Department vows changes to oversight of $13.6 billion child-care subsidy after audit criticism

The Australian National Audit Office (ANAO) has delivered a critical report on the Department of Education’s management of the $13.6 b Child Care Subsidy (CCS), prompting the department to commit to immediate improvements in oversight, compliance, and fraud prevention.

What the audit found

The ANAO’s review identified significant weaknesses in the current CCS monitoring system, noting that the subsidy has rapidly become one of the government’s largest payments second only to aged care and the NDIS. The department’s processes for detecting overpayments and fraud were deemed insufficient and lacked a streamlined, proactive data-driven framework.

Government responds with stronger compliance measures

In response, the Department has pledged to enhance cross‑agency collaboration, upgrade data analytics capabilities, and implement more comprehensive auditing. 

The objective is to detect anomalies and suspicious claims early and swiftly, thereby safeguarding both taxpayers and the integrity of child-care services.

These reforms are expected to bolster public confidence in the CCS and ensure funds are appropriately directed to support families, especially those accessing early childhood education and care (ECEC).

Implications for early childhood providers

ECEC services should anticipate:

• Stricter audits and compliance reviews as part of a tighter CCS regime
• Increased use of data matching and analytics to detect irregularities
• Clearer monitoring of provider fee structures and attendance reporting

To prepare, providers are advised to:

1. Review and update internal policies for attendance tracking and fee discount disclosures
2. Stay informed about upcoming regulatory changes and CCS compliance updates
3. Ensure accurate record-keeping, particularly concerning family claims and actual attendances

Expect further announcements from the Department of Education and Services Australia detailing new systems and compliance protocols. The CCS’s position as a critical component of Australia’s early childhood system supports over 1.3 million children, so maintaining its integrity and preventing misuse is a sector-wide priority.