House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Education, the Hon Jason Clare MP)

GLOSSARY

OUTLINE

The purpose of the Early Childhood Education and Care (Strengthening Regulation of Early Education) Bill 2025 (the Bill) is to amend the A New Tax System (Family Assistance) (Administration) 1999 Act (the Family Assistance Administration Act) to strengthen regulation in the early childhood education and care (ECEC) sector to improve safety and quality outcomes.

The Bill will:

•

ensure quality and safety is a paramount consideration when assessing CCS provider approval applications;

•

ensure quality and safety is a paramount consideration for maintaining ongoing CCS provider and service approval, meaning providers or services who do not meet this consideration can be subject to compliance action;

•

expand the Secretary's power to publicise actions taken against providers; and

•

strengthen powers of entry of authorised persons to enable them to conduct unannounced service visits and spot checks.

The Bill also supports implementation of the CCS Reform – further measures for strong and sustainable foundations measure announced in the 2024-25 Budget. These measures include the regulatory powers measure, the auditor measure and the direct gap fee collection measure. These measures will strengthen regulation by enabling the powers to apply for a monitoring warrant and to appoint an auditor to be exercised more readily; and by increasing oversight of gap fee payments.

Strengthen powers to take action based on quality and safety

The Bill will amend the Family Assistance Administration Act to empower the Secretary to refuse to approve a provider or a service, and to suspend or cancel an approval, if the Secretary is not satisfied that it is appropriate for the provider to be approved having regard to the provider's quality, safety and compliance history. This will signal to providers the importance of safety and quality and that additional services will not be approved for a provider with a poor track record in these areas.

The amendments make it clear that the Government expects all CCS approved providers and services to be providing high quality and safe care as a condition of gaining and maintaining approval to administer the CCS. This means that providers or services who do not provide high quality and safe care are at risk of losing their approval to administer CCS, or may face other compliance actions.

These amendments will enhance the Commonwealth's ability to support the actions of State and Territory regulators and respond to community concerns about safety and quality in parts of the ECEC sector.

Expand powers to publicise actions taken against providers

The Bill will amend the Family Assistance Administration Act to expand the Secretary's discretionary power to publicise events such as suspensions and cancellations. The Secretary is now enabled to also publish:

•

conditions imposed on a provider, including details of the conditions;

•

a refusal to approve a provider in respect of a child care service or vary their approval by adding a new service and the reasons why; and

•

when an infringement notice is issued, including the details of the notice such as the alleged contravention and the amount of the associated fine.

The amendments will further clarify, that when publishing information about a sanction, the information may include details of the non-compliance by the provider with each condition for continued approval.

These amendments will further enhance transparency of regulatory decisions taken by the Department to maintain integrity, quality and safety in the ECEC sector, supplementing the existing arrangements for publication of compliance actions and notification to families who may be affected by them. It assists families to make fully informed decisions when selecting a provider.

Broader powers of entry

The Bill will amend the Family Assistance Administration Act to allow authorised persons appointed by the Secretary under the Act to enter premises, without consent, of an approved service during operating hours or, if a service is not operated at the premises, during ordinary business hours. The Secretary must give written authorisation before the authorised person enters without consent, and they must be satisfied that the entry is necessary for the purposes of exercising monitoring powers.

These powers depart from the standard powers in the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act) that only enable entry to premises for monitoring with consent or under a warrant but are considered appropriate and proportionate to protect the financial integrity of CCS and better support safety and quality in ECEC. It is estimated that for the last financial year the Australian Government spent over $16 billion in CCS payments. The Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers has been considered in designing the amendments relating to broader powers of entry. The Guide envisages that the limited circumstances in which warrant or consent may not be necessary may include where Government financial assistance is paid and entry is necessary for the purpose of ensuring compliance with legislative requirements.

The broader entry powers largely mirror arrangements already in place for State and Territory regulators of ECEC under the Education and Care Services National Law (National Law). Safeguards are in place to ensure the broader powers of entry are appropriately exercised. The Secretary must provide written authority for an authorised person to enter without consent. The Secretary may only do so if satisfied that the entry is necessary for limited purposes such to exercise monitoring powers. This will ensure that any personal information handled by authorised persons exercising these powers will be for the legitimate purpose of monitoring provider compliance with key statutory obligations (listed in s 219UA of the Family Assistance Administration Act).

Where these powers are sought to be used in relation to In Home Care (IHC) services, the Secretary must also be satisfied that consent cannot be reasonably obtained, for example, in circumstances where there is an immediate risk to child safety, or allegations of serious breaches that cannot be verified remotely. This additional requirement for IHC, where the care is provided in the child's home, reflects the need to balance these powers against the personal rights and liberties of the occupier of the premises.

IHC settings are often isolated, dispersed, and located in non-standard environments such as remote farms which can present significant physical hazards (such as unrestrained animals, dangerous machinery, unsafe water sources). IHC caters to vulnerable cohorts including children with complex medical or developmental needs and families experiencing crises, or in rural and remote areas with limited access to mainstream ECEC. The nature of care being provided in private homes creates oversight challenges for the Commonwealth as the main regulator of IHC services, for both CCS compliance as well as safety and quality matters. This is unlike other services that are regulated under the National Quality Framework (NQF) and increases the need for the Commonwealth to have proactive regulatory tools such as this available, particularly for IHC.

This amendment will better equip authorised persons to monitor compliance with the family assistance law and motivate providers to improve their compliance. The unpredictability of unannounced visits serves as a powerful deterrent to lax standards of integrity, quality and safety. Knowing inspections can occur at any time will encourage providers to maintain consistent compliance with regulatory standards, reducing the likelihood of deliberate non-compliance or attempts to conceal breaches ahead of scheduled visits.

Without this power, the Commonwealth is significantly constrained in its ability to investigate and respond to serious complaints, critical incidents or emerging patterns of concern that may impact child safety and wellbeing at the educator level.

Regulatory powers measure

Complementing the broader powers of entry outlined above, the Bill will streamline the process for seeking entry under a monitoring warrant.

Amendments in the Bill will enable the Secretary to delegate their existing powers under section 219UA of the Family Assistance Administration Act to apply for monitoring warrants under Part 2 of the Regulatory Powers Act. This will enable a limited cohort of officers in addition to the Secretary to apply for monitoring warrants.

Monitoring warrants can be an effective tool in supporting the Department's monitoring of CCS compliance. The Bill's amendments provide a more streamlined application process to enable monitoring warrants to be requested and issued more efficiently. Currently, only the Secretary may apply for a monitoring warrant. This is not practicable when the applicant must apply in person and under oath or affirmation to an issuing officer for a monitoring warrant, and the warrant should be sought in the jurisdiction in which it would be executed.

The delegation will be limited to appropriately qualified and experienced officers at Executive Level 1 and above. The scope of this delegation is necessary for practical reasons. There is a strong layer of external oversight over any application made, as a judicial officer must review each monitoring warrant application and decide whether to approve it or not. An additional level of oversight is provided in that a delegate must also comply with any directions issued by the Secretary (new subsection 219UA(4C)).

Auditor measure

The Bill will amend section 221 of the Family Assistance Administration Act to enable the Secretary to delegate their existing power to a Senior Executive Service (SES) employee or acting SES employee to appoint an appropriately qualified and experienced expert to conduct an independent audit of a large child care provider. Independent audits of large providers can be an important tool to ensure integrity and market sustainability. Streamlining the process for appointing an independent auditor will allow action to be expedited in the event the Secretary has concerns about the financial viability of a large provider (which is defined in section 4A of the Family Assistance Administration Act). This supports the success of activities funded through the Child Care Subsidy Reform – further measures for strong and sustainable foundations in the 2024 – 25 Budget.

Direct gap fee collection measure

The Bill will amend the Family Assistance Administration Act to give legislative effect to the new CCS direct gap fee collection requirement announced in the 2024-25 Budget. Under this new requirement, from 1 January 2026 all Family Day Care (FDC) and IHC providers will be required to collect the CCS gap fees (the amount of CCS session fees paid by families after CCS is deducted) directly from families. This means that FDC and IHC educators will no longer be able to collect the gap fees on behalf of providers. However, providers will continue to be able to collect gap fees from families through a payment gateway service. This means families can pay their gap fees into their provider's payment gateway account and the payment gateway service then transfers the gap fee to the provider. The use of a payment gateway service is intended to provide oversight and transparency with respect to payment of gap fees by providing an efficient, clear and separate audit trail.

This amendment will enhance FDC and IHC providers' governance and administrative responsibilities to correctly administer CCS entitlements. It will also reduce the administrative burden for FDC and IHC educators so they can focus on providing education and care and reduce fraudulent and non-compliant CCS claims. Improving FDC and IHC providers' ability to correctly administer CCS will give families and regulators confidence in the sectors' viability and encourage sector growth, particularly in areas that need more child care services.

FINANCIAL IMPACT STATEMENT

The amendments in this Bill have nil financial impact.

CONSULTATION

The Department conducted targeted consultations relating to the provider quality and safety and the broader powers of entry measures with key stakeholders including State and Territory regulatory authorities, and the ECEC Reference Group. Key stakeholders were supportive of the Commonwealth's strengthened focus on quality and safety within the sector.

The Department will continue to work with the sector when implementing these measures to ensure any policy positions are fit for purpose, meet the needs of stakeholders while also upholding the policy intent of these measures.

Specific consultation on the regulatory powers and auditor measures was not necessary as these amendments do not alter existing powers but rather enable these powers to be delegated to appropriately qualified and experienced officers.

The Department conducted targeted consultations with key sector stakeholders and peak bodies, including local government bodies, Australian Local Government Association, Municipal Association Victoria, Local Government NSW, Family Day Care Australia, Australian Home Care Association, IHC support agencies and other key stakeholders within the sector, in August and October 2024, on the provisions for the direct gap fee collection measure. The consultations provided stakeholders with an opportunity to review an Exposure Draft of the provisions and provide their feedback. The sector was largely supportive of the amendment and their feedback was taken into consideration during the final drafting of the Bill. This included amending the start date of the measure from 1 July 2025 to 1 January 2026 as the sector indicated this would assist with implementation as enrolments are linked to the calendar year. In addition, the amendments will continue to allow providers to collect gap fees via a payment gateway service nominated by the provider to address sector feedback.

The Department will continue to collaborate closely with providers and educators ahead of the direct gap fee collection measure's anticipated commencement date of 1 January 2026, rolling out a series of planned engagement opportunities, communication activities and sector support materials to ensure smooth implementation of the measure.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Early Childhood Education and Care (Strengthening Regulation of Early Education) Bill 2025

The Early Childhood Education and Care (Strengthening Regulation of Early Education) Bill 2025 (the Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The purpose of the Bill is to amend the A New Tax System (Family Assistance) (Administration) 1999 Act (the Family Assistance Administration Act) to strengthen regulation in the early childhood education and care (ECEC) sector to improve safety and quality outcomes.

The Bill will:

•

ensure quality and safety is a paramount consideration when assessing CCS provider approval applications;

•

ensure quality and safety is a paramount consideration for maintaining ongoing CCS provider and service approval, meaning providers or services who do not meet this consideration can be subject to compliance action;

•

expand the Secretary's power to publicise actions taken against providers; and

•

strengthen powers of entry of authorised persons to enable them to conduct unannounced service visits and spot checks.

The Bill also supports implementation of the CCS Reform – further measures for strong and sustainable foundations measure announced in the 2024-25 Budget. These measures include the regulatory powers measure, the auditor measure and the direct gap fee collection measure. These measures will strengthen regulation by enabling the powers to apply for a monitoring warrant and to appoint an auditor to be exercised more readily; and by increasing oversight of gap fee payments.

Strengthen powers to take action based on quality and safety

The Bill will amend the Family Assistance Administration Act to empower the Secretary to refuse to approve a provider or a service, and to suspend or cancel an approval, if the Secretary is not satisfied that it is appropriate for the provider to be approved having regard to the provider's quality, safety and compliance history. This will signal to providers the importance of safety and quality and that additional services will not be approved for a provider with a poor track record in these areas.

The amendments make it clear that the Government expects all CCS approved providers and services to be providing high quality and safe care as a condition of gaining and maintaining approval to administer the CCS. This means that providers or services who do not provide high quality and safe care are at risk of losing their approval to administer CCS, or may face other compliance actions.

These amendments will enhance the Commonwealth's ability to support the actions of State and Territory regulators and respond to community concerns about safety and quality in parts of the ECEC sector.

Expand powers to publicise actions taken against providers

The Bill will amend the Family Assistance Administration Act to expand the Secretary's discretionary power to publicise events such as suspensions and cancellations. The Secretary is now enabled to also publish:

•

conditions imposed on a provider, including details of the conditions;

•

a refusal to approve a provider in respect of a child care service or vary their approval by adding a new service and the reasons why; and

•

when an infringement notice is issued, including the details of the notice such as the alleged contravention and the amount of the associated fine.

The amendments will further clarify, that when publishing information about a sanction, the information may include details of the non-compliance by the provider with each condition for continued approval.

These amendments will further enhance transparency of regulatory decisions taken by the Department to maintain integrity, quality and safety in the ECEC sector, supplementing the existing arrangements for publication of compliance actions and notification to families who may be affected by them. It assists families to make fully informed decisions when selecting a provider.

Broader powers of entry

The Bill will amend the Family Assistance Administration Act to allow authorised persons appointed by the Secretary under the Act to enter premises, without consent, of an approved service during operating hours or, if a service is not operated at the premises, during ordinary business hours. The Secretary must give written authorisation before the authorised person enters without consent, and they must be satisfied that the entry is necessary for the purposes of exercising monitoring powers.

These powers depart from the standard powers in the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act) that only enable entry to premises for monitoring with consent or under a warrant but are considered appropriate and proportionate to protect the financial integrity of CCS and better support safety and quality in ECEC. It is estimated that for the last financial year the Australian Government spent over $16 billion in CCS payments. The Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers has been considered in designing the amendments relating to broader powers of entry. The Guide envisages that the limited circumstances in which warrant or consent may not be necessary may include where Government financial assistance is paid and entry is necessary for the purpose of ensuring compliance with legislative requirements.

The broader entry powers largely mirror arrangements already in place for State and Territory regulators of ECEC under the National Law. Safeguards are in place to ensure the broader powers of entry are appropriately exercised. The Secretary must provide written authority for an authorised person to enter without consent. The Secretary may only do so if satisfied that the entry is necessary for limited purposes such to exercise monitoring powers. This will ensure that any personal information handled by authorised persons exercising these powers will be for the legitimate purpose of monitoring provider compliance with key statutory obligations (listed in s 219UA of the Family Assistance Administration Act).

Where these powers are sought to be used in relation to In Home Care (IHC) services, the Secretary must also be satisfied that consent cannot be reasonably obtained, for example, in circumstances where there is an immediate risk to child safety, or allegations of serious breaches that cannot be verified remotely. This additional requirement for IHC, where the care is provided in the child's home, reflects the need to balance these powers against the personal rights and liberties of the occupier of the premises.

IHC settings are often isolated, dispersed, and located in non-standard environments such as remote farms which can present significant physical hazards (such as unrestrained animals, dangerous machinery, unsafe water sources). IHC caters to vulnerable cohorts including children with complex medical or developmental needs and families experiencing crises, or in rural and remote areas with limited access to mainstream ECEC. The nature of care being provided in private homes creates oversight challenges for the Commonwealth as the main regulator of IHC services, for both CCS compliance as well as safety and quality matters. This is unlike other services that are regulated under the National Quality Framework (NQF) and increases the need for the Commonwealth to have proactive regulatory tools such as this available, particularly for IHC.

This amendment will better equip authorised persons to monitor compliance with the family assistance law and motivate providers to improve their compliance. The unpredictability of unannounced visits serves as a powerful deterrent to lax standards of integrity, quality and safety. Knowing inspections can occur at any time will encourage providers to maintain consistent compliance with regulatory standards, reducing the likelihood of deliberate non-compliance or attempts to conceal breaches ahead of scheduled visits.

Without this power, the Commonwealth is significantly constrained in its ability to investigate and respond to serious complaints, critical incidents or emerging patterns of concern that may impact child safety and wellbeing at the educator level.

Regulatory powers measure

Complementing the broader powers of entry outlined above, the Bill will streamline the process for seeking entry under a monitoring warrant.

Amendments in the Bill will enable the Secretary to delegate their existing powers under section 219UA of the Family Assistance Administration Act to apply for monitoring warrants under Part 2 of the Regulatory Powers Act. This will enable a limited cohort of officers in addition to the Secretary to apply for monitoring warrants.

Monitoring warrants can be an effective tool in supporting the Department's monitoring of CCS compliance. The Bill's amendments provide a more streamlined application process to enable monitoring warrants to be requested and issued more efficiently. Currently, only the Secretary may apply for a monitoring warrant. This is not practicable when the applicant must apply in person and under oath or affirmation to an issuing officer for a monitoring warrant, and the warrant should be sought in the jurisdiction in which it would be executed.

The delegation will be limited to appropriately qualified and experienced officers at Executive Level 1 and above. The scope of this delegation is necessary for practical reasons. There is a strong layer of external oversight over any application made, as a judicial officer must review each monitoring warrant application and decide whether to approve it or not. An additional level of oversight is provided in that a delegate must also comply with any directions issued by the Secretary (new subsection 219UA(4C)).

Auditor measure

The Bill will amend section 221 of the Family Assistance Administration Act to enable the Secretary to delegate their existing power to a Senior Executive Service (SES) employee or acting SES employee to appoint an appropriately qualified and experienced expert to conduct an independent audit of a large child care provider. Independent audits of large providers can be an important tool to ensure integrity and market sustainability. Streamlining the process for appointing an independent auditor will allow action to be expedited in the event the Secretary has concerns about the financial viability of a large provider (which is defined in section 4A of the Family Assistance Administration Act). This supports the success of activities funded through the Child Care Subsidy Reform – further measures for strong and sustainable foundations in the 2024 – 25 Budget.

Direct gap fee collection measure

The Bill will amend the Family Assistance Administration Act to give legislative effect to the new CCS direct gap fee collection requirement announced in the 2024-25 Budget. Under this new requirement, from 1 January 2026 all Family Day Care (FDC) and IHC providers will be required to collect the CCS gap fees (the amount of CCS session fees paid by families after CCS is deducted) directly from families. This means that FDC and IHC educators will no longer be able to collect the gap fees on behalf of providers. However, providers will continue to be able to collect gap fees from families through a payment gateway service. This means families can pay their gap fees into their provider's payment gateway account and the payment gateway service then transfers the gap fee to the provider. The use of a payment gateway service is intended to provide oversight and transparency with respect to payment of gap fees by providing an efficient, clear and separate audit trail.

This amendment will enhance FDC and IHC providers' governance and administrative responsibilities to correctly administer CCS entitlements. It will also reduce the administrative burden for FDC and IHC educators so they can focus on providing education and care and reduce fraudulent and non-compliant CCS claims. Improving FDC and IHC providers' ability to correctly administer CCS will give families and regulators confidence in the sectors' viability and encourage sector growth, particularly in areas that need more child care services.

Human rights implications

The Bill engages the following rights:

•

the rights of parents and children – article 3, article 18, and article 27 of the Convention on the Rights of the Child (CRC); and

•

the right to privacy – article 17 of the International Covenant on Civil and Political Rights (ICCPR).

Rights of parents and children

Article 3 of the CRC states that in all actions concerning children, the best interests of the child shall be a primary consideration. Further, article 18 of the CRC requires States Parties to take all appropriate measures to ensure that children of working parents have the right to benefit from child care services and facilities. Finally, article 27 of the CRC recognises the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development.

The Bill promotes the rights of children, and the best interests of children, by strengthening regulation in the ECEC sector and improving quality and safety outcomes. This promotes the rights of children by better ensuring they are provided with quality child care services that meet the requisite standards of care. This is achieved by the following measures:

•

by expressly enabling the Secretary to consider quality and safety matters when approving a provider or a child care service under the Family Assistance Administration Act and as part of a provider's conditions for continuing approval (Part 1 of Schedule 1);

•

by broadening the powers of entry to better equip officers to monitor compliance and motivate providers to maintain high standards of quality and safety (Part 2 of Schedule 1);

•

by enabling the Secretary to delegate to other persons the power to apply for monitoring warrants (Part 3 of Schedule 1) and to appoint experts to carry out an independent audit of large child care providers (Part 4 of Schedule 1) which will allow for easier compliance and monitoring checks of child care services. It remains the case that adequate safeguards are in place for monitoring warrants as these may only be issued by judicial officers;

•

by making fraud and non-compliance more difficult through a requirement that gap fees are paid directly to the providers of FDC and IHC services (or using a payment gateway service nominated by the provider) rather than allowing them to be paid to the educators (Part 5 of Schedule 1).

The Bill is compatible with the human rights in articles 3, 18 and 27 of the CRC because it promotes the rights of parents and children.

Right to privacy

Article 17 of the ICCPR provides that no one shall be subjected to arbitrary or unlawful interference with their privacy, family, home or correspondence, nor to unlawful attacks on their honour or reputation, and that everyone has the right to the protection of the law against such interference or attacks.

The right to privacy under article 17 can be permissibly limited to achieve a legitimate objective and where the limitations are lawful and not arbitrary. The term 'unlawful' in article 17 of the ICCPR means that no interference can take place except as authorised under domestic law. Additionally, the term 'arbitrary' in article 17(1) of the ICCPR means that any interference with privacy must be in accordance with the provisions, aims and objectives of the ICCPR and should be reasonable in the particular circumstances. Any limitation should be proportionate and necessary.

The amendments to section 199B of the Family Assistance Administration Act in items 4 to 9 of Schedule 1 to the Bill enable the Secretary to publicise, in any way they think appropriate, information about imposing a condition on a provider, a decision not to approve a provider's child care service or vary a provider's approval to add a new service and the issuing of an infringement notice. These events are in addition to compliance events that the Secretary is already permitted to publish under section 199B of the Act. The majority of providers are not individuals, however, to the extent that the Bill limits an individual's right to privacy by extending the Secretary's publication powers, these limits are proportionate and necessary as they promote provider compliance and the best interests of children. These amendments are aimed at achieving the legitimate objective of increasing transparency within the child care sector. This transparency will provide the community with further information on the outcomes of compliance activities enabling families to be better informed about their childcare decisions.

The Bill also limits the right to privacy by introducing in Part 2 of Schedule 1 the power for an authorised person to enter premises without consent or a warrant for monitoring purposes. To the extent that these powers depart from the standard powers of entry in the Regulatory Powers Act they are necessary to ensure authorised persons are better equipped to monitor compliance with the family assistance law, motivate providers to improve their compliance and better support child safety and well-being. An occupier commits an offence, or is liable to a civil penalty, if they do not provide an authorised person (or person assisting them) with all reasonable facilities and assistance for the effective exercise of the authorised person's monitoring powers while at the premises.

The broader entry powers can only be used for limited purposes, such as to exercise monitoring powers. This will ensure that any personal information handled by authorised persons exercising these powers will be for the legitimate purpose of monitoring provider compliance with key statutory obligations (listed in s 219UA of the Family Assistance Administration Act).

Additional safeguards are provided in the Bill to ensure this broader power of entry is not arbitrary or at risk of abuse. First, the Secretary must provide written authority for an authorised person to enter the premises without consent. Authority may only be granted if the Secretary is satisfied that the entry is necessary for the purposes of exercising monitoring powers (as provided for in Part 2 of the Regulatory Powers Act) or powers under section 24 of that Act (which relate to asking questions or seeking access to documents) in relation to the provisions or information that is subject to monitoring under the Family Assistance Administration Act (see existing section 219UA). In recognition that there is a greater risk of interference with the privacy rights of persons operating IHC services (which are typically operated from the home of the child), the Bill further requires that before entry can be granted to these premises, the Secretary must also be satisfied that the consent of the occupier to the entry cannot reasonably be obtained.

Additionally, entry without consent is only permitted during operating hours for when a child care service is being operated at the premises and otherwise during ordinary business hours. Before entering the premises, the authorised person must announce that they are authorised to enter the premises, show their identity card and give any person at the premises the opportunity to allow entry with consent.

A further safeguard is provided by not allowing the authorised persons, when entering without consent, to exercise the powers in section 22 of the Regulatory Powers Act (which enables an authorised person to secure evidence for a 24 hour period) in respect to 'related' provisions. This is because under the Family Assistance Administration Act, the 'related' provisions are all offences.

These new powers of entry are reasonable, necessary and proportionate to achieve legitimate objectives and directly connected to the Bill's purpose of promoting the best interests of children by improving quality and safety outcomes. The additional safeguards and limitations on the use of this broader power ensure that lawful interferences against the right to privacy are not arbitrary or at risk of abuse.

Conclusion

The Bill is compatible with human rights because, to the extent that it may limit human rights, the limitations are reasonable, necessary and proportionate.

NOTES ON CLAUSES

Clause 1: Short title

1. This is a formal provision specifying the short title of the Act.

Clause 2: Commencement

2. The table in this clause sets out the commencement date for when the provisions in the Bill commence.

3. Sections 1 to 3 will commence the day the Bill receives the Royal Assent. Parts 1 to 4 of Schedule 1 will commence the day after the Bill receives Royal Assent. Part 5 of Schedule 1 to the Bill, relating to the direct gap fee collection measure, will commence on the later of 1 January 2026 and the day after the Bill receives Royal Assent.

4. The commencement of the direct gap fee collection measure on 1 January 2026 will enable affected providers to make the necessary changes to their business practices and to notify families of their new fee collection arrangements.

Clause 3: Schedules

Schedule 1 – Amendments

Part 1 – Provider quality and safety measures

Division 1 – Amendments

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

Items 1 and 2: After paragraph 194C(e); After subparagraph 194D(f)(v)

5. New section 194EA of the Family Assistance Administration Act (inserted by item 3) will set out quality and safety considerations for approved child care providers and services. Item 1 will add an additional requirement to the provider eligibility rules in section 194C, requiring the Secretary to be satisfied that it is appropriate for the provider to be approved having regard to the matters in new section 194EA. Item 2 will insert an equivalent requirement in the service eligibility rules in section 194D.

6. To approve a provider under the Family Assistance Administration Act, the Secretary must be satisfied that the provider satisfies the provider eligibility rules, and that the provider operates, or will operate, at least one child care service that satisfies the service eligibility rules in section 194D. It is also a condition for continued approval of a provider that the provider continues to satisfy the provider eligibility rules and each approved child care service of the provider continues to satisfy the service eligibility rules.

7. Items 1 and 2 will ensure that quality and safety matters must be expressly considered as part of the provider eligibility and service eligibility rules. This is intended to give the Secretary more effective tools to better protect the quality and safety of early education and care in Australia. The Secretary will be able to refuse to approve a provider, or refuse to vary a provider's approval to add an additional service, if not satisfied that it is appropriate for the provider to be approved having regard to the quality and safety considerations in new section 194EA.

8. The Secretary may at any time assess whether a provider is complying with the conditions for continued approval of the provider and may suspend, vary or cancel a provider's approval for breaching these conditions.

9. By providing for specific conditions relating to quality and safety, these amendments respond to community concerns about safety and quality in parts of the ECEC sector, strengthen the Secretary's powers to take compliance action based on quality and safety grounds and support the actions of State and Territory regulators.

Item 3: After section 194E

10. Item 3 inserts new section 194EA in Division 1 of Part 8 of the Family Assistance Administration Act (Provider approval). This section sets out the following quality and safety considerations for the purposes of new paragraphs 194C(e) and 194D(f)(v):

•

The provider's record of demonstrating commitment to, and achievement of, high quality education and care. Examples of matters that could be considered to determine this include:

•

consideration of a provider's overall track record across current and former services;

•

past assessment results such as repeated low ratings; and

•

breaches/complaints on safety and supervision.

•

Any previous assessment of the provider's services under the National Quality Framework in the National Law, including any relevant rating level. This includes any prescribed provisional rating which a provider is taken to have under the National Law before they are first assessed. The rating levels are determined by the State and Territory Regulatory Authorities in accordance with the National Law at the levels prescribed by the national regulations.

•

Any notifications about a 'serious incident' made by the provider that have occurred or are occurring, or circumstances that could have resulted in the occurrence of a serious incident. New subsection 194EA(2) provides that 'serious incident' has the meaning in the Minister's rules. This is intended to cover any serious incident notification, including notifications providers are required to give to State or Territory Regulatory Authorities under the National Law as well as notifications providers regulated under the Minister's Rules are required to give the Secretary. A serious incident would include, for example, any incident involving injury, harm, trauma to, or illness of, a child while being cared for by the service for which the attention of a medical practitioner was sought, or ought reasonably to have been sought, or the child attended, or ought reasonably to have attended, a hospital.

•

Any complaints of serious incidents received by the provider, or of which the Secretary is aware, about the provider's services which are alleged to have occurred or to be occurring. This is intended to ensure the Secretary can take action in relation to a serious incident that the provider has failed to notify.

•

The nature of any serious incident the Secretary reasonably believes has occurred, is occurring or is likely to occur.

•

Any previous or current conditions relating to quality or safety imposed on the provider's approval, or imposed on the provider's services under section 195E or 195F.

•

Any record of non-compliance by the provider with the family assistance law or with Commonwealth, State or Territory laws relating to quality and safety.

•

Whether the quality and safety of the provider's services has improved over time and the extent of any improvement.

•

Any other matter prescribed by the Minister's rules.

•

Any other matter relating to quality or safety that the Secretary considers relevant. For example, the Secretary may consider information it has received from the National Disability Insurance Agency relating to the provider's safety of children in its care as a matter relevant to consider.

11. This new section 194EA will empower the Secretary to consider a provider's quality and safety record, including in relation to services the provider currently operates or has previously operated.

12. The Secretary will also be empowered to take into account the nature of any particular serious incident as well as any pattern of quality and safety breaches or continued failure to improve quality and safety.

13. The power to take action against a provider if the Secretary is not satisfied that it is appropriate for the provider to be approved, having regard to these quality and safety matters, will allow the Commonwealth to respond more effectively to quality and safety concerns and drive improvement in quality and safety.

Items 4 to 9: Before paragraph 199B(1)(a); Before paragraph 199B(1)(b); At the end of subsection 199B(1); After paragraph 199B(2)(c); Subparagraph 199B(2)(d)(iii); At the end of subsection 199B(2)

14. Subsection 199B(1) enables the Secretary to publicise events such as sanctions or suspensions in any way the Secretary thinks appropriate. These amendments will give the Secretary the discretion to publicise the following additional events:

•

refusal to approve a provider in respect of a child care service (Item 4);

•

imposing a condition on a provider (Item 4);

•

refusal to vary a provider's approval by adding a new service (Item 5);

•

issuing an infringement notice under Part 5 of the Regulatory Powers Act in relation to an alleged contravention of a civil penalty provision of the Family Assistance Administration Act (Item 6).

15. Subsection 199B(2) provides examples of the types of information that the Secretary may publicise about the events listed in subsection (1). These amendments insert the following additional information in subsection 199B(2):

•

the condition imposed under subsection 195F(2) or details of the condition (Item 7); and

•

the details of an infringement notice (Item 9).

16. Section 104 of the Regulatory Powers Act prescribes the details of what must be included in an infringement notice. Amongst other details, the notice must include the name of the person, brief details of the alleged contravention, the amount payable under the notice and that payment of the amount is not an admission of guilt or liability. It is anticipated that if the Secretary were to publicise the issuing of an infringement notice under s 199B(1) that similar details would be included in the publication.

17. Item 8 amends subparagraph 199B(2)(d)(iii) to clarify, that when publishing information about a sanction under section 195H, the information may include details of the non-compliance by the provider with each condition for continued approval.

18. It is a matter for the Secretary whether and what information about an event listed in subsection 199B(1) should be published on a case by case basis and the level of detail. Factors relevant to that decision may include the seriousness of the breach, the service's past record of compliance with its responsibilities and the consequences of the Secretary's decision for parties such as parents and children.

19. Extending the Secretary's publication powers further promotes the underlying purpose of the Act and provides for greater transparency, enabling families to be better informed about their childcare decisions.

Division 2 – Application, transitional and saving provisions

Item 10: Application of amendments

20. Item 10 is an application provision. Paragraph (1)(a) provides that the amendments to sections 194C and 194D made by Division 1 of Part 1 apply to a provider approval decision under section 194B in relation to applications for approval made at any time. This means that the Secretary can have regard to the new safety and quality considerations in deciding whether to approve a provider or a service in response to an application for approval that is on hand and undecided at the time the new provisions commence. Naturally, the Secretary can have regard to the new safety and quality considerations in deciding whether to approve a provider or a service in response to an application for approval that is lodged on or after commencement of the new provisions.

21. Paragraph (1)(b) provides that the amendments to sections 194C and 194D made by Division 1 of Part 1 apply as conditions of continued approval for existing and future approved providers and services. This means that as soon as the provisions commence, all existing providers and services must satisfy, and must continue to satisfy, the quality and safety requirements in new section 194EA.

22. Subitem (2) provides that the amendments to section 199B apply in relation to an event that occurred on or after the commencement. This means that the Secretary is able to publish decisions to refuse to approve providers and services, to impose conditions, and to issue infringement notices, that occur on or after commencement of the amendments.

Part 2 – Powers of entry measure

Division 1 – Amendments

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

Item 11: Section 219UC (at the end of the heading)

23. Item 11 amends the heading of section 219UC to make clear that the modifications to the Regulatory Powers Act because of section 219UC apply when an authorised person has consent to enter the premises. The heading of section 219UC now becomes 'Modification of Part 2 of the Regulatory Powers Act (entry with consent)'. This amendment is consequential to the insertion of new section 219UCA.

Item 12: After section 219UC

24. This item inserts a new section 219UCA to provide for modifications to Part 2 of the Regulatory Powers Act for when an authorised person enters premises without the consent of the occupier.

25. The monitoring powers under Part 2 of the Regulatory Powers Act may only be exercised where consent is given by the occupier of the premises or where a monitoring warrant has been issued authorising entry to the premises. New section 219UCA departs from those rules by enabling entry to premises to exercise monitoring powers without consent in certain circumstances. This departure is considered appropriate and proportionate having regard to the overriding public interest in needing to monitor the financial integrity of CCS and enhancing the safety and quality of child care services. In recognition that this is an intrusive power that may significantly impact on personal rights and liberties, this new section contains conditions that must be satisfied before the power may be exercised.

26. New paragraphs 219UCA(1)(b) and (c) make clear that the section only applies if entry to the premises is not made under a monitoring warrant issued under the Regulatory Powers Act and if the occupier of the premises has not consented to the authorised person's entry.

27. The first condition imposed is that the authorised person may only enter premises without consent at which a child care service is being operated during operating hours for the service (see subparagraph 219UCA(1)(a)(i)). Proposed subsection 219UCA(8) provides that 'operating hours' has the meaning prescribed in the Minister's rules. Currently, under item 2 of section 55 of the Minister's Rules, approved providers are required to notify the Secretary in writing of their operating hours including information on the hours and days on which each approved child care service of the provider operates. New section 219UCA reinforces the importance of the provider ensuring it has reported their operating hours accurately to the Secretary.

28. If a child care service is not operated at the premises, then subparagraph 219UCA(1)(a)(ii) enables the authorised person to enter the premises without consent during ordinary business hours. For example, an approved provider may occupy premises such as a 'head office', separate to the locations from which it operates its child care services, and at which it has information related to the provisions that are subject to monitoring under the Regulatory Powers Act.

29. A second condition imposed before an authorised person may exercise power under section 219UCA is that before entering the premises the authorised person must announce that they are authorised to enter the premises, show their identity card to the occupier of the premises or to the person who apparently represents the occupier and give any person at the premises the opportunity to allow entry to the premises (paragraph (1)(e)).

30. The third and main condition imposed is that the Secretary must have first authorised the authorised person's entry to the premises (paragraph 219UCA(1)(d)). Proposed subsection 219UCA(2) gives the Secretary the discretion to authorise, in writing, the entry without consent but only if satisfied that certain factors are met depending on the type of child care service that is provided at the premises.

31. For access to any premises, the Secretary must be satisfied that entry without consent is necessary for the purposes of exercising monitoring powers (as provided for in Part 2 of the Regulatory Powers Act) or powers under section 24 of that Act (which relate to asking questions or seeking access to documents) and which relate to a provision or information that is subject to monitoring. Subsection 219UA(1) of the Family Assistance Administration Act sets out the provisions in the Act which are subject to monitoring under Part 2 of the Regulatory Powers Act. These provisions include civil penalty provisions and various conditions providers must meet for continued approval. Subsection 219UA(2) sets out the information given in compliance with a listed child care information provision that is subject to monitoring.

32. Proposed paragraph 219UCA(2)(b) imposes an additional requirement for when an in home care (IHC) service is operated at the premises. For these services, the Secretary must also be satisfied, before authorising the entry, that the consent of the occupier to the entry cannot reasonably be obtained. For example, in circumstances where there is an immediate risk to child safety or there has been repeated obstruction to compliance monitoring. A higher bar is provided for access to premises from which an IHC service is operated. This is because these services are typically provided from the home of the child and have a greater risk of imposing on an individual's personal rights and liberties. The same standard is not considered necessary for Family Day Care (FDC) services because for those services the residence would have been structured to provide an environment suitable for a child care service and is being used as a business from which the child care service operates.

33. New subsection 219UCA(3) provides that despite paragraph 18(2)(a) and sections 24 and 25 of the Regulatory Powers Act, the authorised person is not required to obtain the consent of the occupier of the premises to the authorised person's entry.

34. New subsection 219UCA(4) provides that, when entering premises without consent, the authorised person must not exercise powers under section 22 of the Regulatory Powers Act in relation to a 'related' provision. Section 22 enables an authorised person to secure evidence for a 24 hour period if they reasonably believe it is about contravention of a provision that is the subject of monitoring or a related provision. Under subsection 219UA(3), the provisions that are 'related' for the purposes of the Family Assistance Administration Act are all offence provisions. By ensuring the authorised person cannot secure evidence under section 22 in relation to an offence provision, the amendment seeks to address concerns that evidence obtained under a warrantless entry power could otherwise be potentially used in a criminal investigation.

35. Powers of entry may only be exercised by authorised persons. It remains the case that a person may only be appointed by the Secretary as an authorised person if they have the knowledge or experience necessary to properly exercise the powers of an authorised person (per subsection 219UD(2)). As an additional oversight, such persons must comply with any directions of the Secretary.

36. New subsection 219UCA(5) requires the occupier of the premises or the person who apparently represents the occupier to provide the authorised person (or any person assisting them) with all reasonable facilities and assistance for the effective exercise of their monitoring powers. Failure by the occupier to provide reasonable facilities and assistance carries a civil penalty of 30 penalty units and it is also an offence with a penalty of 60 penalty units. Consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the appropriate sanction can be imposed in the circumstances. Further, these amounts are considered commensurate with the nature of the contravention and other penalties in the Family Assistance Administration Act. Relevantly, it is also a condition of continued approval that an approved provider must cooperate with a person exercising powers under the Regulatory Powers Act in respect of provisions the subject of monitoring (paragraph 195A(3)(c) of the Family Assistance Administration Act).

Item 13: Before paragraph 221(4)(b)

37. Section 221 of the Family Assistance Administration Act enables the Secretary to delegate their powers under the family assistance law. Subsection 221(4) lists certain powers which the Secretary must not delegate to officers other than Senior Executive Service (SES) employees or acting SES employees. Item 13 lists new subsection 219UCA(2) in subsection 221(4). This will limit the Secretary's ability to delegate the power to authorise entry without consent to officers at SES Band 1 level or above. As this power is not subject to external oversight, delegation to a SES Band 1 level employee or above balances the need for operational flexibility and timeliness while ensuring oversight by appropriately qualified and experienced senior officers.

Division 2 – Application, transitional and saving provisions

Item 14: Application of amendments

38. Item 14 is an application provision. It provides that the insertion of section 219UCA made by Division 1 of Part 2 applies in relation to an entry to premises that occurs on or after the commencement of the Division.

Part 3 – Regulatory powers measures

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

Item 15: After subsection 219UA(4)

39. Item 15 inserts three new subsections to enable the Secretary to authorise officers in the Department to apply for a monitoring warrant for the purposes of Part 2 of the Regulatory Powers Act. For the purposes of Part 2, as it applies in relation to the provisions in subsection 219UA(1), the Secretary is the 'authorised applicant'.

40. New subsection 219UA(4A) allows the Secretary, as the authorised applicant, to delegate their powers and functions in subsection 219UA(4B) to an officer of an agency (within the meaning of the Act). Currently, the Secretary cannot delegate these powers and functions. This presents practical difficulties because the authorised applicant must apply in person and be under oath or affirmation to an issuing officer for a monitoring warrant, and a warrant should be sought in the jurisdiction in which it would be executed.

41. This amendment allows delegation of the Secretary's powers and functions as an authorised applicant to an officer who is an Executive Level 1 (EL1) officer or above. The scope of this delegation is necessary for practical reasons and will be appropriately limited. SES employees have a broad range of responsibilities and competing priorities and may not readily be able to travel interstate to apply for a monitoring warrant in person. Additionally, a judicial officer reviews the application and decides whether to approve or not, so this is distinct from delegated decisions exercised without any external oversight.

42. These officers will be required to have the relevant training and expertise to carry out the powers and functions of an authorised applicant to enable them to be appointed a delegate of the Secretary for the purposes of section 219UA. For example, experience in a regulatory environment and experience in understanding risk and leading and undertaking monitoring visits.

43. New subsection 219UA(4B) prescribes the powers and functions that will be delegated. These are the powers and functions under Part 2 of the Regulatory Powers Act in relation to the provisions in subsection 219UA(1), which are the following:

•

civil penalty provisions;

•

certain conditions for continued approval listed at paragraph 219UA(1)(b);

•

circumstances relevant to the power to impose an immediate suspension under section 197A; and

•

listed child care information provisions.

44. New subsection 219UA(4C) provides that a person exercising powers or performing functions delegated by the authorised applicant must comply with any directions of the authorised applicant. This provides an additional level of oversight.

45. These amendments will make the application process for monitoring warrants more streamlined, and it will enable the warrants to be used more easily as an important tool in monitoring CCS compliance.

Part 4 – Auditor measures

Division 1 – Amendments

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

Items 16 and 18: Subsection 221(1); After paragraph 221(4)(a)

46. Items 16 and 18 amend the Family Assistance Administration Act to allow delegation of the Secretary's power to engage an expert to carry out an independent audit of a large child care provider.

47. Item 16 amends subsection 221(1) to remove the restriction on the Secretary's ability to delegate this power. Where the Secretary must personally appoint an auditor, this may create delay between the Department identifying an issue and the Department taking action to manage the risks that arise from the issue. This amendment will enable the Department to be more responsive to risks identified when evaluating the financial viability of large child care providers, and reduce the administrative burden on the Secretary.

48. Item 18 amends subsection 221(4) to restrict delegation of the power to appoint an auditor to SES officers. This amendment will increase the efficiency of the auditing process by allowing more than one person to engage an auditor. Streamlining this process will support activities funded through the 2024-25 CCS integrity reforms.

Item 17: Subsection 221(4)

49. Item 17 inserts the additional words, "any of the following provisions" after the word "under" in subsection 221(4). This is a purely grammatical amendment.

Division 2 – Saving provision

Item 19: Saving provision

50. Item 19 is a saving provision that provides that a delegation in force under section 221 of the Family Assistance Administration Act on the day before this item commences continues to be in force on and after the day of commencement as though it was made under the amended section 221.

Part 5 – Direct gap fee collection measures

Division 1 – Amendments

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

Item 20: Subsections 201B(1), (1A) and (1B)

51. Item 20 amends the Family Assistance Administration Act to require gap fees (the amount of CCS session fees paid by families after CCS is deducted) to be collected directly by providers of Family Day Care ('FDC') and In Home Care ('IHC') services. This means that FDC and IHC providers will no longer be able to allow an educator to collect the gap fees on their behalf, unless granted an exception by the Secretary.

52. Providers are currently required to "take all reasonable steps" to ensure that the individual "pays the provider" the gap fee using an electronic funds transfer (EFT) system. The amendment expressly requires providers of FDC and IHC services to ensure that the gap fee payment is made using an EFT system either: directly to the credit of a bank account nominated by the provider and maintained by the provider or a person with management or control of the provider; or using the payment gateway service, nominated by the provider, of a third party supplier of management software to the provider. A provider that uses a payment gateway service to collect gap fees on their behalf may still do so as long as the fees are collected through EFT (unless an exception has been granted). At all times the provider remains responsible for ensuring all reasonable steps are taken to collect gap fees.

53. The amendment also permits other providers to collect gap fee payments from families using the payment gateway service, nominated by the provider, of a third party supplier of management software to the provider. The use of a payment gateway service promotes oversight and transparency with respect to payment of gap fees by providing an efficient, clear and separate audit trail.

54. There is a strong correlation between the collection of gap fees by child care educators in the FDC and IHC service models and the existence of fraud and non-compliance. This amendment will close an identified integrity loophole in the FDC and IHC service models.

55. The amendment will also benefit FDC and IHC service providers by reducing administrative burden for educators and assisting with correctly administering CCS claims. This is because it is a fundamental duty of providers to submit session reports under section 204B of the Family Assistance Administration Act, and those session reports must include information about the fee charged to parents for the session.

56. New subsections 201B(1A) and 201B(1B) provide for an exception to the general obligation in subsection 201B(1) for a provider of a FDC or IHC service to collect gap fees directly from an individual. Section 201B prior to these amendments included an exception to the requirement to pay by EFT if the Secretary is satisfied that circumstances prescribed by the Minister's rules exist in relation to an individual, or if exceptional circumstances apply to a particular child care service.

57. New subsections 201B(1A) and 201B(1B) provide that the Secretary may determine that either or both the EFT and direct payment requirements do not apply. This recognises that where a child care service or individual has been granted an exception to receiving or paying gap fees via EFT, the same service or individual will also be able to receive or pay gap fees via an FDC or IHC educator rather than the individual needing to pay the provider directly.

Division 2 – Application, transitional and saving provisions

Item 21: Saving provisions

58. Item 21 is a saving provision that applies to decisions and directions made by the Secretary under subsections 201B(1A) and 201(1B) before the commencement of this item.

59. Decisions made under subsection 201B(1A) will continue in effect as though the repeal and substitution of subsection 201B(1A) had not happened.

60. A direction by the Secretary under subsection 201(1B) will continue in effect as though the repeal and substitution of subsection 201B(1B) had not happened.

61. The effect of this item is that that existing exceptions to the requirement to pay by EFT under subsections 201B(1A) and (1B) will continue to be in force after the amendments are made, and do not need to be remade by the Secretary.