by Dave Riley
In Australia over the past past 15 years the number of privately run child care centres has risen from fewer than half the total to 70 per cent today, with many community centres closing or being taken over.
This shift has proceeded with the active support of the Federal Government which today subsidizes the childcare sector through an annual pay out of $1.7-billion through its Child Care Benefit scheme.
While this increase in funding has risen at an annual rate of 14.4 per cent, according to the Sydney Morning Herald, child care costs have gone up by 62 per cent between 2002 and 2006. with some centres in Sydney now charging as much as $100 a day.
As Lynne Wannan, the convener of the National Association of Community-Based Children's Services, has observed, the corporate model preferred by the government has not led to increased competition, lower prices and improved quality “The reverse has happened,” she says. "It has led to a classic market failure."
Early childhood researcher,Joy Goodfellow , has explored the extent of this failure in some detail. She told an ABC Radio's Background Briefing special on childcare in 2004 that you could expect a not-for-profit organisation to have salary costs of around 80% of their total budget. But in the corporate sector the aim is to keep staff budgets down to under 50%.
“So the way you keep your salary budget down under 50%, “ she said, “ is to think about the cost of staff in your centre. So you might want to employ people who have lesser qualification if your regulation allows you to do that. It might say you want to have higher numbers of casual staff so that you can then put those staff off if you don’t have the children there. It might mean that in a day you have only maybe a small handful of children left in the afternoon, so you say OK, we’ll group all those children together under this staff member, and send the other staff member home. So there are things, or practices that can occur that are I believe, detrimental to children but they are undertaken in order to economise.”
Goodfellow's concerns are backed up by the appalling pay rates on offer in the sector. Even after recent substantial wage rises , the minimum award rate for a child-care worker with one year's experience is $611 a week, and with level three qualifications and 5 years experience the pay rate can be as low as $19 per hour.
As Background Briefing concluded,after more than doubling its spending on childcare to foster a multi million dollar industry “it’s the new corporate players that dominate, with their shareholder backing, management systems and economies of scale. And it’s all happened in the mere blink of an eye.”
Coporate Player #1: ABC Learning Centres
The recent collapse in the ABC Learning Centres share price generated a media frenzy. It's director, Eddy Groves, was reputed to have lost $45 million in just two hours of trading. For a time it looked like many of its centres would close their doors.
ABC Learning is the main player in Australia's corporatised child care sector.
Groves floated the company on the stock market in 2001. Then he owned 31 childcare centres in South East Queensland The company has more than tripled the number of its centres in the past three years and now runs 660 centres across Australia and new Zealand.
Since 2003 it has taken over three rival child-care operators, and in November last year spent $218 million buying the third-largest operator in the US, the Learning Care Group.
The company also operates 35 owned and 12 managed nurseries in Britain.
ABC Learning is thought to be Australia’s most subsidised company and federal government child-care subsidies have provided the foundations on which ABC Learning was built.
Last year,according to the company, ABC Learning received 44 per cent of its income from government subsidies: $128 million of its $292 million revenue last year.
It is often alleged that ABC underpays its staff and forces them to clean toilets and buy their own uniforms. When the Queensland branch of the union that represents child-care workers, the Liquor, Hospitality and Miscellaneous Union, handed parents pamphlets which Groves says portrayed him as "mean and greedy" and implied he was "trying to drive down low wages of child-care workers to line his own pockets". Groves sued the union's Queensland secretary, Ron Monaghan, for defamation.
