Day Care Fraud: Dodgy Sydney Providers ‘Hung Out to Dry’ on New Register

Dozens of dodgy childcare providers across Sydney have been named and shamed on a new public register as part of the Turnbull government’s crackdown on fraud in the notorious day care sector.

The hit list shows 59 shonky operators in NSW have had their federal funding cancelled or suspended since July 2016 – accounting for a third of the 179 centres pinged across Australia.

The loss of Commonwealth subsidies does not automatically shut down a childcare centre – that is generally a matter for the states – but it makes it very difficult for the facility to operate.

For the first time, the federal government has named and shamed offenders on a public register, released overnight, which showed the shysters were concentrated in Sydney’s south-west.

There were seven centres to lose funding in both Bankstown and Liverpool, and a further six in Lakemba, including Play School Family Day Care, whose operator was jailed for fraud.

In the high-profile case, Hussain Dandachi pleaded guilty to defrauding the Commonwealth of nearly $110,000. His passport had reportedly been confiscated after authorities suspected he was trying to fly to the Middle East and join Islamic State.

Typically, the scams work by childcare providers claiming subsidies for extra children, or claiming money for hours they didn’t work. The family day care sector primarily consists of small, at-home operators looking after four to six children at a time.

Education Minister Simon Birmingham said the register was published as a warning to non-compliant childcare centres that they will be “hung out to dry” by the Turnbull government.

“Those who go down the wrong path should be held to account for their actions,” he said. “This is about making sure the track record of child care providers is crystal clear to families.”

Along with the states, Canberra has ramped up monitoring of unscrupulous day care practices through a dedicated taskforce, saving an estimated $1.8 billion since 2014 through compliance checks.

Nonetheless, 38 operators (including 11 in NSW) were pinged in the most recent reporting period – between July and September last year – showing the rorting has continued.

Since July 2016, 13 Sydney centres received immediate suspensions of their subsidies – which apply if the centre is breaking the law, if there is an imminent threat to children’s health and safety, or in “urgent circumstances”. No centre to lose its government subsidy has had it reinstated.

Other Sydney hot spots included Punchbowl and the area between Fairfield and Parramatta. Across the country, 179 operators have been sanctioned including 75 in Victoria, 21 in Queensland, 10 in South Australia and five in the ACT.

Senator Birmingham has described the family day care sector as a “hotbed for shonks and rorters”, though he noted on Friday that the “overwhelming majority” of providers were legitimate.

Dandachi, the operator who pleaded guilty to fraud, was originally sentenced to 10 months’ jail. The childcare empire he was part of, owned by Sydney brothers Mohammad and Ibrahim Omar, had raked in $27 million in federal subsidies over four years.

The Victorian state government on Friday announced it had shut down four childcare centres in 2017, conducted 1200 investigations and banned 16 people from the industry as part of an ongoing crackdown. Four out of five of those cases were in the family day sector.

The Compliance Action Register will be updated every three monthsand is published by the federal Department of Education.