or a relevant State or Territory. Item 4 inserts the words "or is of a civil penalty provision" to make clear that it is a condition of approval that a service must not contravene an obligation imposed by the family assistance law, whether or not that obligation is an offence or a civil penalty provision.

Item 5 - At the end of subsection 196(2 )

Item 5 inserts a note to make clear that enforcement of these conditions may be undertaken by a range of compliance measures in the Family Assistance Administration Act such as infringement notices, proceedings for civil penalty orders and criminal prosecutions of offences or a combination of these. The application of one type of measure is not intended to limit the application of any other type. This is intended to give the Secretary maximum flexibility to take action against a service for contravention of their obligations under the Family Assistance Administration Act.

Items 6, 7 and 8 - Section 204

Section 204 concerns the requirement of approved child care services to notify the Secretary in writing of any matters which might affect the eligibility or continued eligibility for approval as an approved child care service. Items 6, 7 and 8 amend section 204 to provide that contravention of this obligation constitutes a civil penalty (proposed subsection (1)) and an offence (proposed subsection (2)). The current criminal penalty under section 204 (and wherever else a criminal penalty is being supplemented by a civil penalty by these amendments) has been repealed and replaced in order to re-frame the provision in modern penalty terminology.

Section 219AC deals with the failure of approved child care services to notify the Secretary of enrolments in relation to:

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new enrolments; and

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enrolments where the child care service is eligible for child care benefit by fee reduction for care provided to a child at risk.

Item 9 - Before subsection 219AC(1 )

Item 9 inserts civil penalty provisions at proposed subsections (1A) and (1B) to supplement the existing offences for failure to notify.

Item 10 - Before subsection 219AG(1 )

Section 219AG deals with the failure of approved child care services to update enrolment information. Item 10 inserts a civil penalty provision at proposed subsection (1A) to supplement the existing offence for failure to notify.

Items 11 to 14 - Section 219B

Section 219B deals with the obligation of approved child care services to pass on fee reductions where an individual is conditionally eligible. Items 11, 12 and 13 amend section 219B to provide that contravention of this obligation may constitute a civil penalty [proposed subsection (2)] and an offence (proposed subsection (2A)). The repeal of subsection (6) by Item 14 and the insertion of proposed subsection (2B) ensure that the offence at proposed subsection (2A) remains one of strict liability.

Items 15, 16 and 17 - Section 219BB

Section 219BB deals with the obligation of approved child care services to charge no more than the usual fee at the rate determined by the child care service or the Secretary. Items 15, 16 and 17 amend section 219BB to provide that contravention of this obligation may constitute a civil penalty (proposed subsection (1)) and an offence [proposed subsection (2)]. Proposed subsection (3) ensures that the offence at proposed subsection (2) remains one of strict liability.

Items 18, 19 and 20 - Section 219BC

Section 219BC deals with the obligation of approved child care services to charge no more than the usual fee at the special grandparent rate. Items 18, 19, and 20 amend section 219BB to provide that contravention of this obligation may constitute a civil penalty (proposed subsection (1)) and an offence (proposed subsection (2)). Proposed subsection (3) ensures that the offence at proposed subsection (2) remains one of strict liability.

Items 21 to 24 - Section 219BD

Subsection 219BD deals with the obligation of approved child care services to charge no more than the usual fee where an individual is eligible to receive Jobs Education and Training (JET) child Care fee assistance. Items 21, 22 and 23 amend section 219BD to provide that contravention of this obligation may constitute a civil penalty (proposed subsection (1)) and an offence (proposed subsection (1A)). The repeal of subsection (3) by Item 24 and the insertion of proposed subsection (1B) ensure that the offence at proposed subsection (1A) remains one of strict liability.

Items 25, 26 and 27 - Section 219E

Section 219E deals with the obligation of approved child care services to provide receipts. Items 25, 26 and 27 amend section 219E to provide that contravention of this obligation may constitute a civil penalty [proposed new subsection (1)] and an offence (proposed new subsection (1A)). The repeal of old subsection (1A) by Item 27 and the insertion of proposed subsection (1B) ensure that the offence at proposed new subsection (1A) remains one of strict liability.

Items 28 and 29 - Section 219EA

Section 219EA deals with the obligation of approved child care services to provide information relating to child care places. In the current legislation section 219EA (2), which requires a service to provide the information by a time, form, and manner to be determined by the Secretary, is the only civil penalty provision. Items 28 and 29 amend the subsection and repeal current subsection (3) to re-frame the provision in modern penalty terminology. This civil penalty provision has no equivalent criminal penalty.

Items 30 to 34 - Section 219F

Section 219F deals with the obligation of approved child care services to keep records on certain specified matters (subsection (1)] and for a certain period [subsection (2)).

Items 30, 31 and 32 amend section 219F to provide that contravention of this obligation may constitute a civil penalty (proposed new subsection (1)) and an offence (proposed new subsection (1A)). Proposed subsection (1B) ensures that the offence at (1A) remains one of strict liability.

Item 33 inserts a civil penalty (proposed new subsection (2)) and an offence (proposed new subsection (2A)) to make clear that an approved child care service must keep these records for at least 36 months after the end of the year in which care was provided or until a time ordered by a court during civil or criminal proceedings. This amendment is proposed in order to preserve the records until any Court proceedings have finally been determined, which may be a time later than the time that the 36 month period has expired. Proposed subsection (2B) ensures that the offence at (2A) is one of strict liability.

Item 34 adds subsection (4) at the end of section 219F which provides that an offence against the Family Assistance Administration Act includes an offence against Chapter 7 of the Criminal Code that relates to the Family Assistance Administration Act.

Items 35 to 44 - Section 219G

Section 219G deals with the obligations of former approved child care services to:

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keep the records specified in section 219F for the same period as specified in section 219F as if they had not ceased to be approved child care services; and

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notify the Secretary within 14 days of ceasing to be an approved child care service of the premises at which the records are kept; and

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notify the Secretary if the premises at which the records are kept changes (within 14 days of the change in premises).

Items 35 to 44 amend section 219G to provide that contravention of these obligations may constitute a civil penalty and an offence and that the offences remain ones of strict liability.

Item 45 - Section 219J

Section 219J deals with the issuing of identity cards by the Secretary to authorised officers. Item 45 amends the section to provide that:

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the card must be in certain form;

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a person commits an offence if they cease to be an authorised officer and do not return their identity card (except where the card was destroyed or lost); and

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authorised officers must carry their identity cards at all times when exercising their powers.

Item 46 and 47 - Section 219K

Section 219K deals with the power of authorised officers to enter premises of approved child care services for the purpose of inspecting records. Item 46 amends the section to provide that an authorised officer may enter premises for the broader purpose of monitoring the approved child care service's compliance with a condition for the continued approval of the service. (These conditions are set out at section 196 of the act.) Monitoring allowable under proposed subsection (1A) could include making observations and generally monitoring the activities being undertaken by the approved child care service.

A note after subsection 219K(1A) advises the reader that the authorised officer could also inspect certain records while on the premises (see paragraph (1)(a)).

Item 47 clarifies that entry by authorised officers:

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must only be with the express voluntary consent of the occupier of the premises (or a person who represents that person), on presentation by the authorised officer of his or her identity card, after having been informed by the authorised officer of the right to refuse consent;

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may be limited to a particular time period with effect only during that period or until such time as consent is withdrawn;

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is subject to the consenter withdrawing consent at any time.

An authorised officer must leave the premises if the consent ceases to have effect.

The role of an authorised officer is to conduct reviews of approved services and educate operators on their obligations regarding the conditions of continued approval specified in the family assistance legislation.

Before undertaking compliance reviews as an authorised officer, all new staff must complete a 2-day training course run by the Department's national office. The course explains the roles and responsibilities of a compliance officer and the legislative framework within which he/she operates. It covers the end to end process of conducting reviews, from the planning of the visit through to follow-up action for any issues of non compliance identified during the review.

All child care compliance reviews must be conducted using the processes and procedures set down in the Child Care Compliance - Compliance Officer Manual Version 2.0. This manual is the primary resource tool for compliance officers - it contains extracts of the legislation applicable to child care compliance activity and documents the mandatory processes for conducting reviews. The manual also includes the review forms, review reports, consent letters and analysis worksheets which compliance officers must use to ensure their work is carried out in a systematic and consistent manner.

To manage the risk of services making particular claims/accusations about the activities of the authorised officers and to ensure the safety of staff while undertaking reviews all visits to services must be undertaken by at least two compliance officers.

While the role of authorised officer is not to investigate fraud, where fraudulent behaviour is suspected the matter is referred to the Department's Investigation Branch. The Investigations Branch is responsible for the investigation of all allegations of fraud, both internal and external, against the Department. All investigations are conducted in accordance with relevant standards and quality expectations as expressed within the DEEWR Investigations Standards and Commonwealth Fraud Control Guidelines 2002.

Items 48 to 58 - Section 219L

Section 219L deals with the obligation of occupiers of premises of approved child care services to provide authorised officers with access to records and assistance during monitoring visits described in section 219K. Items 48 to 58 amend the section to provide that contraventions of these obligations may constitute civil penalties (subsections 1, 2 and 3) and offences (subsections 1A, 2A and 3A). The offences remain ones of strict liability.

Items 59, 60 and 61 - Section 219M

Section 219M deals with the obligation of operators of child care services to notify the Secretary if they intend to cease operating an approved child care services. Items 59, 60 and 61 amend the section to provide that contravention of this obligation may constitute a civil penalty (subsection (1)) and an offence (subsection (3)).

Item 62 - Section 219N

Section 219N deals with the obligation of approved child care services to provide reports to the Secretary on specified matters in a specified manner and form. Item 62 amends the section to insert a civil penalty provision at subsection (5A) for contravention of this obligation. An offence provision already exists at subsection (6).

Item 63 - Section 219NA

Section 219NA deals with the obligation of approved child care services to provide information to the Secretary about the number of child care places. Item 63 amends subsection 219NA(4) to make it clear that contravention of the obligation to provide information as specified in a notice to do so from the Secretary is a civil penalty.

Items 64, 65 and 66 - Section 219NB

Section 219NB deals with the obligation of approved child care services to provide further information to the Secretary about enrolled children. Items 64, 65 and 66 amend the section to provide that contravention of this obligation may constitute a civil penalty (subsection (1)) and an offence (subsection (2)).

Items 67, 68 and 69 - Section 219P

Section 219P deals with the obligation of operators of former approved child care services (where the approval was suspended or cancelled under the Family Assistance Administration Act) to fulfil a range of obligations under the Family Assistance Administration Act in respect of sessions of care provided before the approval was suspended or cancelled. Items 67, 68 and 69 amend the section to provide that contravention of this obligation may constitute a civil penalty (subsection (1)) and an offence (subsection (2)).

Items 70, 71 and 72 - Section 219QB

Section 219QB deals with the obligation of approved child care services to remit to the Secretary amounts that cannot be passed on. Items 70, 71 and 72 amend the section to provide that contravention of this obligation may constitute a civil penalty (subsection (1)) and an offence (subsection (1A)).

Item 73 - Section 219TSA

Section 219TSA deals with definitions of 'civil penalty order' and 'penalty unit'. Item 73 repeals the section because these definitions now appear in section 3 (see items 1 and 3 )

Items 74, 75 and 76 - Section 219TSB

Section 219TSB provides that ancillary contravention of any civil penalty under the Family Assistance Administration Act is itself a civil penalty. Items 74, 75 and 76 amend the section and repeal current subsection (2) to re-frame the provision in modern penalty terminology. This civil penalty provision has no equivalent criminal penalty.

Item 77 and 78 - Section 219TSC

Section 219TSC deals with the power of the Federal Court (or the Federal Magistrate's Court) to make an order, on application by the Minister, for a person to pay a pecuniary penalty if it is satisfied that the person has contravened a civil penalty provision. Item 77 adds a note for guidance that civil proceedings do not limit, or are affected by, the Secretary's power to apply sanctions such as suspension or cancellation, or other compliance measures in the Family Assistance Administration Act.

The Court has discretion to determine the amount of pecuniary penalty it considers to be appropriate, but in making that determination it must have regard to all relevant matters including certain specified matters set out at paragraphs (3) (a) to (d). Item 78 amends subsection (3) to add a proposed specified matter at (e), namely that in determining a pecuniary penalty the court must have regard to the likely impact of the penalty on the person and the continued operation of the approved child care service. This is to ensure that the Court takes into account matters which might include the relevant size and location of the service and whether the penalty is likely to cause a severe impact on the service's continued operation.

Item 79 - Section 219TSD

Section 219TSD deals with the maximum penalties for contravention of the civil penalty provisions. Item 79 amends the section to provide for a general rule that the maximum pecuniary penalty must not exceed 200 penalty units for an individual or 400 penalty units for a body corporate. Item 79 provides an exception for this general rule for contraventions of the obligation to provide information relating to child care places (subsection 219EA (2)) or the obligation to provide authorised officers with access to records and assistance during monitoring visits (subsection 219L (3)) for which the maximum penalties are set at the previous rates of 30 penalty units for an individual and 60 penalty units for a body corporate.

The maximum penalties for the general rule have been set at the proposed levels in order to act as an effective deterrent to non-compliance across a wide range of approved child care services in the industry. Without an effective lever for service providers to comply with their obligations for continued approval, it would not be possible for the Government to adequately monitor the expenditure of Child Care Benefit payments made through service providers. The Court retains the discretion to impose a lesser penalty on a case by case basis having regard to the matters specified at subsection 219TSC (3) any other relevant matter.

Item 80 - After section 219TSG

Item 80 inserts a number of proposed provisions to deal with extra procedural issues which are raised by the expansion of the civil penalty scheme.

Proposed section 219TSGA deals with the situation where certain conduct contravenes two or more civil penalty provisions. Under the new provision, proceedings may be instituted against a person if they contravene one or more of those provisions. Although the double jeopardy rule applies so that a person cannot be liable for more than one pecuniary penalty for the same instance of contravening conduct, administrative sanctions for that conduct (such as suspension of approval) may still be imposed.

Proposed section 219TSGB provides that civil penalty proceedings must not follow successful criminal proceedings - in other words a court cannot make a civil penalty order against a person for conduct which is already the subject of an offence conviction.

Proposed section 219TSGC provides that where criminal proceedings are commenced after civil proceedings are commenced on the same conduct, the civil proceedings are to be stayed pending the outcome of the criminal proceedings. Where a conviction is recorded, the civil proceedings are to be dismissed and costs must not be awarded. (This is because the Minister should not be entitled to recover costs from the defendant if inappropriate proceedings have been instituted, and the defendant should not be entitled to recover costs as the defendant has clearly been in breach of an obligation under the family assistance law.) If the person is not convicted, the civil proceedings are to be resumed.

Proposed section 219TSGD provides that criminal proceedings may be commenced against a person after civil proceedings have commenced whether or not a pecuniary penalty has already been imposed for the same conduct.

Proposed section 219TSGE provides that evidence given by a person in a civil proceeding may not be used in a criminal proceeding. This does not apply where the person is accused of perjury in relation to evidence given in the civil proceeding.

Proposed section 219TSGF provides that the Minister may request a person to give all reasonable assistance in connection with an application for a civil penalty order and that, where this request has been made, failure to comply is an offence. Subsection (2) provides assistance to readers to clarify that the Ministerial request is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 . This subsection clarifies that the request is not an additional exemption under section 7 of the Legislative Instruments Act 2003 which declares which instruments are not legislative instruments. The Minister would not be able to seek the assistance of:

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a person who is likely to be the subject of the civil penalty order;

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a person who has committed an offence constituted by the same conduct to which the application relates; or

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a person who is or was the legal practitioner representing the person against whom an order can be made.

The application for a civil penalty order in relation to which the Minister seeks a person's assistance need not have actually been made.

Item 81 - Section 219TSH

Section 219TSH deals with the definition of 'penalty unit' in relation to the infringement notice scheme. Item 81 repeals the section because the definition now appears in section 3 (see item 3 ).

Items 82 and 83 - Section 219TSK

Section 219TSK deals with the infringement notices that can be given to bodies corporate (subsection (1)) and persons other than bodies corporate (subsection (2)).

Items 82 and 83 replace the current infringement notice scheme with new tables each for bodies corporate and persons other than bodies corporate. The tables set out the penalty units which can be imposed for single contraventions of a civil penalty provision for specified groups of civil penalty provisions, and for multiple contraventions, with maximum penalty amounts for each group. The penalty that can be imposed per infringement notice may not be multiplied by more than 8 times (even if there are more than 8 contraventions listed in the infringement notice).

Item 84 - Section 219TSN

Section 219TSN makes clear that the infringement notice scheme does not limit, nor is it affected by civil proceedings for contravention of a pecuniary penalty. Item 84 adds a note to clarify further that the effect of the infringement notice scheme does not limit, nor is it affected by the Secretary's power to apply sanctions such as suspension or cancellation, or other compliance measures in the Family Assistance Administration Act.

Item 85 - After section 220

Item 85 inserts proposed section 220A to provide that the Minister may request a person to give all reasonable assistance in connection with criminal proceedings and that, where this request has been made, failure to comply is an offence. Subsection (2) provides assistance to readers that the request is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 - it is not an exemption to that Act. The Minister would not be able to seek the assistance of:

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a person who is likely to be a defendant in the proceedings;

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a person who has contravened a civil penalty provision constituted by the same conduct to which the proceedings relates; or

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a person who is or was the legal practitioner representing the defendant or a likely defendant in the proceedings.

The criminal proceedings in relation to which the Minister seeks a person's assistance need not have actually commenced.

Part 2 - Application

Items 86 and 87 - Application of amendments

Item 86 provides that subject to the application provision about keeping records at item 87 , the amendments made by Schedule 4 apply to conduct happening wholly after the commencement of the Schedule.

Item 87 provides that if, before the commencement of Schedule 4, an approved child care service was required to keep records under section 219F(2), and but for these amendments the record keeping period would have expired after commencement, the obligations under the amended section 219 (i.e. the civil penalty provision and the offence provision) both apply. The effect of this provision is that the approved child care service will only contravene the new civil penalty and offence provisions if the service fails to keep the records after commencement. Section 8 of the Acts Interpretation Act 1901 applies to the application after commencement of the current offence in section 219F (2) is a service fails to keep records before commencement.