Detectives from the State Crime Command's Child Abuse and Sex Crimes Squad started an investigation following reports a girl had been sexually assaulted by a man while in his care.

Detectives arrested the 54-year-old man near Mollymook on Tuesday, December 8.

A crime scene warrant was executed at a vacant home near Mollymook, where investigators conducted a thorough examination of the property and allegedly recovered a number of items.

The man fronted Nowra Local Court via audio visual link from the nearby Nowra Police Station on Wednesday, December 9.

He is charged with taking or detaining a person with intent to obtain advantage, intentionally sexually touching a child under 10 years of age and aggravated sexually touching another person.

The court heard the alleged offences happened some time between February 2, 2020 and December 7, 2020.

It is alleged by police the man took the girl from a child care centre, which he runs with his wife, to a vacant, neighbouring property, where the offences allegedly occurred.

This was disputed by the accused's defence lawyer, special counsel David McCallum, who told the court it would be near impossible for the man to take the child from the centre without attracting the attention of fellow staff members and the 30 children who attend the centre.

In opposing bail, police prosecutor Andrew Kingston said it was feared the man may not appear in court due to the serious nature of the charges, for the man's own safety and that of the community.

He said the charges were of "a serious nature" and if found guilty the man "could face a lengthy custodial sentence".

He said the prosecution had a strong case and there were concerns the man, if released, could interfere with witnesses and possibly impede further investigations or contaminate possible further evidence.

"A forensic search of the property has located a number of items in the empty house consistent with the child's evidence," Mr Kingston said.

"The fact the community where the offence allegedly occurred is small and all parties know each other there is the risk of interference with witnesses."

The court heard following the man's arrest other people, including parents of other children, had come forward with further information and allegations.

Mr McCallum argued the man posed no risk, had been a permanent resident of Australia for 32 years, been married for 25 years, had three adult children and had strong ties to the community where he had lived for 14-15 years.

He said the couple had lived in their current home for seven years.

"He has run the business with his wife for the past 10 years," Mr McCallum said

"Previously to that he was a baggage handler with Qantas for 18 years."

Mr McCallum said he believed his client could be released on strict bail conditions.

"As for the items found in the property, I submit they weren't hidden - the rag, which was used for cleaning purposes while the accused was undertaking renovations of the property and had been dropped in the wardrobe," he said.

"Other items at the location were consistent with the renovation works - tools and equipment."

The court heard the Department of Education had already suspended the business's licence.

"With the centre being closed and unable to operate there is no threat that the accused can have any contact with children or witnesses through association with the childcare centre," Mr McCallum said.

"From the information available I don't believe the prosecution case could be regarded as strong.

"I'm not saying it is weak but it is based on uncorroborated claims by a three or four-year-old child witness.

"It was a known and discussed fact by staff and children at the centre that when the accused did not have a physical presence in the centre itself, he was across the road renovating the property in preparation for the business's expansion."

Magistrate Gabriel Fleming said the charges were "very serious matters".

"It is alleged you sexually touched a child," she said.

"One of the charges is strictly indictable and will go to a higher court. And if found guilty there is a likelihood of a custodial sentence."

She refuted defence claims it was a "weak case" and acknowledged police concerns on the serious nature of the alleged offences.

"The alleged matters might have happened against the victim possibly a while ago or even possibly recently."

She granted the man strict bail that he reside at his address, surrender his passport to the court, not approach any international departure places and report to Ulladulla Police daily between 6am and 6pm.

She further ordered he not be alone with any person or child under 16, not approach children or any parents of children at or previously at the centre and not approach anyone associated with the centre excluding family members and put forward a surety of $50,000."

An apprehended violence order was also put in place to protect the alleged victim and her family.

The matter will be back in court on February 15.