Debt in the Child Care Sector - CareforKids.com.au®

Debt in the Child Care Sector
Have you had to deal with unpaid fees?

Increasing reports of child care services calling in debt collectors to chase parents for fees have industry professionals calling on the Government to change the system.

A growing number of parents are racking up debts with child care services and receiving the child care rebate then changing to a different service provider without ever paying.

The CCMS requires child care providers to report on a child’s attendance and the fees being charged but does not give providers an opportunity to say whether or not the fees have actually been paid.

Speaking to the Sunday Telegraph Lyn Connolly of the Australian Childcare Alliance said the government was enabling the profiteering by paying parents the rebate without finding out whether or not they have paid their fees.

"Parents are going from centre to centre skipping out on their debt and still getting the rebate, leaving the child care centre in the soup," she said.

"This is a major concern and it's getting worse. Families can do it because there are vacancies in many areas and centre owners trust that people will do the right thing."

From July, parents will be able to choose to have the rebate paid directly to their child care centre but Ms Connolly said this would need to be mandatory to have a positive effect.

"Parents can still choose to have the money paid into their bank account so the problem will persist," she said.

"The Government is wasting taxpayers' money that is allocated to help families offset child care costs but is being spent on who knows what.

"The genuine parents are suffering because of the parents who aren't doing the right thing - because when a centre has bad debts they have to increase the fees for everyone else to stay viable," said Ms Connolly.

Unpaid child care debts have increased by about 15 per cent in the last 12 months, says the chief executive of debt collection agency Prushka Mr Roger Mendelson.

Prushka chases debts of between $500 and $2000 for child care centres across the country, but only a quarter of them are ever recovered says Mr Mendelson.

"If they don't have a house or a job there's not much you can do, legally you can sue them but commercially, it's not worth it."

According to the President of the Australian Childcare Alliance Ms Gwynn Bridge the problem will worsen from 1 July when parents will be able to choose to have their rebate deducted weekly or fortnightly from their child care bills or sent to them every quarter or annually.

"It's not a healthy system when parents can get paid for not paying their bills. We would prefer to see the rebate just taken directly off the childcare fees in all instances. By the time families [receive the rebate] after three months, they don't see it as a child care payment," said Ms Bridge.

Have you had to deal with unpaid debts in your service?

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