The Importance of Compliance

by Mick Ogrizek

August 14

The views expressed by contributors are their own and not the view of The Sector.

What is Compliance?

According to the International Compliance Association, compliance describes “the ability to act according to an order, set of rules or request.” 

 

Compliance, in the context of education and care services, is abiding by the requirements of the Education and Care Services National Law and Regulations (National Law). This refers to the responsibility of approved providers, nominated supervisors, and educators, to comply with the specific requirements of the National Law and Regulations that apply to them. 

 

Regulatory Authorities have a key role in ensuring compliance. Under Section 260(c), National Law, they have the function to monitor and enforce compliance with the National Law.

 

Why is Compliance Important?

 

Complying with the requirements of the National Law and Regulations is important for a number of reasons:

 

  • To ensure the safety, health and wellbeing of children.
  • To improve the educational and developmental outcomes for children.

 

The points above are both key objectives of the National Quality Framework (NQF) (see section 3(2), National Law). Greater rates of  compliance are important not only for children’s outcomes,  but also for reducing the demands on Regulatory Authorities’ scarce resources so that they can do much more proactive work, such as monitoring and supporting the sector. 

 

However, I should clarify that compliance within the context of some regulatory requirements is more important than with others. For instance, not all breaches (non-compliances) represent a risk to children’s health, safety or wellbeing.

 

My recent article for The Sector touched on reducing the red tape around childcare. The main reason I believe that red tape needs to be reduced in any regulatory field, not just early childhood education and care (ECEC) is to enhance and support compliance. 

Regulatory requirements which are unnecessary, complex, ambiguous, confusing or vague, undermine compliance. It is difficult for those subject to regulation to comply with responsibilities which are not clear and accessible. 

For me, the principle underpinning the objective of red tape reduction is simple: get rid of unnecessary or ineffective regulation to make it easier for those subject to regulation to comply with the regulations in order to better support the objectives of those regulations. 

 

Is Compliance an Issue?

 

Evidence points to compliance remaining an issue in education and care services as we have seen many reports of some very disturbing incidents occurring at services.

 

Of particular concern is the frequency in which children have left services unsupervised. The available statistics in relation to confirmed breaches (non-compliances) of the National Law supports this observation.

According to the Report on Government Services 2019 (ROGS Report) , nationally in 2017-18, there were 125.7 confirmed breaches per 100 services (up from last year’s 97.9), with the highest rates being for family day care (295.9 breaches per 100 services, down from 306.7 last year.) and long day care (155.3 breaches per 100 services, up from 115.2 last year). This represented a total of 19,808 breaches nationwide. 

ACECQA’s National Partnership Annual Performance Report, published in December 2018 provides more information on the nature of the breaches. 

 

In 2017-18 50 per cent of confirmed breaches under the National Law related to breaches of sections 165 (Offence to inadequately supervise children) and 167 (Offence relating to protection of children from harm and hazards). The most breached National Regulations related to regulation 97 (Emergency and evacuation procedures) and regulation 103 (Premises, furniture and equipment to be safe, clean and in good repair), both at 10 per cent.

 

Particularly concerning is the number of serious incidents (as defined in regulation 12 of the National Regulations) reported by services. Nationally, there were 97.9 serious incidents per 100 NQF services, with a total of 15,435 serious incidents having occurred in 2017-18.

 

This is down from last year when the figures were 99.3 serious incidents per 100 NQF service, but with slightly less serious incidents at 15,432. It should be remembered that there were 15,763 services nationwide at the time. Again, the ACECQA National Partnership Annual Performance Report provides further specifics. 

 

In 2017-18, 81.3 per cent of reported serious incidents were in relation to injury, illness or trauma to children. But more significantly, 8.3 per cent of incidents related to a child missing or unaccounted for, child locked in or out of the service, or child taken away or removed. 

This amounts to 1,019 such incidents occurring in a year, which means at least three of these types of incident, which directly relate to the safety of children, occur on average every day.

By way of balance, ACECQA in its National Partnership Annual Performance Report, provides an explanation as to the rate of breaches and serious incidents. These include multiple breaches from one incident, under/over reporting, number of children in services (13,000), and increased compliance activity by Regulatory Authorities.

 

However, I believe without more accurate data and/or further research some of these explanations are speculative and some of them represent a failure in compliance itself.

 

Why Compliance may be an issue

Some of the major causes, in my opinion, for such a change in the compliance record may be because many Regulatory Authorities have: 

 

  • prioritised the assessment and rating process over compliance activities.
  • had to deal with challenging issues in relation to Family Day Care licensing and enforcement, in response to the rate and scope of noncompliance.

 

However, there are areas in which compliance activity could be enhanced, which I outline below.

Consistent Recording of Compliance Data

 

At present jurisdictions have their own separate approaches to recording non-compliances. According to the ROGS Report, “Confirmed breaches data should be interpreted with caution as jurisdictions operate different regulatory and compliance systems. A high number of breaches may not necessarily indicate a lower quality of services, but may indicate more intensive regulatory practice (for example, more frequent regulatory visits or a higher propensity to investigate complaints)

 

Data are not comparable across jurisdictions due to differences in administrative and reporting procedures. For example, similar incidents may be investigated and entered into the NQA ITS as a breach in one jurisdiction but referred for administrative action without being recorded a breach in another.” 

Therefore, we do not have consistent and comprehensive data to inform compliance activity as each jurisdiction is ‘doing its own thing.’

This makes accurate assessments about the effectiveness of compliance improvement measures difficult to assess and to consequently develop a compliance strategy that works for the sector nationally. Common approaches to recording breaches would help address this issue and enhance compliance.

 

National Approach to Addressing Non-Compliances

 

It is not surprising that jurisdictions also have different approaches to addressing non-compliances. The ROGS Report shows that the proportion of breaches resulting in action being taken by Regulatory Authorities varies wildly across jurisdiction. 

 

This is primarily because what is regarded as “action” taken varies by jurisdiction. For instance, in Victoria action was taken in 25.5 per cent of cases, whereas in South Australia, 97.7 per cent of breaches were addressed. 

 

The ROGS report warns that in relation to this data, actions can range from administrative actions (such as correspondence, a phone call or meeting with the service provider) through to licensing action or prosecution and that care should be taken when comparing data across jurisdictions due to differences in administrative and reporting procedures (including actions which may or may not be included as reportable actions). 

 

While each jurisdiction has some form of regulatory and enforcement policy  it is not consistent across jurisdictions, with some jurisdictions taking a “risk based” approach and/or basing their compliance activities on the concept of “earned autonomy”. 

 

Many of these policies reflect the good practice principles of responsive regulation. However, in practice many jurisdictions take a very light handed approach to compliance, with the major exception of Western Australia

 

This is indicated by the few enforcement activities undertaken (particularly prosecutions) or at least that are published . This approach to compliance is best summarised by the phrase (used in Responsive Regulation: Transcending the Deregulation Debate by I. Ayres and J. Braithwaite): “talk softly but carry a big stick”. 

 

Compliance could be improved by adopting a consistent compliance and enforcement approach across all jurisdictions that reflects good regulatory practice as outlined in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry’s findings

 

Although the Royal Commission looked at misconduct in a sector other than ECEC, the findings spoke to the dangers of not following through to the full extent of the legislation, and not making others in the sector aware of the consequences which may occur as a result of failing to adhere to the legislation, regulation and laws of the sector. 

 

“All of these considerations show that improving compliance with financial services laws cannot be achieved by focusing only on negotiation and persuasion. Compliance with the law is not a matter of choice. The law is, in that sense, coercive and its coercive character can be neither hidden nor ignored. 

 

Negotiation and persuasion, without enforcement, all too readily leads to the perception that compliance is voluntary. It is not. All financial services entities must obey the law, not just those who are willing to do so. And all financial services entities must comply with all the laws that apply to them, not just with those bits of the law that they find to be commercially acceptable. (pp.424-5).

 

Breach of the law carries consequences. Parliament, not the regulators, sets the law and the consequences. There are cases where there is good public reason not to seek those consequences. Prosecution policies have always recognised that there may be good public reasons not to pursue a particular case. But the starting point for consideration is, and must always be, that the law is to be obeyed and enforced. 

 

The regulatory pyramid [i.e. responsive regulation] to which so much reference has been made in evidence and submissions, reflects two very practical observations: not all contraventions of law are of equal significance; and regulators do not have unlimited time or resources. But it is wholly consistent with the analyses that are expressed by the metaphor of the regulatory pyramid, that serious breaches of law by large entities call for the highest level of regulatory response. And that is what has been missing. (pp.432-3)

 

This approach could be supported by nationally consistent compliance and investigation training for Regulatory Authority’s Authorised Officers, as is the case with the assessment and rating process.

 

Consistent Education and Information Provision

 

A key aspect of the principle of responsive regulation is that information and education be consistently provided to those regulated (However, currently many jurisdictions undertake their own (or no) education activities for approved providers, services, and educators, and publish their own separate, information for services through practice notes, fact sheets and/or policies. 

 

ACECQA’s The Guide to the National Quality Framework (NQF) should be the only source of guidance on the application and interpretation of the NQF. 

 

Conclusion

 

Compliance is a very important and complex issue which requires just as much attention and resources as the assessment and rating process. 

 

As outlined, I think the sector has an issue with compliance that ACECQA and many Regulatory Authorities have neglected. Based on the available data, many of these compliance issues relate to “high end” non-compliances related to the health, safety and wellbeing of children. 

 

There are a number of ways to address this issue, most of which involve taking a more nationally consistent approach to compliance that reflects the principles of good regulatory practice, which means wielding ‘the big stick’ when necessary.

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