By BEST Childcare Consulting
The Australian Federal Government has taken a major step to strengthen safety and quality across the early childhood education and care (ECEC) sector. Under new legislation, the Department of Education now has expanded powers to suspend, impose conditions, or even cut Child Care Subsidy (CCS) funding for providers that fail to meet required standards.
This change is designed to ensure that every child receives education and care in a safe, high-quality environment — and that families can have confidence in the services they choose. For providers, it signals a clear expectation: compliance with the National Quality Framework (NQF) and Family Assistance Law is non-negotiable, and services must be able to demonstrate ongoing commitment to safety, governance, and continuous improvement.
Staying ahead of these changes is not just about avoiding penalties — it’s about protecting children, safeguarding your service’s reputation, and showing families that your organisation leads with integrity and quality.
Key Purpose
- These guidelines explain how the Australian Department of Education will use new powers from the Early Childhood Education and Care (Strengthening Regulation) Act 2025 to ensure early childhood education and care (ECEC) services remain safe and of high quality.
- The measures focus especially on applying conditions to, suspending, cancelling, or refusing access to the Child Care Subsidy (CCS) where there are risks to child safety.
What powers are introduced / strengthened
- Powers to suspend or cancel CCS approvals if safety or quality standards are not met.
- Ability to refuse new CCS service applications.
- Imposition of conditions on approvals (e.g. requiring safety improvements within a timeframe, or limiting expansion) when risks are identified.
- Expanded powers of entry: authorised officers can make unannounced visits or spot-checks to services to check safety and correct administration of CCS.
- Powers to publicise certain compliance actions taken against providers for transparency.
When these powers may be used
- The Department will use them in partnership with State and Territory Regulatory Authorities (STRAs).
- The enforcement will be proportionate: higher risk or serious failures will get stronger action; more moderate issues may result in conditional or less severe responses.
- Considerations include: the provider’s past and present performance, improvement over time, previous ratings/assessments, serious incidents or complaints, compliance with CCS rules.
Guidance for providers – self-assessment
- There’s a self-assessment tool (Table A) so providers can check how they fare against risk factors for compliance action. Department of Education
- Performance levels in the tool are grouped into three tiers:
- Performing well — meeting standards, proactively improving and responding to issues.
- Of concern — repeated or ongoing issues; efforts to improve might be slower or incomplete.
- Falling short — serious, persistent failures; lack of action or improvement.
- Key areas assessed include:
- Commitment to safety and quality (e.g. meeting National Quality Standards, leadership, planning)
- Improvement in NQS (National Quality Standard) ratings over time
- Past/current ratings and whether any imposed conditions have been addressed
- Incidents, complaints, breaches of safety laws
- Compliance with CCS rules (financial and administrative compliance)
Legal & Regulatory Context
- Links to Family Assistance Law (FAL), which governs the CCS and ACCS (Additional Child Care Subsidy) — provider obligations, subsidy rules, accountability.
- Also under the National Quality Framework (NQF) and associated state/territory regulatory authorities — these govern safety and quality standards.
- Providers must comply both with the FAL and National Law.
Financial Integrity
- The guidelines tie into the department’s Child Care Subsidy Financial Integrity Strategy, which aims to detect and address risks of financial misuse or non-compliance in the CCS system.
- A “Compliance pyramid” describes escalating responses depending on severity, frequency and persistence of non-compliance.
Key Provider Obligations
- Compliance with Family Assistance Law (FAL)
- Correct enrolments and attendance reporting
- Accurate session reports for CCS payments
- Preventing fraud or misuse of funds
- Safety & Quality Obligations under the NQF
- Meet National Quality Standards (NQS) in all 7 Quality Areas
- Promptly address compliance breaches, incidents, or complaints
- Ensure staff qualifications, ratios, and supervision requirements are always met
- Continuous Improvement
- Demonstrate that you are proactively improving service quality
- Show progress through QIP updates and improved A&R (Assessment & Rating) results
- Cooperation with Regulators
- Respond to Department of Education and Regulatory Authority requests quickly
- Provide accurate information during investigations or audits
- Record Keeping & Evidence
- Maintain clear, accessible records for at least the minimum legal period
- Be ready to produce them during an unannounced visit
Key Changes Providers Need to Make
1. Strengthened CCS Compliance
- Prepare for new conditions on CCS approval – The Department can impose conditions if risks are identified (e.g. safety plans, compliance action plans, reporting requirements).
- Be ready for suspension or cancellation – if a service poses a risk to child safety, breaches Family Assistance Law (FAL), or repeatedly fails to improve.
- New refusal powers – the Department can refuse new CCS service applications where there are concerns about a provider’s compliance history or risk profile.
2. Documentation & Self-Assessment
- Use the new Provider Self-Assessment Tool (Table A) to review performance across risk categories.
- Maintain evidence of improvement – track and record actions taken to meet NQS and CCS requirements.
- Strengthen internal governance – ensure management systems can quickly respond to compliance actions or imposed conditions.
3. Be Inspection-Ready
- Unannounced visits and spot checks may be more frequent – review your procedures, policies and physical environment so you are always compliant.
- Documented QIP (Quality Improvement Plan) must be current, accessible and show evidence of ongoing progress.
4. Transparency & Public Accountability
- Be aware that some compliance actions may be published (naming services or providers). This means reputational risk is higher – staying compliant protects your service’s reputation.
Provider Self-Assessment Tool Instructions for Use
- Step 1: Work through each risk category every quarter (or after major incidents/assessments).
- Step 2: Rate your current performance level (✔).
- Step 3: Record evidence to support your rating (attach or link documents).
- Step 4: Identify actions to reduce risk and set target completion dates.
- Step 5: Review progress with leadership team and update your QIP.
Integration embedded into Practice
- Embed in QIP: Attach completed reviews as evidence of ongoing critical reflection (QA7, Exceeding Theme 2).
- Discuss in Team Meetings: Use results to inform staff training priorities and policy reviews.
- Track Over Time: Compare ratings each quarter to show continuous improvement.
BEST Childcare Consulting
At BEST Childcare Consulting, we partner with early learning services to turn regulatory changes into opportunities for growth. We make it easier to stay compliant, protect children, and demonstrate high-quality practice that families trust.
Reach out today to find out how we can help your service stay ahead of the new compliance requirements and showcase your commitment to excellence.
