Ontario teachers shouldn’t invest in for-profit child care

By Charles Pascal, professor at OISE, University of Toronto, and former early learning adviser to the premier of Ontario
Toronto Star

Ontario Teachers’ Pension Plan recently purchased Britain’s largest for-profit child-care chain. Will new owners improve quality or cut back on salaries?

While there have been a few lean years, it’s nice to see the Ontario Teachers’ Pension Plan making tons of money for its more than 300,000 retired and current Ontario teachers, with a $5.1-billion surplus for this past year.

Ontario’s teachers have among the best retirement benefits in Canada. While some might think they are a bit too generous, I am not among them. The majority of our publicly supported teachers work hard in service of a better future for all of us and deserve to be properly compensated. But I do wonder if the rank and file would be comfortable with how their pension plan generates some of the resources that feather their nests.

Ontario’s teachers might wish to know that its pension plan leadership recently purchased Busy Bees, Britain’s publicly traded and largest for-profit child-care chain for more than $400 million and have plans for major expansion in other parts of the world.

Busy Bees was previously owned by the now-disgraced ABC big-box child-care company in Australia, known for its cut-rate approach to kids. ABC spent a good deal of energy fighting Australian regulations designed to improve quality while employing poorly qualified staff and spending little to assist their professional development.

When ABC bought Busy Bees from its founders, it partnered with a U.S. junk bond dealer who had spent a few years in the pen for securities no-nos. ABC went bust in 2008 as a result of huge debt repayment challenges, having overextended itself to become the world’s largest corporate kid’s-care business. Busy Bees’ original owners then bought back a majority equity position, with the highest-paid director earning a cool million this past year. Enter stage right, the Ontario Teachers’ Pension Plan, the new Busy Bees proprietor as of late last year.

Yes, profit-driven preschool is big business, especially if corporations like ABC undercut the already low wages paid to early childhood educators and skimp on better working conditions that would promote children’s learning, health and safety. Will Busy Bees’ new owners ensure proper investments in quality? Or will the pressure to earn enough to deal with unfunded liability challenges of the teachers’ pension plan lead to cutting back on staff salaries, professional development and educator-child ratios?

No question, the objective of the pension plan leadership is to produce maximum profit for teachers’ retirement. Over the years, they have done it extremely well. It is also true that most of us who still have pensions don’t know what’s in our pension holdings and/or the process for stock picking.

But there is an increasing desire on the part of big and small investors for a socially responsible approach that makes money while making a difference. The notion that a values-based approach to the markets cannot reap healthy profits is pure hogwash.

Given the huge assets of the teachers’ plan, it has the potential for meaningful engagement with the companies it owns about things like employment practices and the environment. A while back, I had a conversation with a previous head of the teachers’ plan about the social and economic impact of promoting a healthier, safer and more prosperous future that could derive from even a modest approach to socially responsible investing. He showed no interest, save for the influence the plan has tried to exert to improve governance practices of its “holdings.”

I’m certain that teachers and their unions, who valiantly fight for publicly funded education, would not want to be party to turning early education into a stock market commodity. And even when a union rep on a pension board raises an objection to a purchase infused with ethical contradiction, how often are they successful in swaying the “real” money-making experts around the table?

It’s crucial that our teachers and their reps pay closer attention to the holdings of their pension investments. In Ontario and elsewhere, we have seen an extension of publicly funded learning beginning earlier and earlier; inserting the profit motive of these big-box chains into the mix is simply not aligned with teachers’ belief in the importance of public investment in education.

How would teachers feel if their pension managers started buying up private elementary and secondary schools in Ontario and beyond? My guess is they would feel much better if their retirement investment objectives were more aligned with the aspirations they have for the future social context of the students they mentor.

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The shaky business of childcare and past lessons

Sydney Morning Herald
By Lisa Bryant, convener of Australian Community Children’s Services (NSW)

Australians seem, on the whole, to be happiest when our government is quietly taking charge of things without really bothering us with the ins and outs. We like it best when it acts like benevolent parents, efficiently cleaning up our messes, footing the bills and occasionally splashing out on the odd treat. But much like we expect of parents, we expect the government to get it right and without embarrassing us too much….

Parents are also supposed to act in our interests. We expect them to have long memories of our misdemeanours and to put limits in place to ensure that we don’t make the same mistake twice.

The Australian government cleaned up and paid the damage bill for one childcare mess after that spectacular failure of publicly listed provider, ABC Learning. Will the listing of a new childcare company on the stock exchange mean another damage bill for the country?

When ABC Learning went bust in 2008 it cost the Commonwealth $56 million to keep the centres operating until buyers were found for them. At the time it went under, ABC Learning provided almost 20 per cent of Australia’s childcare. Post the bailout, the government made strong noises about ensuring that it would put in place effective measures to ensure that never again would so many families’ childcare be put at risk.

But somehow, unlike the watchful parent we would like it to be, the government seems to have forgotten the misdemeanours of the corporate world when it comes to childcare and is now watching on the sidelines while three new corporate providers arise. The first company to list publicly after ABC Learning’s demise, G8 Education, holds about 3 per cent of the market with its 233 centres. The second one, Affinity Education started trading in December and will operate 68 centres. A third one, Sterling Early Education was supposed to go public early this week. This has been delayed while management recheck its forecast figures. Sterling hopes to purchase 77 centres.

Since the Howard era, successive governments have been indifferent as to the ownership structure of those providing childcare. If a service can attract families it is paid Child Care Benefit on behalf of those families. This is one of the things that makes childcare look such a good investment on paper – a guaranteed cash flow paid directly into company bank accounts by the government each week.

What is never seriously considered, however, is which sort of provider offers the highest quality childcare. For some provider types, financial return on investment is more highly prioritised than quality of care on offer….

For corporate providers, growth is everything. While they can grow by opening new childcare services, they prefer to take the less risky option of purchasing existing services. This is the strategy that G8, Affinity and Sterling have chosen.

Over the past year, G8’s share price has skyrocketed from $1.35 to $3.30 on the back of capital raisings, debt issuance and service acquisition announcements. The G8 share price appears to have already fully anticipated the immediate growth prospects for the company. By failing to hose down investor expectations as the share price shot up, the company is faced with having to support what some would consider a manifestly overpriced stock. It can only do this by either cutting costs or growing.

Cutting costs in childcare generally means reducing staff costs and G8 is currently close to the bone, spending just 60 per cent of its revenue on employee expenses.

Some of us look at the inflated share price as a symptom of a problem, but those who structure finance look at it as an opportunity. Hence, the listings of Affinity and Sterling. From the perspective of a private operator, one publicly listed company is good for an exit strategy; three such companies competing for market share is Christmas. No matter that paying too much for centre acquisitions is one of the things that got ABC Learning into hot water.

Publicly listed companies’ first mandated responsibility is to increase shareholder value – this can be in conflict with the provision of high-quality childcare. But even ignoring the ethical question of who should be providing childcare, the similarities between the new corporate providers and ABC Learning should be ringing warning bells. Could possible inflated share prices, questionable quality and shareholder pressure to grow cause similar results?

Unless our government takes some action to put boundaries around the growth of these three corporate providers now, once again they could be left cleaning up a big childcare mess.

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Childcare operators being enticed away from outer growth areas

The Age

The head of Australia’s biggest childcare operator, not-for-profit group Goodstart Early Learning, says the lure of higher returns is driving private operators to set up shop in wealthy, inner-city suburbs, rather than burgeoning outer growth areas.

Goodstart chief executive Julia Davison said some operators, faced with rising costs, were choosing to set up in high-income areas where they could charge higher prices for “premium” care.

“There is much more incentive for for-profit operators to set up in those localities where you can charge a high fee and where you’re going to get a high occupancy than there is for them to set up in middle or lower economic suburbs,” she said.

“If you wanted to make a profit, those are the obvious locations to go to… I wouldn’t be rushing to the growth corridors of Melbourne or low-socio-economic corridors.”

Her warning was echoed by Professor Deb Brennan at the University of New South Wales Social Policy Research Centre, who said reforms were needed to ensure taxpayer subsidies were not used to cover luxury services such as “baby massage, on-site chefs and yoga for toddlers”.

She said childcare operators in inner-city suburbs in Sydney and Melbourne were charging as much as $170 a day for childcare – compared to the national average of about $100 a day.

“We need to make sure that public subsidies get spent on reasonable costs, and not on luxury items,” she said.

Private operator Only About Children, run by investment banker turned childcare entrepreneur Brendan McAssey, charges up to $160 a day for its centres with services that include foreign language classes, nutritionists and health checks.

Its operations are mainly clustered in well-heeled suburbs such as Mosman, Neutral Bay and Rose Bay in Sydney, and it also operates a centre in South Melbourne.

The federal government, under its Childcare Rebate, covers 50 per cent of the cost of childcare up to $7500 a year. The rebate is not means tested.

The Productivity Commission, which is currently scrutinising the sector in an inquiry, says the subsidies cost taxpayers $5 billion a year “and growing”.

The Australia Institute, in its submission to the inquiry, pointed to an “uneven availability of childcare places” in Australia, noting that competition in the sector – and therefore choice for parents – was likely to be greatest in areas where the returns were higher.

The thinktank called for means testing of the rebate and to redirect funding to centres in areas of “highest need to maximise service affordability”.

Goodstart, which took over ABC Learning’s centres after the private operator collapsed in 2009, is owned by a coalition of not-for-profit charities including Brotherhood of St Laurence. It currently operates 641 centres around the country and has a national market share of about 10 per cent, IBIS calculates.

About 40 per cent of childcare centres nationwide are run by not-for-profits.

Ms Davison said the need for private operators to keep on top of costs and make a profit meant many were pursuing a “premium” brand of quality care in inner-city areas.

“We may not see the growth that is needed in those other communities to support both children and working families,” she said.

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The debate over for-profit child care heats up

by John Geddes, MACLEANS.ca

In debates over how to provide care—whether in hospitals, seniors’ residences or daycare centres—clashes along the border between not-for-profit and for-profit services are particularly ferocious.

For free-market types, it’s axiomatic that injecting competition into the system should boost choice and, as a result, quality and efficiency. For social democrats, it’s equally self-evident that profit-seeking providers are more likely to sacrifice standards, especially by hiring fewer and less-qualified staff, than the not-for-profits.

… Toronto-based Childcare Resource and Research Unit’s new report flagging, with some alarm, the rise of for-profit daycare. For-profit spaces grew to 28 per cent of those available in Canada in 2010, up from 20 per cent in 2004. …

My inclination, for what it’s worth, is that policy should support choice and variety in the pre-school years, while means-tested subsidies for care should flow to low-income parents. As well, I think research that raises concerns about daycare (like this report on less-than-stellar results from Quebec’s generous system) deserves close attention….

For instance, a study published last year in the Journal of European Social Policy usefully surveyed the cautionary experiences of Sweden, Britain and Australia, as all three countries moved toward more for-profit care in recent decades, with uneven results.

The paper, jointed authored by British, Swedish and Australian academics, is called “The marketisation of care: rationales and consequences in Nordic and liberal care regimes.” It looks at what happened after social-democratic Sweden extended taxpayer subsidies to for-profit child-care providers for the first time in 1991; the Brits used tax credits to spark a 70 per cent increase in for-profit child care between 2002 and 2010; and Australia introduced a voucher system that helped child-care businesses expand starting in the 1990s.

These are complex stories that followed very different paths. Still, the report points to a raft of findings that suggest market forces failed in all three countries to reliably boost quality. It cites three UK studies that rated not-for-profit child care run by local authorities better than for-profit providers, including a big 2007 study, which tracked 19,000 children born in 2000-2001, and concluded that the non-profits offered “higher quality provision in almost all dimensions measured.”

An Australian study rated non-profits top, independent for-profits second, and corporate for-profits at the bottom. In Sweden, staff qualifications, notably the number of pre-school teachers with university degrees, is lowest in for-profit child care centres….

Policy needs to follow the evidence….

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Willowbrae aims to be McDonald’s of daycare

COLLEEN COSGROVE, Business Reporter
The [Nova Scotia] Chronicle Herald

Just as a big Big Mac in Alberta tastes the same as one purchased in Nova Scotia, W… Childcare Academy intends to offer parents coast-to-coast consistent and reliable service.

Halifax entrepreneur W C launched the flagship …. in Dartmouth in 2011; a year later, the daycare is doubling in size, three more are on tap to open in metro Halifax and 15 other locations are in the works across Canada and the United States.

“Our goal in the next 10 years is to open 100 locations,”… “We know we have a better brand and we’ve built a good investment model, so everyone wins. During our research three years ago, I didn’t see any one brand that could be the McDonald’s of the child-care industry, so we thought this was a great opportunity. That’s our role; that’s who we’ll be.”…

The … business model taps entrepreneur investors to finance the daycare, hire a facility director and an on-staff chef. Even the facility’s accounting and bookkeeping needs are outsourced….

“This is all so the director is truly focused on education and on the children and not be worrying themselves with meal plans and books,” ….

If they won’t listen to the experts, maybe they’ll listen to the accountants – Commercial child care doesn’t work. Even the accountants say so.

Hans Rollmann,The Independent.ca [Newfoundland and Labrador]

There are, in this world, some things that are so intuitive they shouldn’t require a commissioned study by a certified accounting firm to “prove”.

But, when certified accountants are commissioned and rise to the occasion, perhaps their reports will prevail where common sense, thus far, has not.

One such example is a report released in late October on the viability of commercial child care in this country. Commissioned by the Coalition of Childcare Advocates of British Columbia, it’s a report that this province needs to be paying attention to.

Commercial? Doesn’t. Work.

The Dragomir Report – Can Child Care Thrive in a Speculative Investment Environment? – cuts to the heart of one of today’s most vital policy questions, and an issue I’ve written about before. Does childcare work – achieve positive results for our children and our society – when operated commercially by the private sector according to free market principles?

The answer – according not just to many experts but now also according to Dragomir’s accounting analysis – is a resounding no.

What does this mean for us? Well it means we must, first and foremost, pay heed to the fact we are teetering on the edge of a very dangerous public policy precipice. The fact most of our provincial and federal governments allow commercial childcare to spread unchecked means the dangers highlighted in Dragomir’s report are growing steadily in this country. This is an issue that needs to be addressed sooner, rather than later.

In actual fact, as the report demonstrates, even commercial childcare providers don’t operate according to free market principles, because they rely on public subsidies – government money – to make their operations viable. Most parents can’t afford the outlandish fees charged by commercial providers, so government subsidizes those fees.

And that, according to Dragomir, and according to childcare researchers and advocates across the country – is simply not sustainable. Essentially, it’s transferring millions of dollars to private business owners; millions which could be much better spent building a no-fee public system (or a virtually no-fee public system, such as the overwhelmingly popular $5-a-day childcare system Quebec introduced in the 1990s. Even at its current $7-a-day level, it’s far more accessible than anything in the rest of the country).

The only way to make a profit off childcare, the report explains, is by doing one of two things: cram more children into smaller spaces with less supervision and access to learning activities, or increase fees to parents. The first option hits hard on the children, and results in a more dangerous and reduced learning environment. Not what we want for our children, is it? That’s why government regulates childcare so closely – thus preventing the sorts of cost-cutting, profit-making initiatives that might be used at Wal-Mart. The second option – higher fees – hurts parents. But more broadly, it hurts all of us. When fees go up, that means government comes under pressure to boost subsidies and help parents with the fees – and it usually does. So government winds up spending more money – which has to be diverted from other programs, like health care or education or any of a number of other already underfunded programs – not because there’s a legitimate need for more money to continue to provide the service, but simply because the private operators want to be able to make a larger profit.

When your childcare regime is reliant on private, commercial, for-profit operators, those operators have one of the most effective proverbial, metaphorical guns held to government’s head.

And that should not be acceptable to anyone.

Other risks

There are other dangers as well. When a significant proportion of your provincial childcare system comes under private commercial operator control, those private operations gain significant lobbying power. If they want to reduce staffing costs and increase the potential labour pool of trained childcare staff to draw from, for instance, they might pressure government to reduce the qualifications necessary to work at a childcare facility. They might pressure government to reduce the length of training courses, or the amount of ongoing training and skills childcare staff have to have. These are ways they can reduce the value and cost of the childcare staff they hire and pay for. Yet once again, the ones who pay the real cost – and who wind up hurting as a result – are the children. The lower the qualifications, training and skills of the staff looking after them, the more disadvantaged – and dangerous – the environment our children will be growing up in.

No matter which way you look at it, private, commercial, for-profit sector childcare provision does not make sense.

This isn’t to diss the private operators themselves. Many of them probably got into the business because they sensed a need for good childcare. And they were right – there’s a great need. The problem is, government should never have allowed the opening for private sector commercial childcare provision to emerge. So long as government continues to regulate the childcare learning environment – and regulate it they should, otherwise the safety and wellbeing of our children will be in danger – it is virtually impossible for a childcare system to thrive based on commercial private sector market principles (without endangering and negatively affecting the upbringing of our children).

Cautionary tales

One of the key case studies the report looks at is the fate of commercial child care in Australia. In that country, a private childcare company – ABC Learning Inc – managed to buy control of 25% of child care spaces in the country in the early 2000s. Having expanded too rapidly and aggressively, it then proceeded to collapse: threatening to smash a huge hole into the availability of childcare in that country. With more than a quarter of all childcare spaces under threat, the Australian government had to spend millions to prop the company up while it worked out a deal with the non-profit childcare providers for them to take over the failed private sector operation.

The spread of private, commercial childcare in Australia cost taxpayers a fortune…

The spread of private, commercial childcare in Australia cost taxpayers a fortune, and in more ways than one. Not only did the Australian government wind up on the hook for millions when the company failed, but it had been dishing out millions in subsidies to the company the whole way along. In fact shortly before its collapse, 44% of the company’s “profits” came directly from the Australian government! One is tempted to call such an operation not a ‘commercial venture’, so much as outright theft from the public purse.

Yup, that’s right. Private, commercial childcare almost caused the land down under to go under, in a manifestation of literary punditry which would have inspired clever, yet tragic, headlines.

That’s the extreme end of the spectrum, of course. Or perhaps not. Already there is one publicly traded commercial childcare company in Canada – Edleun Group – which is expanding in a way eerily similar to the Australian case. In fact, it’s the growth of that particular provider which inspired childcare advocates to commission the Dragomir study. But, they point out, the results of the study aren’t exclusive to Edleun: the results can be applied to “a commercial child care chain, whether a publicly traded company, as in this analysis, or another form of business ownership.”

What is to be done?

In Newfoundland and Labrador, the provincial government currently spends over $26 million on childcare, much of that going into the pockets of private operators in the form of subsidies.

It’s time for that to end, and for the provincial government to take on the urgently needed task of building a provincial, universally accessible, public childcare system. This is, recall, the province which last year ranked very poorly in a report on child care in Canada. As of now, our tax dollars – millions of them – are being funneled from the provincial treasury into the accounts of private commercial operators, running childcare facilities like businesses in a model which a growing array of research – like the Dragomir Report – are indicating is both unsustainable and dangerous. The provincial government ought to buy them out, end the subsidies, and redirect its money into building a viable province-wide public model.

Enough parents are struggling to find and pay for childcare as is. We can’t afford to waste yet more time and money on unsustainable commercial models. Let’s build a provincial public childcare system.

One we can all be proud of. One we can all access.

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Children Ahead of Profit

Our solution to BC’s child care crisis does not include the expansion of commercial child care chains.

Commercial child care chains are companies that own or franchise large numbers of child care programs. As with other commercial enterprises, their primary duty is to maximize the return on investment for owners, investors and shareholders. In our opinion, this is likely to put making a profit ahead of the needs of children and families!

Over and above the concerns raised by the primary duty of these chains, there is a considerable body of Canadian and international research that indicates that quality early care and learning programs are best provided through community based non-profit or public operations, not businesses.

CCCABC has long been concerned about the attempts by commercial child care chains to establish in BC. In 2007, when a foreign-based corporation actively but unsuccessfully tried to take over community-based child care providers, we launched the BC Child Care Not For Sale campaign.

Recently, we have been observing an increase in the number of child care chains looking for business opportunities here and in the rest of Canada. They are companies, with investors and/or shareholders, who own, want to own, or franchise, a large number of child care programs. Some promote their services to a particular clientele, for example, to employers as a response to the child care needs of employees for child care or to parents as early schooling for their children. These niche services appear to charge top-of-the-scale fees making them inaccessible to families with moderate incomes. Other companies appear to emphasize acquiring real estate and operating in well-to-do communities.

All seek to realize a profit or a return on investment. And, when and if a commercial child care chain fails (as in Australia) – families, communities and governments are left to pick up the pieces.

The CCCABC‘s position is that public funding should not go into profits for shareholders or investors. We have asked the BC Government to place a moratorium on new approvals of Child Care Operating Funding (CCOF) for commercial child care chains.

Mounting evidence supports the CCCABC position that relying on the market place is NOT the way to build a system that meets the needs of children, families, educators or communities.

Can Child Care Thrive in a Speculative Investment Environment?

In 2010, a group of child care centres in Alberta purchased by Edleun Inc. became the first commercial child care chain in Canada to list on the stock market, specifically the TSX Venture Exchange. This created considerable concern but it also provided an opportunity.

One concern was that Edleun appeared to be modeled on the Australian chain ABC Learning Inc. ABC’s rapid growth and subsequent failure caused havoc in that country – negatively impacting company investors; funders; the public purse; as well as access to and affordability of child care.

However, the fact that publicly traded companies must make a quantity of information available through the public reporting process was the opportunity. Such information might provide insight about the business approach typically used commercial child care chains and either support or refute the concerns about commercial child care chains.

The CCCABC decided that an analysis of the business model demonstrated by Edleun would be a useful and that it should be undertaken by someone familiar with the costs and constraints of delivering child care services in Canada. Gerry Dragomir, a Vancouver CMA was engaged. Dragomir’s company has knowledge and experience as public accountants working with the child care sector in British Columbia for the past 30 years.

Dragomir’s report Commercial Child Care in Canada: Can Child Care Thrive in a Speculative Investment Environment? is based on public information from government, the publicly traded child care chain, child care organizations, the public media and from information obtained by direct inquiry. His analysis provides information on the financial viability and sustainability of child care delivered via Edleun’s business model.

Can child care thrive in a speculative investment environment? Based on the analysis, Dragomir’s report concludes that the answer to this question is “not likely”.

The CCCABC has decided to make Dragomir’s report publicly available:
Commercial Child Care in Canada: Can Child Care Thrive in a Speculative Investment Environment?
Media Release

Manitoba’s first for-profit day care opens for business

Megan Batchelor, Global News

Parents struggling to find a day care might find relief in a new for-profit day care that has opened downtown.

Daily rates at Kids and Company average about $50 for pre-schoolers and $75 per day for infants. That’s about twice the going rate.

If the company parents work for is one of its clients, they are guaranteed a space in the Fort Street facility.

“For companies that have moms that have babies, they need to have childcare to come back to work,” said Victoria Sopik the CEO of Kids and Company. “And if they can’t find a day care they can’t come back.”

Nine thousand Manitobans are on a waiting list for day care.

While the Manitoba Child Care Association agrees there is a shortage of spots and early child care workers, it doesn’t believe for-profit care is the right fix.

Corporate for-profit daycare comes to Winnipeg

CBC News

In a few weeks the doors open on Winnipeg’s first corporate for-profit daycare.

Kids and Company will open its doors downtown at Fort Street and York Avenue next month with 90 spaces, including at least 20 for infants. But the service will only be available to employees of member corporations…

Sopik said 70 corporations each pay $5,000 in annual memberships but that only guarantee spaces for their employees’ children.

Employees are still responsible for footing the bill for the care, which is roughly double the fee that non-profit daycares are allowed to charge.

Infant spaces at Kids and Company will be about $70 per day and pre-school spaces will be $40 a day….

Non-profit daycare director concerned

But some who work in the not-for-profit child-care system say they worry the gap in fees could create a two-tier system.

April Kalyniuk, executive director of the Lord Roberts Children’s Programs, said she does not like the idea that people who can afford to pay more for child care can jump the queue to get a spot….

Company brings for-profit daycare to Toronto apartment buildings

Adrian Morrow, Globe and Mail

Daycare company Edleun is teaming up … to bring … new childcare spots to apartment buildings. …

Edleun will convert common areas, pools or other spaces in buildings owned by the Canadian Apartment Properties Real Estate Investment Trust (Daycare company Edleun) into childcare facilities….

Critics of for-profit daycare argue money-making care in general is inferior to the non-profit variety because earnings that could otherwise be funnelled back into the service must be used to pay dividends.

“It’s capitalizing on a crisis in childcare in Ontario – why don’t we have childcare in some parts of Toronto? It’s because there’s a vacuum in public policy,” said Martha Friendly, executive director of the Childcare Resource and Research Unit….

Edleun Group buys 3 child care centres in Ontario for $4M; passes Alberta centre

Canadian Press

CALGARY – The Edleun Group, Inc. says its has completed the acquisition of three child care centres in the Greater Toronto Area involving 356 licensed spaces in a deal valued at $4 million.

The centres, which have 112, 83 and 161 licensed spaces respectively, are all located in premises under long-term leases “in a major commercial node of the Mississauga, Ont., area.”

The company also said that, after due diligence, it had decided not to acquire a 70-licensed-space centre in Airdrie, Alta.

Edleun now has a total of 4,641 licensed spaces in 44 early learning and care centres, including centres owned and transactions previously announced to acquire, redevelop or build.

Big-box child care buys Ontario centres

Laurie Monsebraaten, Toronto Star

… Edleun’s expansion into Ontario comes at a time when the province’s patchwork of mostly non-profit daycare programs is teetering on the verge of collapse due to municipal cuts, chronic provincial underfunding and the loss of 4- and 5-year-olds to all-day kindergarten.

Advocates who have been lobbying for a public or non-profit system of high-quality, affordable child care for all families that need it, say Edleun’s arrival marks the beginning of the privatization of daycare in Ontario….

Ontario Early Learning adviser Charles Pascal, who has just returned from Australia where he talked to child-care staff who worked at former ABC Learning centres, is alarmed by the arrival big box child care in Ontario….


Acquisition of Five Additional Western Canada Centres

CALGARY /CNW/ – Edleun Group, Inc.

Edleun is purchasing three operating child care centres as well as the underlying real estate from a single vendor for $5.3 million. Two of the centres are located in the city of Calgary ….

In addition, Edleun is purchasing an operating child care centre in Vernon, BC for $300,000. …the Company will enter into a long term lease commitment that will provide Edleun with a right of first refusal to purchase the underlying real estate. This acquisition will add 85 licensed childcare spaces to the Company’s portfolio….

In total, the new acquisitions announced today will add 421 licensed child care spaces to the Company’s portfolio representing an increase of 12.3%. This brings the total, including centres owned and transactions previously announced to acquire, redevelop or build new centres, to 3,801 licensed spaces in 39 Early Learning & Care centres….

Children aren’t widgets

Darryl Walker’s blog, President, BCGEU

The expansion of big box, commercial daycare centres in British Columbia is not a good thing. Children aren’t widgets. Their care should not be entrusted to a corporate entity. I mean, would you trust your three-year old to Wal Mart?

Private daycare operator Edleun recently announced it was taking over five daycare centers in BC, including three in the Lower Mainland. As a corporation, Edleun’s focus is to deliver a return to its shareholders.

The only way private daycare centers make a profit is by charging higher fees, paying staff less, and by gambling on real estate. None of these prospects is good for working families. Average families probably can’t afford private daycare – and certainly not if you have more than one child.

We need an alternate vision: a publicly-funded, accessible, community-based early childcare system. And we need it yesterday. We needed it five years ago. This type of care brings out the best in children, is affordable for BC families, and encourages the development of a skilled and committed workforce.

We are being let down. Big box daycare is not a solution. B.C. families deserve better.

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For-profit firm plans seven centres in BC: Critics charge ‘big box child care’ too risky, push for control to move to Ministry of Education

Tracy Sherlock, Vancouver Sun

A for-profit, publicly traded company that is rapidly expanding across Canada plans to open seven child care centres in B.C.

Edleun Group, Inc. purchased five B.C. daycares – three in Metro Vancouver and two in Kelowna – for $4.1 million, Calgary-based Edleun said in a news release. The company also plans to build two new centres in Kelowna.

Edleun’s name is short for Education Learning Universe, and the company says it is the largest for-profit child care operator in Canada with 30 centres. The company’s website states that its goal is to acquire 10 per cent of the 8,800 child care centres in Canada.

This expansion has some child care workers worried about the “commercialization” of child care, expressing concerns that the quality of care decreases when the provider is a for-profit business. But Edleun’s chief executive officer Leslie Wulf said in an interview that his company is all about quality and choice.

“Closing of these acquisitions cements our initial move into the British Columbia marketplace, which broadens national awareness of the Edleun brand and creates new child care spaces in underserved communities,” Wulf said in a news release. “These acquisitions are quite material, both strategically in terms of entrenching our expansion into British Columbia and financially due to their contribution to our bottom line profitability and cash flow.”

However, Sharon Gregson, Vancouver school board trustee and an operator of several not for-profit child care centres, worries about “big box child care.”

“Their primary concern is meeting the needs of their shareholders, which means making a profit,” Gregson said. “The only way, from experience, that anybody makes a profit in child care is by gouging parents with high fees, or gouging workers with low wages and benefits or gouging kids with poor quality care.”

But Wulf said that is “misinformation.”

“We charge market fees and our employees are paid equal to or more than market rates. On an annual basis we do reviews and everybody gets a raise,” Wulf said, adding that the company offers a career path for early childhood educators that smaller daycare centres can’t….

Gregson cited the Australian experience with ABC Learning Centres, which expanded rapidly, then went broke, as a cautionary tale for Canada.

“That should be a big heads up for our provincial governments in Canada as to the dangers of having one company with that much control,” Gregson said.

Michael Lanier, chairman of the CUPE BC child care working group and president of CUPE local 1936, is also concerned.

“In Vancouver, only approximately 20 per cent of children have access to a licensed, highquality daycare,” Lanier said. “The waiting lists are huge. The average fees are anywhere from $900 to about $1,400 a month. That can be a real problem for families.

He says that’s why CUPE supports a new plan that would move child care from the control of the Ministry of Children and Family Development to the control of the Ministry of Education.

The plan, created by the Coalition of Child Care Advocates of BC, has been endorsed by several B.C. bodies, including Vancouver city council and Metro Vancouver. It calls for “Early Years Centre Networks” through which boards of education would take responsibility for child care from the time children are born. The centres could be existing not-forprofit ones that join the new program, centres within schools, or new purpose-built centres.

The plan proposes a public system of child care that caps parent fees at affordable levels (Gregson said it calls for $10 a day for all ages); improves staff education and wages; is open to all children, including those with special needs; and offers play-based programs. The more corporate daycare grows in B.C., the more difficult it will be to move to a public system, Gregson said.

She said Edleun is one of three big corporate players in the Canadian daycare scene; the other two she named are Kids and Company and Core Education Fine Arts.

Kids and Company recently opened its first location in Vancouver, a 10,000-square-foot licensed facility that can accommodate up to 100 children. The company has a unique business model in that employers pay an annual fee for child care space for their employees’ children.

Core Education Fine Arts offers franchises of its junior kindergarten program – for kids aged two to five – and lists 11 locations in Metro Vancouver on its website. The Metro Vancouver Edleun centres, which will have 422 licensed spaces, are in Maple Ridge, Coquitlam and Port Moody….

‘Big box’ daycare setting up in Maple Ridge

Monisha Martins, Maple Ridge News

A publicly-traded company focused on consolidating Canada’s fragmented childcare industry has acquired at least two daycares in Maple Ridge …

Edleun Group Inc. completed it purchase of the Maple Ridge businesses earlier this month and has agreements for two other redevelopment properties, as well an additional centres in B.C….

Located in Maple Ridge, Coquitlam, Port Moody and Kelowna, the five childcare centres with 422 licensed spaces were purchased ….

“These acquisitions are quite material, both strategically in terms of entrenching our expansion into British Columbia and financially due to their contribution to our bottom line profitability and cash flow.”

Edleun estimates there are 8,800 childcare centres across Canada and aims to become a larger player through acquisitions of new and existing operations, with plans to control 10 per cent of the Canadian market….

The company’s aggressive expansion plans, however, worry childcare advocates who characterized Edleun approach as “big box child care.”

“They are not really in the business of childcare, they are in the business of making money for their investors,” said Michael Lanier, chairperson for CUPE B.C.’s childcare working group….

Lanier points to Australia’s ABC Learning Centres as an example of a large-scale corporate childcare operations gone awry. At its height, ABC Learning Centres owned 25 per cent of the daycare spaces in Australia – more than 1,000 – centres but folded in 2008 with $1.6 billion of debt.

Wulf, Edleun’s CEO, was linked to ABC Learning Centres Canadian arm, 123 Busy Beavers.

“The Edleun Group is really involved in the real estate market,” said Lanier.

“They drive the competition out of the area. They buy buildings, set it all up and then they’ve got themselves a real estate investment. They are not really in this because they believe in child care. “…

Sanya Boatter, who owns Start Smart, a for-profit daycare with 170 spaces and a staff of 28, confirmed the company was sniffing around the Maple Ridge childcare market.

She, too, worries about a large corporation, focused on racking in profits for investors, caring for kids….

Edleun Group seeks to consolidate childcare: Company is buying six more centres in Alberta at a cost of $7.1 million

“Edleun will now own or have agreements in place to acquire 17 centres in total. These additions to a rapidly growing portfolio make Edleun one of Canada’s leading childcare operators in a fragmented industry that includes an estimated 8,800 centres across the country. Edleun’s extensive pipeline of potential acquisitions and newly-developed centres should allow it to become a much larger player in this industry.”

Read the news release

Related article: Globe and Mail
July 21, 2010

Corporate child care is not the solution for New Brunswick

New Brunswick Times and Transcript and Straight Goods
By Jody Dallaire, involved in the New Brunswick women’s movement and a member of Dieppe City Council and chair of the Dieppe Advisory Committee on Equal Opportunity between Women and Men.

… Bottom line, when I say ‘big business,’ few people think ‘child care’ or ‘early learning’ services.

But big business is setting up shop in the delivery of early learning and child care services in Canada. It used to be that examples of child care conglomerates could only be found abroad. Not anymore.

Currently there are a number of Canadian-based child care chains. One of them is even publicly traded on the Toronto Stock Venture Exchange (TSX-Venture)….

Is corporate child care a bad thing?

Let’s just say that it does not have a good track record. ….

Countries that do child care well, namely where services are widely available, affordable, inclusive and of high quality, have policies that provide for services that are publicly funded and publicly managed. They are also operated on a non-profit or public basis. None of the countries that treat child care as a private business have a track record of equitable access to high quality programs.

Already Canada has a dismal international record on early learning and child care. We cannot afford any costly mistakes. UNICEF, Save the Children and the Organization for Economic Co-operation and Development (OECD), all give Canada extremely poor rankings in terms of meeting suggested standards for child care services. Each of these organizations has published reports which place Canada last among developed countries….



Letter of the day: Column on child care highlighted risks
Published Tuesday May 31st, 2011
Times and Transcript
By Sandy Harding, Saint John

To The Editor:

Regarding “Corporate child care is not the solution” in the Times & Transcript of May 26, kudos to Jody Dallaire for explaining the risks of big business delivering early learning and child care.

When it comes to early learning and child care a public system is best because it is more accessible, more stable, provides higher quality care and pays better wages for workers. There is no place for profit in child care. Child care providers must be beholden to the children and families they care for, not their shareholders.

Quality public and not for profit early learning and care services reduce poverty, increase employment, and stimulate the economy. These programs build strong communities as the services can be planned and be accountable.

In Australia, where there were a large number of corporate operators, the private providers invested about 50 per cent of revenue on staff costs, compared to 75 per cent of revenue in public and not-for-profit centres.

Higher wages result in less staff turnover and greater quality for children and parents – another good reason to keep early learning and child care public.

Profit motive sits uneasily with aims of childcare

Patrick McClure, Ethics Fellow at the Centre for Social Impact, University of NSW

The importance of childcare and early childhood development cannot be overstated. Most of our development as individuals takes place in early childhood.

Research shows that it is from birth to age five that children rapidly develop the foundations on which subsequent development builds.

The increase in working parents in Australia has highlighted the importance of affordable, accessible and quality child-care services. It also raises an ethical dilemma.

Is child care about quality of services that includes higher staff-child ratios and better qualified staff?

Or is child care a corporate business making large profits and returns for investors? Or is it a mix of quality services and profitable business?….

It is a consortium of non-profit organisations with funding from the federal government, non-profit partners, high-net-worth individuals, foundations and a bank loan. One hopes that it will be successful in providing the affordable, accessible and quality care that Australian children deserve.

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