Analysis: Australia – Childcare reformed in wake of ABC collapse

Helen Penn, Nursery World

ABC’s collapse led to changes in Australia

….in the past year there have been some new developments in policy and practice that have put Australia back on the childcare map.

The new Labour government …has paid much more attention to childcare. And the messy collapse of the corporate giant ABC Learning, which was the biggest operator …in Australia, has led to a rethink about the role of government and of the private sector in childcare.

Australia is a federal country. There are six states, each of which has its own constitution, has its own budget, and is in control of its own domestic affairs. There are also two mainland quasi-independent territories.

In terms of childcare there has been relatively little consistency. Levels of provision, requirements for trained staff, curricula, regulation and so on were all dealt with at a state level. ….

The Rudd government has strengthened the mechanisms for sorting out policy at a national level. The Council of Australian Governments (COAG) has the job of initiating, developing and monitoring the implementation of policy reforms that are of national significance.

In July 2009 COAG agreed to set up a National Early Childhood Development Strategy. The first part of the strategy, the National Quality Agenda for Early Childhood Education and Care, which applies throughout Australia, was agreed in December 2009. This is intended to create new quality standards, including higher staff-to-children ratios and better trained carers and early childhood teachers, with requirements phased in over the next decade. ….


COAG also agreed an early learning framework called Belonging, Being and
Becoming. This framework has five learning outcomes, illustrated by very
practical sets of examples:
– children have a strong sense of identity
– children are connected with and contribute to their world
– children have a strong sense of well-being….

This framework was the result of extensive negotiations with a very wide range of practitioners and academics,….


These national developments were given extra urgency by the …collapse of the corporate giant ABC Learning in November 2008, amidst accusations of poor financial management ….

ABC Learning ran over 1,000 centres in Australia, as well as having investments in a number of other countries, including the UK …The ABC share of the Australian market was so substantial that the Government could not let the centres themselves go under – too many nurseries faced closure.

It has taken the receivers over a year to sort through the business and to decide about the future of the nurseries. The government has bailed out well over A$100m to keep the nurseries open ….

Childcare workers and parents lobbied hard to have the nurseries taken under government control. A Senate committee, set up in the wake of the ABC failure, commented on ‘the deficiencies in childcare policy and regulation’ that led to the collapse. It recommended that small-scale or individual independent operators and not-for-profit and community-based organisations should provide services, rather than childcare being left entirely to the market.

As a result, the government has overhauled its regulations, but it has not changed its policy as much as many would like. Before demand-side funding (parent childcare subsidies through the tax system) was introduced, the previous system had been to give grants to community organisations providing childcare. The switch to demand-side funding had led to the growth of the private for-profit market and enabled the growth of ABC Learning. ….

Nurseries sold off

The Australian government continues to support demand-side funding, but it has intervened in the sale of the remaining ABC assets. Of the 1,000 or so ABC nurseries, about one quarter were deemed unviable by the receivers and sold off at peppercorn prices, mainly to non-profit organisations. The remaining 715 nurseries were put up for sale. ….

In the end there were only two …bidders – the private equity company ….and a charitable consortium branded as Good Start. The receivers, unsurprisingly, awarded the bid to Good Start.

The charitable consortium…. has borrowed money and tapped private philanthropists to help fund its bid. The centres will now be run as community-based, low-profit centres to help children from disadvantaged backgrounds, although they will also cater for working parents.

Investors will be paid below-market rates of return on their investments, with the rest of any profits from childcare fees ploughed back into the centres to improve the quality of service.

Can we learn any lessons from these turnabouts in Australian policy? First, in a recession, private for-profit nurseries are vulnerable. Second, corporate firms are problematic, particularly if they have taken on childcare as a speculative investment, because it takes time – and government money – to unravel their affairs if they go bankrupt. Third, even when they get into a mess, corporate firms are unlikely to be repentant. ….

Fair Trade model

One of the ideas being bandied about when I was in Australia recently was the notion of ‘Fair Trade’ nurseries.

Fair Trade goods are now a well-known idea. The Fair Trade movement favours small co-operative producers, who plough the profits back into the business in order to pay a fair wage to the workers rather than have profits extracted for shareholders or owners. …. Fair Trade is also synonymous with high quality and community involvement….

The lesson from Australia is that it has proved too risky, as well as morally repugnant, to make a profit out of children.