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Rudd government must take responsibility for operating ABC child care centres

A statement by the Socialist Alliance

November 7, 2008

Now that ABC Learning Centres has gone into voluntary administration, the Socialist Alliance calls on the Rudd Government to ensure that the company’s child care centres remain open to cater for the 120,000 children in its care.

The Rudd government should take over ABC immediately, delist it from the stock exchange and guarantee the ongoing functioning of centres and the wages of staff.

ABC should not be entrusted to normal bankruptcy procedures, which would inevitably see the company “restructured” with centres closing and commercial creditors given priority.

While ABC’s creditors and shareholders are expecting preferential treatment, parents and the company’s workers must have the first claim. All payments to shareholders should be frozen until the mess is sorted out.

After all, the problem with ABC was that its director, Eddy Groves had gambled too much of the company’s capital in the dodgy subprime loans market in the US. When that collapsed, Groves and ABC Learning were caught short.

ABC has had a near monopoly in the commercial for profit child care sector and its 1200 centres represent 33% of the industry, receiving $1 million every day from tax revenue. As the only available childcare centre in many parts of Australia, ABC has used its market power to charge parents exorbitant fees. Its monopoly profits have been underpinned by the Howard government’s 30% (and the Rudd government’s 50%) subsidy for childcare payments.

The federal government, which has already committed to paying an extra $300 million this financial year into the failed child care provider, has a golden opportunity to shift the balance in child care from failed commercial enterprise towards a new model, publicly owned and community run.

Child care should never have become a private profit-making business in the first place, but a community service—publicly funded and democratically managed at the local level.

The administration of local ABC centres should be entrusted to community-based child care organisations and local councils. The not-for-profit child care sector is fully accountable and responsive to the community. It has demonstrated for over 30 years that it can deliver quality services and manage public funds, unlike the bankrupt ABC.

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