Friday, 7 November 2008

Gillard flags childcare rethink

Government will look at childcare industry: Julia Gillard

Ms Gillard has blamed the Howard Government for letting the private childcare industry run unchecked with no national standards.

She said that it is vital for the Government to manage the system and it must respond to the failure of ABC Learning.

"We are in a difficult situation and we've ended up here because the former government took the caps off childcare places and then just let the market rip," she said.

"They had no plan for market design, they had no workforce plan, no quality plan - they just let it go with their eyes shut.

"We want to make sure we've got a child care system that is stable for the future.

"That doesn't mean that there won't be private providers. But how this market works, how it is managed, is a question for the Government."

ABC Learning, which provides care for over 100,000 children, was placed in voluntary administration yesterday.

A Government taskforce has been monitoring the child care provider since September.

The centres remain open for now but Ms Gillard has not yet confirmed if the Government will provide any bailout funds to keep them running or whether they will guarantee entitlements for its employees if the centres close.

There are around 16,000 staff employed in ABC Learning Centres in over 1,000 centres across the country.

The company was placed in voluntary administration yesterday and owes more than $1 billion.

Community operators keen to step into ABC void

The community childcare sector should take over the running of ABC Learning centres in the wake of the company's collapse, a community childcare advocate says.

The spectacular collapse of the childcare giant, which controls around 25 per cent of the market in Australia, has raised questions about how a private operator was allowed to build up such a stake.

Lynne Wannan, the immediate past convenor of the National Association of Community Based Children's Services, says it would be "foolish" to let the company return to its previous business model.

"It is extraordinary to imagine that they would ever have been able to see you could return shares to shareholders. So there was no other route for them than to end up like this," she said.

"To imagine that you are ever going to have millions and billions of dollars t2o return to shareholders and banks based on the revenue that you get from childcare is ludicrous."

She says the community-based sector is in a strong position to take over ABC Learning centres, with just a minimal increase in workload.

"It is not a complex task to manage children's centres and those community ones that have been operating for 30 to 40 years, they can do it. They manage. That is what they do on a day-to-day basis," she said.

If community operators are to step in, they will need the Government to use its capital to secure the buildings, Ms Wannan says.

Receivers McGrathNicol have taken control of ABC Learning and moved to assure parents that fees will not rise.

But Ms Wannan says it is inevitable costs will be trimmed.

"To try and generate the surplus that you need to repay shareholders, what you have to do is cut your costs considerably and it is unfortunate but ABC has had a very long record of all sorts of cost cutting," she said.

"You would hope that we would finally get the better ratios, the better qualifications of staff, improvements to all sorts of things including food and the rest of it that has really dogged ABC throughout its existence."

Gillard commits $22m to keep ABC Learning open

Deputy Prime Minister Julia Gillard says the Government will provide up to $22 million in funding to keep ABC Learning centres open until the end of the year.

Yesterday the childcare company was put into voluntary administration and has revealed it is $1 billion in debt.

Ms Gillard says preliminary data shows 40 per cent of the company's 1,040 centres are unprofitable.

"The $22 million represents the possible costs of supporting the continued operation of these centres for two months and will allow parents to have certainty that childcare will be provided as usual," she said.

"It is there to bridge the gap between the costs of operating the unprofitable centres and the amount that is raised through their operation."

However, the funding is conditional on further figures being provided by receivers about the unprofitability of some of the centres.

Ms Gillard says until December the receivers will work with the Government taskforce to conduct a review of the company's operations and the Government will also fund some of the receivers' costs.

The Government also expects to make a further announcement about the company's future by mid-December.

But Ms Gillard says it should not be assumed that centres will close on December 31.

"This period will be used to work through the arrangements beyond the 31st of December," she said.

"We will obviously be as transparent and upfront with people as we can ... and make sure they understand what the future of their centre is."

"Our priority has been and continues to be providing child care to mums and dads who need it."

Ms Gillard has reiterated to the company's workers that it is "business as usual" until the end of the year but entitlements are a matter for the receiver.

"On the question of accrued entitlements, obviously the ability of ABC Learning to meet those entitlements is first and foremost a question for the receiver and should be directed to him," she said.

More than 100,000 children attend the ABC Learning centres across the country, which also have over 10,000 employees.

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