Slapstick tactics fed $1 billion childcare fraud
Ruben Majok Aleer Aguer. Picture: Kim Smith
Cars were in the driveway and the family daycare investigators heard adult voices inside the Melbourne home, but when they knocked on the door a hush fell over the residence and the blinds were drawn.
As far as fraud goes, it’s not exactly hi-tech. But countless little slapstick moments such as these, which might best be scored by Benny Hill theme music, underpinned the blockbuster $1 billion-plus rip-off of the family daycare sector.
The men who drew the blinds were phoned by Victorian staff. There was no answer. In the world of family daycare, the educators are employed by the approved provider and, in this case, the boss made various excuses.
The carer was sick; required to attend a family funeral; had to travel to Sydney to care for a sick relative; or even attend court.
On these days, however, commonwealth records show that the carers still claimed the Child Care Benefit. The federal government piped money directly to daycare providers — as it had always done — but some time after the introduction of Labor’s National Quality Framework providers realised they could just lie about which kids they were looking after and who was looking after them. Soon, they figured out, you didn’t even need the kids at all. The lowest overheads, zero headcount.
State authorities recall asking for the last name of the children supposedly in the care of an educator, only to be met with silence, reminiscent of the Simpsons scene in which Homer attempts to impersonate Mr Burns. When he is asked for his first name, he twirls a fake moustache and says: “I ... don’t know.’’
The Australian revealedthis week the case of Ruben Majok Aleer Aguer, who received $1.6 million in taxpayer money to run a network of family childcare educators looking after up to 74 children. In a farcical game of cat and mouse that lasted 16 months, Mr Aguer led the monitoring authority, the ACT government, on a bizarre chase of excuses, delayed inspections and 13 site visits, during which no child was ever confirmed to be in his care.
In the local tribunal, Mr Aguer was unable to furnish evidence that he had contracts with the educators he said he employed. Mohammad and Ibrahim Omar, two young brothers in Sydney’s Lakemba, had their network of 600 educators shut down when two of their employees were raided by the Australian Federal Police and charged with offences relating to fraud.
The ongoing investigation is looking at whether some of the $27m administered through the NSW Family Day Care Scheme went to Islamic State.
The Weekend Australian is not saying that any money went to Islamic State from those named in this story.
Victoria’s Families and Children Minister, Jenny Mikakos, said the cases revealed so far were “just the top of the iceberg”.
“The family daycare sector has all the hallmarks of the same problems as the VET system ... which is why I’m calling for an independent review,” Ms Mikakos said. “Lured by commonwealth subsidies, fraudulent providers are destroying the reputations of hardworking carers to the detriment of Victorian children.”
The national childcare standards were pushed through in 2012 by then childcare minister Kate Ellis. Towards the end of the government’s term, Ms Ellis began getting intelligence that something was going seriously wrong.
The NQF coincided with a dramatic escalation in the growth of family daycare — 62 per cent in the years since — compared with 7 per cent of higher-cost long daycare centres in fixed locations.
Correlation, however, is not causation. Nobody can offer totally plausible arguments for or against the NQF’s role in the explosion. Education Minister Simon Birmingham half-heartedly denied linking the corruption to the NQF on radio this week. Senator Birmingham, who has done much to frustrate fraud at the federal level, saving about $1bn over the forward estimates, is stung by continued chatter about the scale of what went wrong, though he concedes more can be done.
“The facts and figures from public reports over the years have been repeated in the media again this week and call attention to the loopholes and flaws that have existed; loopholes and flaws that the Coalition has actively been closing since 2013,” he said.
“We’ve been closing those loopholes as quickly as we find them but we are partners in this process and it is up to the states and territories to fulfil their responsibilities as the level of government primarily responsible for regulating childcare providers to ensure quality and compliance.”
The Australian’srevelations began with leaked documents from the September 23 education ministers council. The agenda paper is clear, pointing out the interaction between two competing sets of legislation — the federal one that governs family assistance law and the co-regulatory national law which addresses quality — “appears to be an area where FDC operators seek to find loopholes in the early childhood education and care system”.
“Unscrupulous operators are becoming increasingly adept at finding new ways to operate within the current quality and funding frameworks and these are serious issues that will require the co-operation of all governments and must be addressed in a timely way,” it says.
That interaction between two laws is important because, under the national law, it is not considered a compliance issue if a registered childcare provider does not have in their care any children during random checks. The legislation is preoccupied with what happens to children when they are in care but silent on the fate of kids who evidently do not exist in the family daycare system.
In any case, the federal government is blaming the state and territory jurisdictions for dragging the chain on compliance checks. During negotiations for the NQF, the states agreed to run assessments, hold interviews for new providers and make sure they were not breaching the law. They did so, however, assuming growth would be manageable.
The Productivity Commission noted in its 2011 report into potential workforce issues in the sector that the number of family daycare providers had been declining in the years to 2010. While its final report found that price rises in the sector might limit growth, there were caveats. “In cases where families view FDC and LDC as substitute services, if LDC fees increase at a faster rate than those for FDC, demand for FDC services and qualified FDC staff would be expected to increase,” it says.
In Victoria alone, these services grew by 303 per cent, the vast majority being for-profit providers who “squeezed out” non-profit operators. In 2011, about one-quarter of services were delivered from ethnic communities. By 2014, this had become about 40 per cent. The biggest subsets in this group were those who spoke Arabic and Dinka, the major language group of South Sudan.
A senior figure with knowledge of the FDC policy believes word about potential “workarounds” in the system spread fastest in these communities.
Ms Ellis said “alarm bells have been ringing” for the past three years, adding that the government should have acted sooner.
“Three Liberal ministers have announced crackdowns, but it’s clear that still hasn’t worked,” she said. “We have consistently said we would work with the government on changes that might help stamp out rorting and fraud.”
