Hundreds of childcare workers face the axe

April 18, 2009

On April 15, receivers for collapsed childcare company ABC Learning announced they had found new operators for 210 of its 241 childcare centres deemed unprofitable. As well as the 55 centres already shut down at the end of last year, 19 are set to close next month.

A further eight — in Western Australia, Tasmania and Victoria — are also under threat, with no potential operators identified and no suitable alternatives for children using those centres to relocate to.

These arrangements mean about 450, or 20%, of ABC's current childcare staff are set to lose their jobs.

ABC Learning had grown to be Australia's biggest childcare provider, running 1100 centres across the country after swallowing up several smaller rivals. In 2005, company director Eddy Groves made it to second position on Business Review Weekly's list of the richest people under 40. That year, his company received $128 million in government subsidies — 44% of ABC's income.

In July 2008, when the federal Labor government increased the childcare tax rebate to 50%, ABC raised its fees by 11%.

However, in November ABC Learning collapsed with about $1.5 billion in debts after Groves gambled much of the company's capital on the US sub-prime mortgage market. When the company went into receivership, PM Kevin Rudd announced a $22 million bailout to keep the childcare centres running until the end of the year.

In the wake of ABC Learning's downfall, the Rudd government established a Senate inquiry into childcare provision, which is due to report in June. However, like its Coalition predecessor, the Labor government has made it clear that rather than an adequately funded, community-run, not-for-profit childcare sector, it favours leaving this crucial service to the market.

ABC Online said on April 15, deputy PM Julia Gillard stressed that the government "did not want to be long term owners of child care centres".

Researchers Deborah Brennan and Sue Newberry, in a submission to the Senate inquiry on February 6, explained how in 1991, the then-Labor government ended its subsidies to non-profit childcare centres and moved to individual payments to parents for use at a childcare service of their choice.

This approach was extended with the Howard government's introduction of the Childcare Benefit in 2000, which "has been at the heart of the corporate expansion of child care in Australia".

As a result of this shift, the childcare sector has become overwhelmingly corporate-dominated, fees have hiked up, the quality of services provided is placed second to the generation of profits and childcare companies are receiving massive public subsidies.

Childcare workers have suffered greatly under this arrangement and continue to be among the lowest-paid workers in Australia. In 2004, Groves sued the Queensland secretary of the Liquor, Hospitality and Miscellaneous Union after it published information about the poor working conditions of ABC Learning staff.

The Australian reported on March 26 that in a submission to the Fair Pay Commission, the Australian Childcare Alliance advocated a wage cut for childcare workers because of the economic crisis, despite many now earning as little as $14.74 a hour.

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