Measures to Ensure Childcare Operators are Financially Sound

Mr Ang Hin Kee asked the Minister for Social and Family Development (a) whether the criteria for issuing licences to operators of childcare centres are adequate to ensure that the operators are financially responsible to safeguard the fees paid by parents and the salaries of staff; (b) whether a screening process and safeguards will be established to ensure that only responsible operators are issued with the necessary licences; and (c) how many childcare centres have recently defaulted on salaries owed to teachers or fees collected from parents.

The Early Childhood Development Agency (ECDA) regulates preschools to ensure the safety, well-being and development of our young children enrolled in these preschools. In determining whether to issue or renew a licence under the Child Care Centre Act, ECDA assesses the centre’s standards in providing holistic early childhood development programmes in a safe environment. This includes looking at physical space norms and designs, environment safety and hygiene, programme staff quality and staff-to-child ratio. In addition, ECDA also considers the character and fitness of the applicant or licensee, such as whether he or she had committed child-related offences previously.

In this context, ECDA will intervene decisively if operations are affected in a way that poses risks to the safety and well-being of children. For more complex cases, ECDA may work with other Government agencies to carry out investigations. In the event that centres abruptly close, ECDA will assist parents with alternative placement for their children, if needed. The number of abrupt preschool closures has been low, at about three annually, on average, over the last three years, and we will closely monitor this trend.

Under the new Early Childhood Development Centres Act, which was enacted in April this year and which will be brought into force next year, ECDA will have enhanced authority to take into account the financial capacity of applicants in operating and maintaining such a centre. This will be one of the factors that ECDA will look at in determining whether a licence is to be awarded or renewed. Such upstream intervention will go some way in reducing the risk of operators abruptly defaulting on fees paid by parents or salaries owed to teachers.

There are other approaches that can help protect parents from fee defaults arising from sudden closure, such as a student fee protection scheme, as suggested by Ms Tin Pei Ling. We will study the options carefully, taking into account the context and possible trade-offs, such as added costs to the sector and to parents.

Under employment laws, it is an offence not to pay salaries and provide Central Provident Fund (CPF) contributions. The Ministry of Manpower and CPF Board will investigate such cases.