How Labor's new bill to strip unsafe childcare centres of funding would work

Australia Broadcast Center

3 days ago

A proposal to strip childcare centres of federal funding has been introduced to parliament.
It is one of the re-elected Albanese government's first items of legislation, accelerated in the wake of the shocking allegations against former childcare worker Joshua Brown.
It could lead to the effective forced closure of childcare centres that cannot guarantee child safety. Here's how that would work.
Like many sectors in Australia, responsibility for child care is split between federal and state governments.
States are largely responsible for monitoring the quality and safety of centres, which are mostly run by for-profit companies and not-for-profit organisations.
But the federal government provides the money via parents, in the form of the Child Care Subsidy — effectively a "voucher" parents can use on accredited providers.
This bill does not propose a federal takeover of quality or safety regulation — that will continue to be done by state auditors in line with their own existing rules.
But it does give the secretary of the Department of Education broad discretion to deny or revoke subsidy eligibility from providers if they fall short. Given the centres' business model relies on receiving the subsidy, that would effectively force them to close. For large providers, it could also prevent them from adding new centres.
In making such a decision, the legislation would allow the secretary to consider past and present assessments from the states, including whether they meet national quality standards or are graded as "working towards" them.
The secretary can also consider any serious incidents or allegations, complaints, or anything else deemed relevant. The legislation sets out a process involving warnings and infringement notices, leading up to suspension of funding.
A similar process already exists to strip funding from centres for reasons like fraud, but not for quality and safety — although state regulators can currently shut centres when there are serious threats.
The bill leaves significant room for discretion and does not detail the thresholds the secretary must use to make a decision or directly define circumstances where funding must be revoked.
It does not specify whether multiple breaches or just one breach are required, and in fact leaves open the possibility a centre could be denied funding on the basis of potential harms rather than past breaches.
Education Minister Jason Clare told the ABC's News Breakfast his intention was to focus on centres "that are repeatedly failing to meet [the] minimum standards" and that withholding funding would have significant consequences for non-compliant centres, but also said an action "could be as simple as one" breach.
"It is the biggest weapon that we have got to wield here," he said.
"Taxpayers provide about $16 billion to childcare centres every year. That represents about 70 per cent of the funding to run a centre … They cannot operate without [subsidies]."
The bill also gives the secretary of education greater powers to order spot checks and unscheduled visits to childcare centres.
Consistent with their current role, federal auditors visiting sites will focus on fraud rather than quality or safety, which remains the purview of state regulators, but the federal auditors will be able to pass on to the states any safety concerns they observe.
Mr Clare said Labor had been working "really professionally and constructively" with the opposition and had also briefed the Greens, signalling hope for broad co-operation to pass the legislation.