Dale Brazao and Robert Cribb, The Toronto Star
Child care advocates are mobilizing across Canada to fight big-box daycare saying they fear the arrival of “Fast Eddy” Groves’ company will raise fees and lower quality in this country.
“Our biggest concern is that foreign owned big-box child care is going to drive a stake through any notion of a national child-care system,” said Paul Moist, the national president of the Canadian Union of Public Employees (CUPE), which represents some 7,000 Canadian child-care workers.
“We intend to make child care an election issue.”
Moist said the union will tap into a $5 million anti-privatization war chest to fund the fight and lobby government to keep public daycare subsidies away from for-profit child care.
Groves, … has grown fabulously wealthy as his Australia-based ABC Learning Centres experienced a meteoric rise during the past decade to become the largest daycare operator in the world.
But critics fear Canada is about to experience the kind of dramatic change that happened in Australia’s child-care industry when Groves began to acquire centres there – higher fees for parents, rising public subsidies, questionable quality and a switch to more for-profit daycare at the expense of community- based centres.
The central complaint against the 41-year-old entrepreneur – that he milks government child care subsidy programs for personal profit – is also the source of his financial success.
ABC Learning Centres has aggressively expanded into jurisdictions where governments provide generous payouts to offset child care costs. Tens of millions of those public dollars have contributed to ABC profits, which rose 150 per cent last year alone to more than $70 million.
From Australia to New Zealand, the U.K. to the U.S., the formula has made Groves one of Australia’s richest people, wealthier even than Hollywood star Nicole Kidman.
A spokesperson for ABC denies the company has any plans to expand to Canada “in the near future.” …
But the Star found evidence that Groves is already here. Corporate records and interviews show that companies related to the ABC empire are setting up in Ontario, Alberta and B.C. The company fronting the expansion is 123 Busy Beavers.
Government support of daycares differs from province to province. In Ontario, the government provides subsidies to some parents, depending on need. The subsidy can be used at private or non-profit centres.
…. In Australia, before Groves came on the scene in 1988, a little more than one- quarter of that country’s 4,500 daycares were for-profit. That ratio has flipped in Australia, with almost three quarters of the daycares now private, for-profit centres. ABC is the largest chain.
Tricia Edgar, a spokesperson with the Ontario Ministry of Children and Youth Services, says big-box child care is not welcome here and that the province will not provide capital funding for companies such as ABC. But, she said, the province has no legal authority to keep ABC from setting up here.
In British Columbia, where more than half of child care is already private, a Texas-based company representing 123 Busy Beavers started making buyout offers to daycare operators in mid-September.
That’s around the same time the provincial government announced a $12.5 million capital fund to create new child-care spaces and invited, for the first time, for-profit operators to apply for the money.
Rita Chudnovsky, a member of the B.C. Coalition of Child Care Advocates, says ABC has a history of increasing fees and reducing quality wherever it has gone. And yet, the B.C. government is luring them here with public money, she says.
“We think (the province) put out the welcome mat for corporate child care,” she said. “The move to provide capital funds is a fundamental shift because it says public funds will go into privately owned assets. When we move to foreign- owned, for-profit operations interested in increasing profits it takes child care in British Columbia in a very different direction.”
B.C. government officials did not return requests for an interview.
In Alberta, the province with the greatest growth rate in Canada, about 65 per cent of the province’s daycare facilities are owned privately, and 35 per cent are non-profit.
Bill Moore-Kilgannon, executive director of Public Interest Alberta, says his group is “deeply concerned.”
“We’ve heard they’ve purchased 20 centres in Calgary and 10 in Edmonton,” he says.
In Australia, parent fees at daycares have risen 123 per cent while household income has only increased by 62 per cent, according to an Australian task force report.
To help compensate for those rising fees, government spending on child care subsides have skyrocketed.
Australian news reports say about 40 per cent of ABC’s revenue comes from government subsidies.
At the same time, some observers say quality child care has fallen.
A 2006 report by the Australian Institute, a national think tank, reported that 18 per cent of the 77 ABC workers surveyed said they wouldn’t send their children to the centre where they worked because of quality concerns including food, cleanliness, equipment and staff. That compares to 4 per cent of workers in community-based, non-profit operations.
The study also predicted that ABC would expand into Canada and Asia.
“Plans to introduce a comparable government subsidy scheme for child car in Canada make it the more likely destination,” the report says.
Lynne Wannan, convenor of Australia’s National Association of Community Based Services, toured Canada in 2005 warning Canadians against adopting an ABC- style approach to child care.
“Plastic grass, distant management, little parental input and millions of taxpayers’ dollars that could have led to real improvements in the quality of child care going into shareholder pockets,” is what Canadians can expect from big-box corporate ownership, Wannan says.
The Groves daycare empire has grown with remarkable speed in the past few years.
Recent purchasing raids into the U.S. and U.K. have made Groves’s kiddie care empire the largest in the world with some 2,400 daycares in its stable and a ticker tape value of more than $2.5 billion.
Corporate records show three ABC-related companies – ABC Acquisitions, 123 Global and 123 Busy Beavers – share a director named Donald Jones.
ABC Acquisitions and 123 Global, two companies that scout out international growth opportunities for ABC, share the same Brisbane address where Groves’s ABC Learning Centres was also headquartered until recently.
A report by Citigroup analysts last year reported a close corporate lineage between Groves’s ABC Learning and Jones’s ABC Acquisitions.
It says the acquisitions arm finds daycares appropriate for international expansion and then sells the properties to ABC.
“We believe the purpose of the ‘arm’s length’ arrangement is to enable the (daycare) licence to be categorized as an asset in (ABC’s) balance sheet,” the report concludes. “Once a decision is made to proceed on a centre, (ABC) are committed to acquiring the centre.”
The report also says ABC’s development team is looking to expand into Canada. …
In August, Groves and several other ABC executives incorporated a company called ABC Canadian Holdings in Brisbane, which lists ABC Learning Centres as the sole shareholder.
A Groves spokesperson said ABC Canadian Holdings “is a dormant company with no assets and no trading.”