As Solidarity goes to print, the fate of up to 386 ABC Learning child care centres is in doubt. That represents one-tenth of the national child care resources. The centres look after 30,000 children and employ over 4000 people.
Besides the possible loss of these jobs, there are another 8000 casual staff effected. On top of this, the leave and other entitlements, worth over $31 million, of 16,300 ABC Learning workers have been frozen by the receivers managing the bankrupt company. The law does not recognise workers’ right to entitlements when a company goes bust—banks and other so-called secured creditors get paid first.
Workers are still waiting to hear whether the government will guarantee their entitlements under the government’s GEERS scheme, set up by the Howard government when Ansett went broke in 2001. 
The Federal Government has put $22 million into ABC Learning but that is only enough to keep the centres open until December 31. There are no guarantees after that.
The Rudd government remains committed to the involvement of private providers in the industry. Julia Gillard has ruled out the government taking control of ABC Learning—even though it is government that provides almost half the revenue to the private child care companies.
Although it is obvious that it was turning child care into a profit making enterprise that underlies the failure of ABC Learning, the Rudd government has also ruled out putting the ABC Learning centres under the control of the not-for profit child care providers.
The receivers are deciding the future of the centres purely on a commercial basis.
The risk is that centres deemed profitable will be picked off by other companies while those considered non-profitable will close.
Astonishingly, one company which runs 44 centres, Early Learning Services, but which made a $1.5 million loss in the six months to June 30, has flagged its interest in buying up to 200 centres from ABC Learning and the other failed company CFK Child Care Centres.
There is good reason to believe Louise Tarrant, national secretary of the Liquor, Hospitality and Miscellaneous Union (LHMU) when she says that the 386 centres considered “doubtful” by the receivers may well have been given a death sentence.
Government action needed
The Australian Services Union (ASU), which covers local government workers, has called for all ABC Learning Centres to be taken over by local government.
Now the Local Government Association has written to Deputy Prime Minister Julia Gillard asking for her to consult with councils on the future of ABC Learning.
Association president Geoff Lake has also called for the Federal Government to guarantee the future of the centres under review until at least the end of the first school term in 2009.
The NSW Teachers Federation has called on the NSW government to seize the opportunity to take over child care buildings and extend pre-school education staffed with qualified teachers.
Many not-for-profit child care providers have put themselves forward to take over ABC centres. In Victoria, TRY Youth and Family Services Community have made an offer for up to 40 child-care centres across Melbourne and provincial Victoria.
But local governments and many community based groups would require government support to acquire the centres or obtain new buildings and then funding to keep the centres going.
But rather than seize the opportunity to get the market and the profit motive out of child care, the Rudd government looks like letting the market determine which centres will remain open, which will close and whether or not workers will have jobs or lose their entitlements.
Much of the money pumped into child care is government money. Why should it continue to go into the pockets of private providers, rather than quality government controlled child care?
A move to nationalise ABC Learning and put the centres under community control would have the backing of the vast majority of the not-for-profit child care providers. They would have the support of parents relying on the centres and the staff who have put up with the sub-standard conditions for both workers and the children under their care.
Where is the campaign to save the centres?
The unions boasted about their successful community campaign, Your Rights At Work (YRAW), which fought WorkChoices.
But in the face of the threat to child care workers jobs and to child care itself, the unions have been remarkably quiet. The LHMU covers most of the ABC workers and it has held a lunchtime protest outside the Commonwealth Bank in Sydney. But its campaigning seems largely confined to press releases and lobbying.
With Rudd and Gillard unwilling to act, there is a real need for a determined campaign to force Rudd to guarantee the jobs and the child care places.
Such a campaign would be enormously popular. Kevin Rudd talks a lot about working families—and working families rely on child care. Every worker and every union is affected by what happens to child care. In particular, the burden will fall on women workers who risk being forced out of their jobs if they can’t access affordable child care.
We need to turn the YRAW campaigning techniques against the Labor MPs. We need petitions, delegations and protests at Labor MP’s electorate offices. We need demonstrations in the cities. A child care speaker at the December 2 ABCC rallies could give the issue a national profile and make it a priority for the union movement.
The LHMU needs to begin now to plan to occupy any centre that might close. With union, community, parent and potential local government support, that kind of action would keep the centres operating and put real pressure on Rudd and Gillard to act.
Market Failure
The collapse of ABC Learning is a small example of the same failure of the free market that has seen stock markets crash and governments spending billions of dollars to bail out failed banks.
In 1997, the Howard government deregulated child care. Previously childcare centres had been directly funded by the government and run by community committees. The government began subsidising childcare fees for parents, allowing them to use “the child care of their choice.” With access to what was effectively a government-backed funding stream, private child care centres boomed.
It also meant that child care centres were opened where the private providers thought they could make the most profits.
Eddie Groves, formerly the chief executive of ABC Learning, became a very rich man out of child care. He was listed in the Business Review Weekly in 2007 among the richest 200 people in Australia with him and his wife having a combined personal wealth of $295 million. In 2004, it was estimated that ABC Learning made around $100,000 per centre. ABC Learning ran 1042 centres.
Around 40 per cent of ABC revenue came from government subsidies. This year when the Rudd Labor government increased the child care rebate to $7500 per child, ABC Learning jacked up its prices 11 per cent. In the last year, child care costs were rising at twice the rate of inflation and rose 50 per cent between 2001 and 2007.
At its height, ABC Learning ran 25 per cent of child care centres in Australia. The child care centres were just a stepping stone to speculation in the effort to make even more profits. Big debts and falling property prices in the US, where he was trying to extend his child care empire, brought Eddie down.
But the people who will pay for Eddie’s market adventures are the workers, the parents and children.
The market failure is obvious—the drive for profit meant poor conditions for workers and for the children in ABC Learning child care centres.
One former worker told Solidarity that ABC “didn’t ever pay teachers wages.” The pressures on staff were “full on” with expectations that cleaning duties were everyone’s responsibility.
Recently there were complaints that office staff were being required to supervise children in the ABC centres.
She also said that overwhelmingly ABC catered for child care in the three to five year age group, because the staff to child ratios could be as low as two staff to 24 children, while for younger ages the ratio in some states is one staff to four children. This meant that there were places where there were unmet needs for child care because it wasn’t profitable.
The Rudd government has announced a $6 billion assistance package (over the next 13 years) for the car industry without requiring the car companies to guarantee one job in the industry.
If they can find that kind of money for the car industry, they can surely find the much smaller amount needed to take over and properly fund child care.
ABC Learning is a test for the Rudd government. There will be more ABC-type failures over the coming months as the global financial crisis rolls through the Australian economy. Is Rudd going to allow the madness of the market to dictate what jobs and services will survive or will the government act to undo some of the worst elements of the Howard years and get the profit motive out of child care?
By Ian Rintoul
