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Challenges and opportunities: the demise of ABC Learning

By Helen Kenneally

Posted November 13, 2008 10:11:00
Updated November 13, 2008 10:21:00

Australian children and families deserve an early childhood education and care framework that drives quality outcomes and genuine choice. (AAP: Mick Tsikas)

The demise of the ABC Learning Group presents both significant challenges and opportunities for the early childhood education and care sector.

The immediate challenge of course is to secure 100,000 childcare places across Australia, maintain continuity of care for young children in ABC services and protect the entitlements of staff who work in these services.

The task at hand is as complex as it is unique. Few would have thought that terms such as receivers, forensic investigators, insolvency practitioners and embedded government officials would be used around services for young children and their families. Sadly this is necessary as we unpack "corporate childcare" with its fluorescent branding, complex company and financial arrangements and unchallenged market dominance.

This is a time for inclusive leadership and cooperation from both the Government and the sector. We are all working in uncharted waters knowing that 100,000 children's services places are a critical component of our national infrastructure. Both the Government and the receiver have been inundated with both advice and offers of assistance.

However in progressing a way forward there must be an eye to the future. The "corporate model of childcare" failed not only because of ABC's exposure to debt and responsibility to third party shareholders but also because of its influence in controlling the supply of childcare places particularly in regional and rural communities. ABC's aggressive acquisitions policies resulted in lack of choice, influence of the cost of care and viability issues for other service providers in these areas.

Childcare Associations Australia (CAA) believes that the answers to the current complex and unique situation lays with both experienced independent private and community providers. CAA supports a well regulated, open and competitive market that drives choice and quality improvement and responds to emerging evidence about what we know are the best environments to support young children in the early years.

CAA represents independent private childcare owners and operators. In the main our members are small family businesses with long and respected histories in the delivery of high quality services. Some of the unique features of this model are close connection and engagement with local communities and an involvement of "mother and daughter teams". It is not unusual for these services to care for several generations of the one family. They run businesses that are an integral part of their local community. Many members are well known for their innovative practice based on emerging evidence or particular philosophies such as the schools of Reggio Emilia or Maria Montessori.

Looking to the future

Where to from here? What have we learned and what are the opportunities from the failed experiment in corporate childcare? For many years the lack of a co-ordinated and focused effort regarding issues of access, affordability, workforce capacity, market dominance and quality has been of deep concern to all in the sector.

We are now provided with a unique opportunity to develop a contemporary and distinctive Australian framework where each of these issues, and the funding base for children's services, is addressed in a systematic and interrelated manner - not in policy silos.

Specifically we need to build the Australian evidence base about what works best in the interest of children, parents and staff. There is a growing awareness and recognition in our community of the critical importance of children's early years in terms of their future growth, development and social and emotional well being. The 2008 OECD Education at a Glance report and the Report Card by Professor Fiona Stanley both indicate underperformance and underinvestment in early childhood education and care services.

As a community we need to be open to the possibilities about how this can be implemented. We need service providers who are engaged and committed to outcomes for children, choice for families and best practice in service provision. The unique characteristics of independent private operators, and our community sector colleagues provides a rare opportunity to create, build and sustain these services for children and families.

For those who create and implement public policy there are of course salutary lessons. Never again can we allow funding models and governance structures that support a single operator obtaining market dominance to undermine a critical component of our national infrastructure. Australian children and families deserve an early childhood education and care framework that drives quality outcomes and genuine choice.

Helen Kenneally is executive director of Childcare Associations Australia.

Tags: company-news, child-care, federal-government, social-policy, australia

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Comments (65)

Comments for this story are closed. No new comments can be added. If you would like to have your say on this issue, you can do so via the Emails section of our Opinion pages.

fd:

13 Nov 2008 11:19:05am

can we grow up in this world really goverment take over for 6 months and get others to buy them and get it done with can we grow up and smell the coffee

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Lindsay Cooper:

13 Nov 2008 11:35:37am

The government could back these schools while they are sold to genuine operators of education.

My learned advice would be to ask Professor FIONA STANLEY for her input and then follow what she says.

She is one of the very few who talk real sense this field.

Selling the schools is not a large problem but teaching the kids the proper way is way overdue. And they don't need religous indocrination.

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Green:

13 Nov 2008 11:35:43am

I'm surprised that big corporations don't take a more active role in providing childcare to their employees.

Think of the advantages they'd gain by providing childcare in the same building where their employees worked - the employees would be happier, they'd be less likely to change jobs, and they could work longer hours (rather than having to rush off to pick up the kids).

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Pen Pal:

13 Nov 2008 11:41:11am

For the sake of families this needs to be sorted.

The Government cannot bail out every private enterprise and that is just on the reasoning of there is just not enough dollars to go around.

As I see it, a "fire sale" needs to occur of the various centres to have them managed and run by individuals as separate business'. If the Government wants to regulate how they operate, that's a different question although fundamentally, I am against too much regulation.

The priority here is to isolate the debt, sell the centres and then sort out how the debt is to be repaid. In keeping with Government Policy - look after the families first and worry about the detail later.

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Richard Bender:

13 Nov 2008 11:52:19am

The first action that needs to be taken is removal of the government intervention that has distorted the market for years, i.e. the childcare rebate.

The second - and last - action is to cut income tax rates or increase the tax free threshold to leave "working families" in the same financial position. This will give them, rather than the government, the choice of where their money will be spent (which may not be on childcare at all).

Nothing forces a business to adapt to the needs of the customer like the threat of the customer going elsewhere, which could never happen when parents were forced to spend their money at certain businesses.

And when we've finished dancing on the grave of Eddy Groves, can we please remember that his childcare enterprise was a generally sound business. Mr Groves' decisions on where to invest the profits of his company, on the other hand, were not. Helen Kenneally's obvious dislike of successful business people should not be a reason to strive for mediocrity.

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paul:

13 Nov 2008 11:56:15am

Why can't child care/education centers be set up in local public schools [both private and state schools] for children under 5.

Most of the infrastructure is already in place, all that is needed is a couple of buildings in a fenced off area of the school.

Sure this will be costly in the first instance but we appear to have funds for "nation building" and our young are the future of our nation.

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John Bugeja:

13 Nov 2008 12:03:09pm

A simple solution to this problem, could be to have the exsisting employees take over the runnning and ownership of these centres, and treat them like a franchise

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Bruce:

13 Nov 2008 12:26:34pm

Fortunately we've managed to secure a place for our 3 year old daughter in a not for profit child care centre starting from next year.

Up until now she has been in a fancy new "ABC Learning Centre". And we've certainly learned - learned what putting profit before children does to staff morale, staff quality and ultimately to the quality of our daughter's early childhood education.

Our new government is showing signs of being just as stupid and short-sighted as the the previous one. There is no more important time in a persons' life to get right than early childhood. The care and education of children at this age must not remain second priority to the profit of a small coterie of greedy individuals.

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Mardy:

13 Nov 2008 12:34:02pm

Why not a Government handout to shareholders who lost money in ABC Learning?

After all, money is given out to farmers farming on untenable land, and foreign automobile manufacturers. And the First Home Owner's scheme principally helps existing homeowners, not home buyers.

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bc:

13 Nov 2008 1:40:05pm

The Aus Govt has been giving ABC Learning concessions and incentives for years. It's now time to take control, and stop the profit-reaping at the expense of families and children.

And make Eddie give http://www.childcare.com.au back while they're at it...

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David:

13 Nov 2008 1:49:21pm

As a former child care professional ('day care worker' for the general public) I have watched the fall of ABC Learning Centres with interest. I wonder if most of the parents with children in the care of centres know how these places are run. I myself have not worked at an ABC centre but have had been in the employ of good and not so good centre owners.
Basically it is all about money. The centre management are constantly fending off staff calls for new(er) equipment, paid training to update or learn new skills such as coping with special needs (autism, ADHD etc) and other things that may help with the daily care of your children. When I was in the industry, paid programming time was a bone of contention. How about asking your friendly Group Leader if they still have to take work home or is it now allocated in the roster.
So, why are the management not allocating funds for anything but the basic of resources? well, people, it is because the are not in this business for the love of children. ABC did not become the biggest provider of Child Care because they had the best trained staff, the best staff conditions or a real passion to learn about intergrating children with special needs. I am guessing most, if not all, of ABC's staff wished and wanted these things, as does 99 per cent of all child care professionals.
We as a society should be looking for other ways in providing child care services. They are definately not just "child- minding" services anymore, haven't been since the idea of 'programming for the individual childs needs' came into place. They are now educational institutions and the staff are being trained as educators. Should child care be placed under the state school system? Now there is a whole new discussion. Here is one more question to make you think: do private schools have shareholders?

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serf:

13 Nov 2008 3:37:17pm

I wonder how education is going to run next year and in 50 years how government and child care and how it will work and how it will be developed what happens to our children are we underfunding child care or not thinking of new
methods of child care. Are we demanding to too much from funding that cannot be meant how is a jungle gym supposed to equip a child for the modern world . We cannot treat autism for people who are older how can we give education for our youngest . I think we need as parents government need to to take a hard look at what we need to to stimulate and what actually we are paying for seriously our child care looks barbaric and under sourced to our Japanese and Swedish friends we are killing the bone of civilisation.

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Dessy Cartes:

13 Nov 2008 4:08:50pm

Will somebody please think of the children!

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kathy:

13 Nov 2008 4:10:56pm

I have owned a daycare centre for 12 years. When ABC came into town they sent a message to me saying that if I didn't sell to them they would "run me out of town". Very nice. We have watched while they have built nine 100 place centres in our town ( pop approx 80,000), bought out 3 owner operated centres, promised above award wages that never materialised, share options for employees (wow!) and bounties for their staff if they could lure other centres directors away from their employers even if they don't go on to work for ABC. ABC also trained all of it's staff in-house so there was no external verification of competency levels. Over time it became clear that there is a major oversupply of childcare places in our town. We have been fine, but some of our wonderful commnity based centres have not been. ABC clients became our waiting list due to dissatisfaction with staffing levels and staff competency.
As far as Childcare Benefit goes I think it needs to made clear to the community at large that this NOT a subsidy of a childcare centre from the government. Childcare benefit is an entitlement to a rebate on fees for parents. The amount that each family receives depends on their family annual income. The family can use their childcare benefit at any registered centre in Australia. Registration for CCB is linked to whether a centre passes accreditation. It costs the same to care for a child whatever the ability of the family to pay. CCB ensures that access to childcare services is not related to a families ability to pay.
We have about 6 new entries on our waiting list from ABC clients since the news has hit. There is no panic here. If some centres close because they are not economically viable there is plenty of very good childcare here for the children. Sadly the reality from my experience is that parents have often put the fact that an ABC centre is closer to home ahead of the level of care that their children receive. This is in a town which probably only covers about five square kms max!
As a final comment, many countries- canada and many european countries refused to allow Eddy Groves access to their childcare centres on principle. They would never permit a corporate model ( as opposed to private owner operated) to use children's services as an entry vehicle to the global stock market. I think we in Australia have not protected the interests or our children which shows how little we really value our under 5's.as a society... Ok- off my soapbox and over to you!

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topend:

13 Nov 2008 4:37:35pm

The issue of childcare is a parent responsibility not a government one. Parents take control and irresponsible childcare disappears or changes.

Childcare is not education but is learning and parents need to be active in its outcome for your children, dont expect the government to do it for you, in fact dont let them tell you what is required or what you should accept.

You might vote for them but would you trust your children with them????????

If ABC run a good childcare system then good they wil stay alive if they dont then other arnagements are needed. The government has bought time to allow those arrangements to be sorted - now let parents and providors sort it out within existing regulations

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Brad:

13 Nov 2008 5:04:03pm

Where to from here? Do what Canada did a decade ago and remove the profit motive from child care and completely eliminated the "big box" corporate model. Now more than 80% of child care in Canada is not-for-profit. Australia already had that in the mid 90s but the Howard government bizarrely went in the opposite direction to Canada. Now we see the result.

ABC Learning deliberately undercut the competition to drive competing centres out of business, then when there was no real competition the fees went through the roof. Yet staff (provided through a subsidiary labour hire company at minimum casual rates) did not even get award wages and most did not have any recognised qualifications.

International research over the last decade found that not-for-profit child care is overwhelmingly superior to for-profit, both in terms of providing the best environment for childhood development and a stable career for staff.

Child care must be run as a not-for-profit community service.

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benny:

13 Nov 2008 5:14:12pm

The government has no business in propping up failed PRIVATE businesses. This is a dangerous precedent and a waste of my tax dollars. Stop meddling Rudd- LET THE MARKET DECIDE ITS OWN FATE - parents should be left to deal with the collapse.

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mike:

13 Nov 2008 5:15:11pm

It's not just childcare!
Over the past few years, a previous Federal Government effectively killed off community child care centers and funded private child care companies. We have seen the results - ABC are now broke. Where will the children play, indeed?

Rudd is repeating the exercise with TAFE right now. He wants to redirect all the Federal Government vocational education (VET) money to lower cost private VET providers. He is blackmailing the states to do the same. TAFE cannot compete with these low cost providers since TAFE provides equity and second chance education, libraries, counseling and employment services, a wide range of courses, many of them equipment intensive and a lot more. These services are unlikely to be provided by the "for profit" trainers. Last year, TAFE across Australia had 1.6 million students.

When these private training companies have made their money and vanished, just like ABC is doing at the moment and TAFE has long since gone, who will provide VET training then?

Don't privatize TAFE!

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Mick.:

13 Nov 2008 5:38:21pm

The govt should be focussed on making family life more affordable on a single income. If a person wants to use child care, thats thier problem. I am a taxpayer with no kids so why should I be paying for childcare.

dumping your kids onto sombody else is not raising them.

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Trish:

13 Nov 2008 5:43:18pm

What a bizarre trail of comments - this article is about an opportunity to grasp a serious opportunity that Eddie Groves sidetracked for a while letting the govt think the availability of childcare for the masses was largely solved for them, whew.

I agree with Lindsay Cooper - let's listen and act on the wisdom of Professor Stanley and the people who know the business inside/out, the CAA. Govt does have to take a lot of ownership of the issue of quality, affordable, availabe childcare - it was an election platform and wasn't Maxine McKew supposed to be doing something? Where are you now Maxine?

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Viola Wilkins:

13 Nov 2008 5:58:38pm

Eddie "ABC Learning" Groves is yet another Australian Genius Boss like Alan Bond, Christopher Skase and so many many more scammers, rip off merchants and fraudsters. Remarkable Bon is back trading again this time in blood diamonds from Africa !
The "Great Financial Crisis" is due to the sociopath greed is good system made global courtesy of Margaret Thatcher & Ronald Reagan and their followers since.
ABC learning shoud be "communalised" run by local community for local community and not shareholders who want to profit from kids, education, medicine, etc
The foundations of community are eroded by the capitalist system and it long overdue that the commons, common good for common people ie most of us be held higher than a few $ and the sicko minority who indulge their theft as "enterprise".
Put the rich and wannbe rich to real work eg putting up housing, for the homeless and all those on the too long waiting lists. Then they should be able to sleep at night and not have to worry about some rough justice at hands of the dispossessed of this country.

"A Commoner"

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Mary Saphin:

13 Nov 2008 6:02:02pm

Your article is spot on, Helen! You have run a successful early childhood centre and in your present capacity, I bet you have also seen what makes a centre successful for the clients, children and adults. I vote for Helen to head a committee to work with Government to solve this problem.

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Bruce:

13 Nov 2008 7:50:10pm

Excuse me but is the majority always drunk?

How convenient it is for profit motivated businesses, operating under the influence of ordinary market forces in an industry charged with the education and welfare of our children, to hide behind a curtain of public money?

Thank you very much but I am happy to have elected representatives of, by and FOR the people, accountable and responsible for pre school education as they are for primary, secondary and tertiary education.

So too I am happy that Government operation, regulation and oversight of pre school education be underwritten by the public purse for the benefit of our collective future. Our nation will survive as a first world nation only if our children have the kind of educative opportunities that will allow them to compete and excell as future leaders and citizens.

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Bloot:

13 Nov 2008 9:34:18pm

The key thing I see is that this business was very successful until it over extended itself in seeking to persue a growth strategy overseas. The strategy may have been valid under different circumstances, but not up against a global meltdown the likes of which havent been seen since 1929.

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SL:

14 Nov 2008 12:50:59am

Irony -
Government reduces funding of child care centres to breaking point. ABC takes advantage underpaying staff and employing less highly qualified staff.

Economic down turn, greed factor, government ends up with all the child care centres to fund.

Libellous ?? Meanwhile ABC owners have accumulated enormous assetts. I wouldn't be surprised to learn some day aboutr some interesting offshore bank accounts and some hedge funds somewhere.

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Comments (65)

fd:

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