Childcare boss unsure if bonuses were docked over rise in safety breaches, inquiry told

The boss of one of Australia's largest for-profit childcare companies has been unable to tell an inquiry whether his bonuses were docked over a rise in safety breaches.

Tim Hickey, the chief executive officer of Affinity Education Group, appeared at a state parliamentary inquiry into the sector on Tuesday morning.

Mr Hickey told the inquiry his bonus payments were tied to his key performance indicator of delivering safe and high quality centres.

But when asked by the chair, Greens MP Abigail Boyd, whether he received the full amount in the past few years, he was unsure.

"I'd have to get back to you on that. I don't believe I have, but I don't want to misinform the inquiry," Mr Hickey said.

"It's a significant amount of money though. I would know if I'd got my whole $300,000 to $400,000 bonus every year," Ms Boyd said.

Mr Hickey said he could receive an annual bonus of up to half of his $625,000 base salary.

Labor MP Anthony D'Adam pressed the chief executive on what dollar amount was at stake if he failed on safety questions.

"Quite frankly, if I fail at a significant level of safety and quality I can receive nothing," Mr Hickey said.

He confirmed his total pay package had risen in the past three years, despite the company's poor safety record, including an instance where an educator used a child as a mop.

Inquiry told of breaches

Earlier, the inquiry heard the rate of breaches at Affinity Education Group centres climbed from 30 per cent above the state average to 70 per cent after the company was bought by Quadrant Private Equity in 2021.

Ms Boyd asked Mr Hickey to explain the "significant decline" in quality and safety since his company was taken over by the private equity firm.

"I don't work for private equity, I work for Affinity, and my job is to sustain profitability in our centres so that we can reinvest back into the educators, back into the centres," Mr Hickey said.

As ABC Investigations reported in May, Affinity Education Group centres were slapped with more than 1,700 regulatory breaches between 2021 and 2024.

In one case, a baby was slapped in the face by a childcare worker at an Affinity Education Group centre in South Strathfield, in Sydney's inner west.

Some staff and parents told Four Corners the company's business model prioritised profit over care.

CEO quizzed over financial penalties

The CEO of G8 Education, Pejman Okhovat, was asked whether he stood to suffer financial penalties over safety failures at childcare centres.

"I personally don't wake up every morning thinking about that," Mr Okhovat said.

The inquiry heard Mr Okhovat earnt $3.3 million last year, more than half of which took the form of bonuses and "long-term incentives".

The CEO of the ASX-listed giant — which owns more than 20 childcare brands — faced questions about an incentive scheme that awards centre managers a 10 per cent bonus, largely based on occupancy rates.

"We're hearing from people in the sector that this creates a culture of you sort of don't speak up and do anything that might impact on profitability or the occupancy rates of the centres, because then you're not going to get your bonus," Ms Boyd said.

Mr Okhovat said a centre's occupancy fundamentally reflected the local community's trust in it.

"If you have a poor reputation, you do not get the occupancy," he said.

Ms Boyd read out a series of breaches at G8-owned centres, including a child at St Marina Early Learning Centre in Parramatta being slapped and pinched on the face, and children being exposed to mould in cot rooms.

Mr Okhovat said the company had strengthened training, with 95 per cent of its centres now meeting and exceeding standards.

Reporting time was 'unacceptable'

Anna Learmouth, the CEO of Only About Children (OAC), said safety was the primary performance measure linked to her potential bonus of 30 per cent of her $400,000 salary.

Ms Learmouth said she had not received any bonus since US operator Bright Horizons acquired the business in 2022, adding that OAC made a significant loss last year.

The inquiry heard OAC took eight days to report a worker's alleged sexual abuse of a child at a centre in Seaforth, on Sydney's Northern Beaches, after the company received a formal reportable conduct notification.

"That incident was entirely unacceptable and the reporting time entirely unacceptable as well," Ms Learmouth said.

"We've really learnt from that and done a significant amount of reinforcing with everyone in the organisation around our obligations to report immediately."

Family's property dealings

The inquiry heard some of the childcare centres leased by Little Zak's Academy were built and owned by the Zaki family, which has an ownership interest in the operator.

Richard Bell, the CEO of Little Zak's Academy, said he treated lease negotiations with the family's property business, Zaki Property Group, like any other negotiation.

"As an organisation we would never make less profit at our main entity to be able to prop up the value of a property," Mr Bell said.

"If the bank are doing a valuation to be able to provide finance for that asset, we need to make sure all of that is done at arms length and is done at a competitive market rate."

Ms Boyd suggested Little Zak's could reduce its tax bill and argue for more federal subsidies by claiming the cost of the lease as an expense while the Zaki family pocketed the rent.

"[The Zaki family is] kind of getting the best of both worlds aren't they?" Ms Boyd asked.

"If you were someone on the street, you might think that's a little unfair," she said.

Mr Bell said he could not answer for the family's property dealings as he was the CEO of the childcare business, adding the family leased properties to many childcare providers.

Internal audits from Busy Bees

Senior staff at Busy Bees were asked about an incident at a Newcastle centre where a child's serious fall went unreported until they were admitted to hospital with a fractured skull nearly a month later.

Mr D'Adam said the fact the centre was rated as "meeting" national standards at the time raised the question of whether the company had a separate, independent process for assessing safety.

Leanne Cain, Busy Bees's chief pedagogy and safeguarding officer, said the business conducted internal audits in a bid to uncover instances of non-compliance before the regulator got involved.

Mr D'Adam asked whether red flags were raised internally about the Newcastle centre before the skull fracture incident.

"Given the compliance history, the organisation did support the service of a number of interactions with the regulator in the lead up to that," Ms Cain said.