VIDEO: Questions raised about the management of disability support program

KIERA HANNIGAN:  It just completely blew me out of the water. 

NAS CAMPANELLA, REPORTER: More than a billion dollars.

GEOFFREY WATSON, SC, CENTRE FOR PUBLIC INTEGRITY:  This is an avoidable conflict of interest. 

NAS CAMPANELLA:  Meant to be giving kids with disability a head start.

GEOFFREY WATSON:  In my experience, this is right off the scale. 

NAS CAMPANELLA:  But is it working?

BARBARA POCOCK:  It's our kids and our kids with disability who are missing out. 

KIERA HANNIGAN: Annabelle is four. She's my third child. She is a happy little girl. 

NAS CAMPANELLA:  Annabelle Holland spends a lot of time with adults – her parents, grandparents, and many therapists.

KIERA HANNIGAN:  It was just so important for Annabelle that she gets an experience to socialise with other little people of a similar age group.

NAS CAMPANELLA:  Keira Hannigan’s older children had attended an early learning centre in southeast Melbourne, but she was worried about sending Annabelle there unless she could get extra support. 

Then the centre told her a federal government program could make that possible.

KIERA HANNIGAN:  It was a massive relief to know that the funding had been approved, that the service was going to have an additional educator in the room when Annabelle attended the service.

NAS CAMPANELLA:  Thanks to funding supplied by the Inclusion Support Program, Annabelle joined the junior room in 2023 and thrived.

KIERA HANNIGAN:  It's so sweet to know that she's just got a couple of little children there who are interested and know who she is and they're excited to see her. 

NAS CAMPANELLA:  Annabelle’s rare genetic condition means she needs assistance to move about and understand what’s around her. 

PING QUAN, CHILDCARE DIRECTOR:  To make that meaningful interaction with her peers, it's very important for another educator to be around to explain to her what's happening right now.

NAS CAMPANELLA:  Since 2016, the Inclusion Support Program has helped early childhood education and care centres address barriers to including children with disability.

It currently supports more than 23,000 kids with disability by paying for additional educators, providing specialist equipment and supporting staff training. 

The idea is that all children benefit from early education and should have access to it.

So, Keira was shocked when Annabelle’s funding was withdrawn earlier this year.

KIERA HANNIGAN:  I was absolutely furious, bewildered, sad.

NAS CAMPANELLA:  She was told Annabelle’s funding was approved on the condition she move to a more senior room alongside her peers at the end of last year.

When Annabelle didn’t move rooms, the funding was pulled even though her therapists explained she wasn’t ready yet. 

KIERA HANNIGAN: Despite my talking to every single level of possible person, they just didn't seem to understand, and I thought I was going a bit mad.

NAS CAMPANELLA:  When Keira asked for the decision to be reviewed, she was told that wasn’t possible and that:

“During January there has been a significant tightening of funding available through our program due to higher level fiscal Government constraints."

Instead, the childcare centre agreed to continue funding the additional worker itself. 

But Annabelle’s mother began questioning whether the program was meeting its objectives. Which led her to contact me – a reporter specialising in disability affairs. 

Many of the documents related to the program aren’t accessible for people who are blind like me, so, I’ve teamed up with my colleague, Mary Lloyd.

MARY LLOYD, REPORTER: The structure of the program is quite complicated. 

The Federal Department of Education oversees the scheme but has contracted the running of it to private operators.

The main one, is KU Children’s Services, a not-for-profit that runs childcare centres across the east coast of Australia.

NAS CAMPANELLA:  What do we know about where the money is going? 

MARY LLOYD:  This is what the government has told us about the program’s budget and spending.

The Government sets aside $133 million each year for the program. It says demand for inclusion services has grown by 81 per cent over the past five years so in recent years, it’s provided at least an extra $137 million to the program. 

Which left us wondering why parents were being told their children couldn’t get support because of ‘a significant tightening of funding.’

KIERA HANNIGAN:  I just really question the people who are making the decisions and the processes that are in place. 

MARY LLOYD:  To ensure that government spending is transparent, it should be publicly reported online.

Now I found one stream of inclusion support funding and it is all itemised on GrantConnect.

But the money that is being used for additional educators – so that is about $560 million over eight years – that’s only recorded as one grant, paid directly to KU Children’s Services and there is no detail of how that money was disbursed or how it was being spent.

The lack of transparency raised important questions about the program, so we turned to public integrity expert, Geoffrey Watson.   

NAS CAMPANELLA:  When it comes to public money, what are the basic principles used to guide how money should be spent?

GEOFFREY WATSON: Transparency is absolutely critical. Confidence in the scheme comes from transparency.

Could the way in which it's spent be improved? There's no point giving money where it won't be used effectively.

MARY LLOYD:  This is what we know about how the program is running. 

When the government set up the scheme in 2016, it sought a private operator to process funding applications. KU Children’s Services won that tender.

It also set up inclusion agencies in each state and territory to help daycare centres apply for funds and develop inclusive practices. Various not-for-profits were awarded those contracts.

KU was chosen as the lead agency in New South Wales and the ACT, and Queensland. 

In Victoria, KU is not the lead agency but works alongside them meaning KU assesses funding applications nationally while also working with various childcare operators to put applications together.

GEOFFREY WATSON:  It's a very messy, very messy design, one which is putting in place some obvious potential for conflicts of interest. 

When you get a complicated scheme, you get high administration costs, you get other inefficiencies.

MARY LLOYD:  To mitigate any conflict of interest up until August 2023 if KU-owned childcare centres applied for funding, those applications were assessed by a different company, called Big Fat Smile.

Now 7.30 has discovered that Big Fat Smile was contracted directly to Ku Children’s Services to carry out that work. 

GEOFFREY WATSON: That's ridiculous. It's a complex of conflicts of interest. That's just wrong.

I'm afraid this thing needs to be taken apart, examined and rebuilt. It's not functional under this. 

MARY LLOYD:  Ku Children’s Services declined our interview request saying its contract with the Government prevented it from commenting publicly. 

In a statement, it told 7.30 its fund manager team is located in premises separate to the KU offices and they have policies in place to ensure quality, consistency and fairness for all service providers. 

The Inclusion Support Program has been overseen by several federal governments over the past eight years. So, we travelled to Canberra to get some answers. 

NAS CAMPANELLA:  But the Minister for Early Childhood Education Anne Aly was unavailable for an interview.

After we sent written questions, a spokesperson for the Education Department confirmed that last year senior department executives realised KU should never have been contracted to approve payments from the fund.

They reported the arrangement as not being compliant with government legislation and have since taken over the role of approving any funding applications. 

NAS CAMPANELLA:  Greens Senator Barbara Pocock recently took part in a senate inquiry into consultancy firms which examined how government outsourced work to private enterprise.

Senator Pocock told 7.30 she wasn’t comfortable seeing KU - or any private operator – contracted to manage a government program.

BARBARA POCOCK:  It is government business to allocate and manage its big programs like this one.

This kind of service is vital. It is really important, and it is vital that it be provided with value for money with the best outcome for our kids.

NAS CAMPANELLA:  In her view, the program should be overhauled. 

BARBARA POCOCK:  I certainly see a strong argument for having a close look at such a program and the conflicts of interest that are implicit there.

The Australian National Audit Office is the place that can do that work with authority.

NAS CAMPANELLA:  The detail of how that money was spent is still not public. 

After spending extra time in the toddler room, Annabelle’s now walking and has moved up to the pre-kinder area.   

As a result, her inclusion support funding has been renewed.

But mum Kiera Hannigan wants to see change. 

KIERA HANNIGAN:  The government has decided that inclusion is important, and they've created an agency to deliver that. So, if all the money's there, why on earth isn't it coming to the people who need it?

Why are there so many barriers and complexities in that program.