14 Nov 2012

Have We Learned From Our ABCs?

By Liam McNicholas
Thanks to government subsidies, more than 70 per cent of our childcare industry is privatised. The collapse of ABC Learning four years ago should have taught us that profit and care don't match, writes Liam McNicholas
This past week marked the fourth anniversary of the appointment of voluntary administrators Ferrier Hodgson to childcare company ABC Learning, after its stunning public collapse in 2008.

With structural changes aiming to improve the quality of early childhood education and care (the National Quality Framework) beginning to roll out this year and a campaign to improve the wages of early childhood educators making news, it's a timely anniversary.

ABC Learning was at one time the largest publicly traded childcare operator in the world, at its peak worth $4.1 billion.

It was regularly held up as a shining example of the "free-market" approach to providing early education and care. Its more than 1200 centres (including centres in New Zealand) were used as evidence of the success of John Howard's changes to the sector — removing the subsidy from service operators and channeling it directly to families.

It was, as we now know, all an incredible sham. The business was in financial turmoil and its founder Eddy Groves is still under economic and legal scrutiny.

In 2008 Labor Government was returned to power, and in 2010 would describe the collapse of ABC Learning as "the greatest ever shock the Australian child care market has experienced". A Department of Education report, "The State of Childcare in Australia", identified that "unfettered growth in the provision of corporate child care created an unacceptable risk of serious disruption in the market".

Crikey's Bernard Keane wrote in 2008 that the collapse of ABC Learning was not just a business failure, but a serious government policy failure. Keane recommended that "Julia Gillard (then minister for education) should be undertaking a fundamental reconsideration of child care support in Australia," perhaps including a takeover of ABC's centres. The Labor Government was continuing the lack of long-term strategic thinking about the goals and growth of the sector, despite investing billions of dollars through subsidies.

Lindsay Tanner, then finance minister, quickly dismissed any notion of a government takeover of ABC. This didn't come as a shock; if the government became involved in the provision of early education and care to that extent they would have had to take responsibility for the systemic and structural problems that are facing the sector, as well as ABC's debt.

Not a lot has changed in the four years since ABC's collapse. Although a large private operator hasn't emerged to take the place of ABC, around 6000 centres are managed by private, for-profit companies, 71 per cent of the centres in Australia.

The 30 per cent direct rebate to families was increased in 2008 to 50 per cent, and government funding to the sector (mostly indirect, through family subsidies) will reach a projected $22.3 billion over the next four years. Accordingly, the number of children now accessing some form of early education and care has jumped to around 1.3 million.

Yet, despite this significant amount of money, the issues facing the sector have only deepened and become more acute. Workforce retention and turnover is reaching endemic levels and presents a looming disaster as qualification requirements become stricter.

Fees are steadily rising to meet new quality requirements and waiting lists have ballooned, particularly for infants.

But the biggest issue still to face the sector and the community is the one that should have been faced four years ago — the incompatibility of private companies, operating in the sector to make a profit, and quality care.

A recent and timely report from Canada, which has a similar early education subsidy model to Australia, has revealed the inherent contradiction of private operators managing centres while being effectively subsidised by government funding.

Not only does it encourage the kind of financial risk that led to the rise and fall of ABC Learning, the report found, but private operators are effectively paid to push for higher profit margins — which means more children in less space, fewer qualifications and lower wages. All of which can have drastic impacts of the quality of children's learning and safety.

The same pattern can be seen in Australia. With representation from the Australian Childcare Alliance, which claims to "represent the future of Australian childcare," the private operators are able to employ a lobbyist to the government to directly advocate for less regulation and caution against raising working conditions for educators.

It should be self-evident that the provision of education and care for Australian children is the responsibility of the community and the government, not private operators. This is not only economically obvious — if the private approach was the best approach government subsidies would be unnecessary — but also ethically obvious.

As was presented to the Government in a submission by Price Waterhouse Coopers in 2011, the only sustainable and equitable model that benefits young children and their families is a government funded and managed model that allows for universal access for all children, regardless of their socio-economic situation.

Community organisations, which currently only provide 26 per cent of early education and care, must work together to present a united front on this issue. Private operators have been effective at coming together and presenting a single voice on issues, which is why the media turn to them for quotes and analysis of early education issues.

The government is currently working with the sector to the implement the National Quality Framework package, which will improve the quality of early education and care services, including lower staff-to-child ratios and higher qualification requirements for early childhood educators.

While the private operators warn of cost increases and burdensome regulation, most experts in the sector actually argue that the changes, although welcome, go only a very small way to creating greater learning outcomes for young children. A lot more needs to be done.

The Gillard Government must face up to the issue that is starting it right in the face. The $22.3 billion it is currently using to subsidise private operators would be far better invested in completely overhauling the sector.

Community organisations are the only operators currently able to fully and ethically represent children and families, but a reluctance to engage in advocacy has been a major failure.

That said, Goodstart Early Learning publicly supported early childhood educators' union United Voice's "Big Steps" campaign for government-funded professional wage subsidies for early childhood educators. Ironically, Goodstart Early Learning is the not-for-profit consortium that now manages the majority of centres that ABC Learning mismanaged and left out to dry. There's a lesson there.

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phoebecoyne
Posted Wednesday, November 14, 2012 - 17:07

There is a significant cultural shift being heralded in across the planet, which significantly reconciles this deep fracture between profit and care, as evidenced in the ABC debacle.
It is the realisation of community, client or worker driven and managed care organisations in health, social care and education. The difference is a "Co-operative" one.
The burgeoning Social Care Cooperative movement throughout Italy, Canada (Quebec), Wales & development in other parts of UK and World is proceeding with significant success!
Italy has the most comprehensive Social Care Cooperative networks in the world, with some 16 000 registered Cooperative Care Organisations, which are regionally coordinated through Consortia arrangements which also extend to National representation.
In encompassing the wide trinity of health, social care and education, Social cooperatives can be geographically localised organisations which fall under various umbrellas of schools, child care, aged care facilities, disability support (including training, education & vocational/ ready-for-work rehabilitation), ex-offender rehabilitation/ reintegration, "care + repair", Child Protection, and domestic violence care & support models.
As an Aussie, I have recently returned to my Masters studies in New Economics in the UK from the International Year of Cooperatives World Expo and Festival in Manchester, UK. I am now specialising in Cooperative studies, following on from my O/S learnings about innovation and enterprise development & progression in this sector outside Australia. A lot of food for thought, potentially spurned by an untenable fiscal situation in many economies with the Crash to enable social care and support under the duress. Hence, communities have self-empowered, and stopped looking to false gods of government and corporations to fill the shortfalls and/or (re)solve community-based issues and challenges. Hallelujah- we have the power, means and capacity to resolve them in our own communities.
The present cultural renaissance and reinvigoration of the Cooperative movement in the rest of the world- and establishment on the map as a competitive FOURTH SECTOR- the "for benefit", social enterprise sector- is having some lag time to catch up in Australia. This could potentially be because of economics in Australia has not necessitated community driven innovations to fill in the holes and gaps between what the government, corporate and third/ NGO/ not-for-profit sectors can accomplish between them.

Allie
Posted Friday, November 16, 2012 - 11:15

If this is about 'child education' I am fine with it. If this is about 'child care' then the elephant in the room is the fact that children under three need a parent or related carer for the best 'outcomes' for their emotional, physical and intellectual health.

The elephant is no-one is willing to stand up for those who should be responsible and take care of their own babies. Until a child can verbalise their feelings that should NOT be with 'strangers' or in 'groups'.

The elephant needs to be taken out of the room and put back in its own home and the millions of subsidise paid to the caring parent.

We used to gasp in horror at how Chinese babies were 'farmed out' in mass cots, playpens, rooms and (if lucky) yards. Now we have taken up that gauntlet and think it is 'best' to get the parents back to paid work and paying taxes so the merry-go-round can swing. The 'need' for stuff and things becomes a higher priority than little fragile humans who are our future. Never before have children been 'chosen' to be apart of a family and now we are happy to farm them out to others who are paid for the 'privilege' of 'caring' ( Ha) for our babies.

THREE is the magic number, especially for little boys ( ref. Stephen Biddolph).
Verbalising concerns and worries, fears and sadness is necessary before a child should be 'cared for' outside the love of parents/grandparents et al.

These little children are humans, they are not a commodity, nor dogs, nor a hobby, nor an 'inconvenience' to your way of life.

It is not easy...but our Govts should be handing back the care of the little ones to their parents, not to some profit making group who care not a jot about the individual needs of the future citizen.

jackal01
Posted Sunday, November 18, 2012 - 07:39

our entire system of consumerism is shot.

Look at it this way, ever wonder where the supposed Tax Dollars are going.

Income slitting. There is 25 unemployment on the North Shore of Sydney, Eastern suburbs etc. The Middle Class, Business People/ Parents decide to Income split so that their unemployable children or Wife/Husband can get $800.00 Gross a week curtesy of the Tax Purse instead of 500.00 on New Start which is also funded by the Tax Purse.

The difference being that the Middle Class Parent/Shop owner/Business Man decide not to pay Tax by Income splitting and denying the Tax Purse as opposed to the Government deciding how much his Dependence should get on the Dole.

Now as I've said before 77% of all Australians live of the Tax Purse, we do not pay into it and that includes Business People or the so called Middle Classes who earn their income through consumerism to so many people who are directly funded by governments and even those indirectly Funded through Infrastructure reliant Companies and or Infrastructure spending/Government Projects to create Employment like the Snowy Mountain Scheme/Motorway construction etc.

Is that why the American Government has given up on the Middle Classes and our own Government is in the Process, have they figured it out, but the Retailers/Small Business Person hasn't.

So who really owns Serco? the Mob that runs our Prisons and Security. Wouldn't be Margaret Thatchers Son would it, the Arms Dealer.

If that is as I state why haven't we been told, why are we told that we are Tax Payers, which we are not and why are we told that Business is so great when it is not.

As I have said GDP only tells us that money flowed, it can't tell you that it only flowed because I mowed your lawn and you mine.

Unemployment figures can't tell you how many people are actually unemployed because of Income splitting to avoid Paying Taxes gives a lot of Middle Class People Jobs that are in fact unsustainable, especially when Recessions and Depressions hit, which restricts Consumerism and makes a lot of these small Business unsustainable and they go broke, Austerity would in fact only make things worse, if you consider who and what fed Prosperity in the 1st place, Government spending and a healthy Tax Purse!

So where do the mystery Taxes that are so good for Prosperity come from?.

jackal01
Posted Sunday, November 18, 2012 - 09:12

Finaly go to
nsw politics
15 Nov 2012

The Crooks Who Could Bring Down Labor
By Ben Eltham