The woman appeared in court on Thursday, accused of lying to the NSW Crime Commission.
She cannot be named for legal reasons, but is the former foster mother of missing boy William Tyrrell.
The charges do not relate to William, who was aged three when he went missing from a home at Kendall on the NSW mid-north coast in 2014.
The woman is accused of lying to the commission about whether she had ever struck another child in her care with a wooden spoon.
"I have formed the view (she) knows where William Tyrrell is," Detective Sergeant Andrew Lonergan told Downing Centre Local Court.
Barrister John Stratton SC, defending the woman, said that was a false belief.
Police charged her for allegedly lying, in an attempt to pressure her, he said.
"You are hoping to break her spirit," Mr Stratton suggested.
"Our main objective is to find out where William Tyrrell is," Det Sgt Lonergan said.
Audio recording from listening devices placed in the home recorded what police allege is the woman hitting a child with a wooden spoon.
The child can be heard threatening to call the police beforehand.
A woman is then heard telling the child to "stand up" three times.
"Where'd you put the wooden spoon?" The court heard a woman on the recording say.
The child then pleads, screams and cries, and is told to turn around and move her hands before smacking sounds are heard.
"She's still going on about it," the woman is heard telling her husband in a later phone call intercepted by police.
The hearing continues.
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