The Education Ministry is reinstating a special squad to investigate financial fraud and safety breaches in early childhood education services.
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The Provider Assessment Group (PAG) was disbanded nearly six months ago after three years making surprise visits to high-risk early learning services.
During that time it investigated 18 home-based providers and an organisation that owned 13 early childhood centres, cancelled up to 17 licences across nine services and claimed to have saved early childhood subsidies totalling $6 million a year.
The ministry said the unit was set up as a pilot scheme and its staffing ceased on 30 October 2020.
It said it was currently recruiting for a manager for the group and once that person had been hired it would appoint 12 more staff, most of which would work in regional offices.
"The PAG team will complement our regional licensing staff by providing specialist skills in financial fraud, and complex risk assessments relating to regulatory and licensing non-compliance," it said.
"While historically the PAG has focussed on home-based services, the knowledge and risk identifiers that the PAG developed have, and will continue to be, used across the ECE sector. We have found that services identified by the PAG as having high risk financial indicators often also have poor health and safety processes in place."
The ministry said the group last year formally investigated one home-based service and made spot checks on four others.
It said the relatively low level of activity in 2020 reflected the impact of the pandemic and large-scale changes that were made to the group last year.
Documents provided under the Official Information Act said the spot checks on 37 homes in four home-based services last year identified health and safety problems at 19 homes and resulted in the immediate removal of six homes from the licences of two of the services.
They also show last year's sole formal investigation triggered months of negotiation and legal wrangling with a service that had 10 active licences and one inactive licence for home-based care and education.
It began the investigation with a "sprint" involving "simultaneous home and office visits" on 11 February.
The visits found the home-based providers were over-claiming government subsidies for children in their care by as much as 11 percent.
It said some of the educators were absent and translators were needed to help the group's staff talk to non-English speakers at some of the homes.
The ministry suspended the service's 10 active licences on 2 May.
It decided to make the licences provisional after the service owner engaged lawyers in early May and threatened to go to the High Court, but it required the owner to provide evidence that people working with children had been safety checked.
By early June the owner had reengaged their lawyers because they were unhappy with the length of time the process was taking and the ministry had issued 10 provisional licences.
But by the start of July the ministry had conducted further assessment and decided five of the licences should be cancelled, a figure that grew to six by the end of August and included the one inactive or unused licence.
The owner appealed to the District Court against the intention to cancel the unused licence and one other licence.
On 21 October, the ministry's lawyers met with the service provider's lawyers and proposed the cancellation of two licences, "some consolidation and the ability to expand child places later if certain conditions are met".
The documents indicated the investigation concluded in the middle of November, and four of the organisation's 11 licences were cancelled.