Two home-based childcare businesses have been caught overcharging the Government for thousands of dollars of taxpayer subsidies.
Oak Tree Care and Lighthouse At-Home, both in Auckland, were each found to be claiming more than they were entitled to after the Ministry of Education placed them under strict monitoring this year.
Lighthouse had to pay back $15,000, while Oak Tree faced a bill from the Government of more than $200,000. Neither business will be prosecuted as their activities did not meet a criminal threshold.
However, both services are now on a shorter funding cycle and will no longer be paid in advance.
The ministry has also declined a number of new applications for more childcare licences lodged by Oak Tree, and one fresh application for a licence by Lighthouse At-Home was also turned down.
Lighthouse defended the overcharging, saying it was a human error and made up only 0.3 per cent of its funding provision. Oak Tree said it had made the mistake of employing educators without a work visa, which it now realised was a mistake. The money has been paid back.
Previous audits have shown that overclaiming usually occurs because providers do not understand the funding rules.
However, some services also deliberately falsify numbers. The ministry confirmed there had been cases where providers enrolled children twice but under different names. The Herald understands there have also been cases where providers start charging for babies before their birth.
Details of the overcharging were revealed as part of an ongoing Herald investigation into the home-based early childhood education sector.
The numbers of children enrolling in at-home care continue to rise. Figures show the sharpest growth has been in the number of children - now 25,000 - in the care of services that do not have to have qualified carers despite receiving tax subsidies for "education".
Unqualified carers include nannies, au pairs and grandparents, whom providers are actively recruiting with online and radio advertising.
Unqualified carers can bring in as much as $9 an hour per child in taxpayer funding.
Despite widespread concern about the number of unqualified staff in the sector, home-based providers have told the Herald they believe qualifications do not necessarily make for better educators. One - Au Pair Link - said its three-day training and mentoring produced educators as good as those with a degree. Lighthouse said: "While we fully support formal study and training, Lighthouse believes qualification certification is not the only validation of someone's contribution to a child's learning."
Its statement said the focus was always on what was best for the child, "and grandparents are, for very young children where the quality of care is paramount, and it is often detrimental for very young children to be in a centre".
Former Labour Education Minister Trevor Mallard, the architect of the 20-hours-free policy that provides the bulk of the subsidies, said it was never intended to support unqualified care.
He said it was always meant to go hand-in-hand with a shift towards a 100 per cent qualified workforce.
The National Government has amended that goal, instead choosing to focus on the number of children participating, rather than ensuring all teachers are fully trained.
Teaching at home
•Home-based early childhood education involves groups of up to four children with an educator.
•Up to 20 educators, and 80 children, are supervised by a co-ordinator (a qualified ECE teacher) who must check in once a week and visit once a month.
•There are two types of home-based ECE: quality and standard. Quality means all educators need at least a Level 3 qualification. Standard means no qualification is required.
•All educators must deliver the Te Whariki curriculum and be police-vetted.