Kate Ellis (Adelaide, Australian Labor Party, Minister for Early Childhood Education, Childcare and Youth) Share this | Link to this | Hansard source

by leave—With the announcement of the sale process for the remaining ABC Learning childcare centres late last month it is a fitting time to update the parliament on ABC, as the future of all remaining centres is near final resolution.

When ABC collapsed late last year there was a very real risk that hundreds of Australian childcare centres across the country would have to close their doors at a moment’s notice, leaving literally thousands of families and children in the terrible predicament of having no child care. This is no exaggeration. The collapse threatened over 1,000 childcare centres nationally, which provided care for 120,000 Australian children from almost 95,000 Australian families. And let us not forget the workers, with over 16,000 ABC staff members also left at risk of unemployment.

It is important to remember that each of these statistics represents real parents, who literally woke up one day not knowing whether their childcare centre would remain open or, in the case of the dedicated ABC childcare workforce, whether their jobs would survive the week. With ABC owning 25 per cent of the Australian long day care market, the community was facing the equivalent of a childcare tsunami. The Rudd government’s quick and decisive action averted what would have been a disaster for thousands of families—action that provided stability and continuity of care for families and employees across the country who were affected by the collapse.

Our focus throughout this entire process has, and continues to be, the stability and continuity of care to support the needs of parents, their children and ABC Learning employees. To back this up we provided a $24 million support package to keep ABC centres open while the receiver McGrathNicol assessed their operations. It is true that we could have asserted that this was not a place for government, given that ABC was a private business gone bust. But, after years of inaction by the previous government, we stepped in because it was the right thing to do for the thousands of Australian parents, kids and workers affected through absolutely no wrongdoing of their own. It is fitting that we as a parliament reflect upon how this all went wrong and the lessons to be learnt.

ABC pursued acquisition after acquisition, buying up as many existing centres as they could and expanding their appetite by establishing more and more sites off the back of increasing debt. This meant that every new ABC sign that appeared on the horizon equated to more and more debt. Ultimately, ABC could no longer sustain their rapid expansion. With a falling share price and a closer examination of their books it became clear that ABC’s true value was significantly lower than previously thought.

When the global financial crisis hit, the ABC collapse consequently came with a thud. Receivers were appointed; properties were assessed. And, as a consequence of this assessment, the receiver announced, on 10 December 2008, that a total of 720 ABC1 Group centres had been identified as profitable and would continue to operate; 55 would, unfortunately, close on 31 December 2009, with all children to be accommodated in neighbouring centres; and 262 centres, including 21 defence centres, were deemed unviable.

As if families had not been through enough, the 262 centres deemed unviable signalled a potential second tsunami and, once again, threatened the care of hundreds of Australian children. In response, the government stepped in with a further $34 million support package for these 262 unviable centres, now known as the ABC2 Group, which became the subject of an expression of interest process, run by the court appointed receiver PPB. I am pleased to report to the House today that, as a consequence of this action, the future of all of the 262 ABC2 Group centres has been resolved, with 236 centres successfully transferring to new operators.

Additionally, I am pleased to report that more than 85 per cent of ABC2 employees have been retained. And, importantly, ABC2 Group centres were sold to 78 different operators, bringing greater diversity into the Australian childcare sector. Currently, 34 of these former ABC centres are operated by not-for-profit organisations, with Mission Australia, the largest not-for-profit buyer, operating 29 centres.

Unfortunately, a small number of ABC Learning Centres have had to close. I know how difficult this must have been for the families and employees involved. And, while it is a remarkable feat that just 26 ABC2 Group centres of the 262 that were originally deemed unviable ultimately failed at the final hurdle, I assure the House that everything was done to exhaust every opportunity to keep these centres going.

In all cases, the government has worked with the relevant court appointed receiver to assist families to access alternative care and to explore redeployment opportunities for staff. And I would like to take this opportunity to acknowledge the role of local members, advocating for their communities, exploring new ways forward and disseminating information locally. I would also like to take a moment to particularly thank the member for McEwen for her efforts in regard to the Broadford centre, working with all levels of government and local families to identify opportunities and avenues for alternative care.

In relation to the ABC1 centres, 705 centres remain in the hands of the receiver McGrathNicol, who has recently announced the commencement of a sale process, with the intention that all centres will transfer to new ownership by early 2010. This is a significant announcement, as it signals the end point of one of the biggest upheavals in Australia’s service industry history.

While the sale process for the remaining ABC Learning Centres is the responsibility of the receiver, the government’s focus remains on stability and continuity of care in relation to these centres. Through the duration of the sale process, the government will continue to work closely with the receiver to ensure that families and employees are fully informed and that their interests are not neglected. To this effect, we have clearly signalled to the receiver and to any potential purchasers that quality of care is a key consideration and we will be closely monitoring the services that they provide.

I want to assure Australian families and the sector that our vigilant approach to child care in this country will not end come the resolution of the ABC chapter and that we will not sweep the learnings from ABC under the carpet. Let us not forget that it was under the previous government that the majority of ABC’s expansion took place.

In contrast to the previous government’s head-in-the-sand approach to ABC, we have taken strong action to support the future stability of the childcare sector in Australia. Because of our intervention, all new applications for childcare benefit approval now specifically ask questions about the applicant’s financial background and whether they or any person involved in the management of the organisation have been previously associated with an insolvency in the childcare sector.

We have also strengthened administrative processes so that there is now a requirement on the operator of childcare centres to give parents 30 days written notice of their intention to close. And we have passed legislation to enhance the childcare compliance framework and strengthen civil penalties for non-compliance.

More broadly, we are providing greater information to parents and increased transparency in the sector through mychild.gov.au—a comprehensive childcare hub, which includes information on locations, fees, services and early learning programs via a searchable database of more than 8,000 childcare providers. We are also moving to raise quality across the board which will benefit all children in child care.

When ABC collapsed there was a very real likelihood that hundreds of centres faced forced closures literally overnight. I am sure that everyone in this House recognises that this would have been catastrophic for tens of thousands of children and their parents, not to mention the serious job losses in the midst of a global economic crisis and on the eve of Christmas. Given what could have happened, the outcome has been remarkable.

I would like to commend the leadership and quick action of the Deputy Prime Minister and the former Parliamentary Secretary for Early Childhood Education and Child Care, Maxine McKew, whose can-do approach to this fiasco was central to the positive outcome. And I would also like to acknowledge the court appointed receivers, PPB, and thank the Department of Education, Employment and Workplace Relations, particularly the childcare industry taskforce headed up by Michael Manthorpe, and the department officers who worked tirelessly to bring about this great result.

This is a result driven by the shared desire to ensure that parents, children and our dedicated ABC childcare workers were protected from the collapse of ABC. It is a result that demonstrates that as a government we understand the critical importance of early education and child care not only to our children but also to the day to day lives of almost 95,000 Australian families.

I am proud of the government’s swift action in response to ABC and equally proud of our ongoing commitment to ensuring Australian parents and their children have access to high-quality, affordable and accessible early childhood education and child care.

I seek leave of the House to move a motion.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the member for Indi speaking in reply to the ministerial statement for a period not exceeding 10 and a half minutes.

Question agreed to.

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Early Childhood Education, Childcare, Women and Youth) Share this | Link to this | Hansard source

I am pleased to have the opportunity to respond to the minister’s statement on ABC Learning Centres. It would appear that the Labor Party have been taking lessons on how to rewrite history and paint themselves as the ultimate reformer and saviour. First, we had the PM’s grossly inaccurate and quite embarrassing summary of economic reform last week, and this week we have a fairytale of Labor heroism from the Minister for Early Childhood Education, Childcare and Youth. According to the minister, Labor held back a childcare tsunami, no less. I assure her that it was all very different in reality. I appreciate the fact that she did not have responsibility at the time when ABC started to unravel, but she should have a detailed look at the history of what happened.

The collapse of ABC was a serious threat to the childcare industry. It had over 1,000 childcare centres providing care for over 120,000 children and employed over 16,000 staff. Yes, it was a major problem that demanded a strong response. Far from averting or managing the problem, the Rudd government stood there and let the ABC tsunami wash over the industry. In reality, the government had plenty of warning about the collapse of ABC Learning. It had plenty of time to ensure contingency plans were in place. In fact, the Deputy Prime Minister assured parliament that a task force had been in place since September 2008 and that contingency plans were well in hand. We kept asking what these contingency plans were. In October 2008, I made repeated calls to the government to outline their contingency plans, as the financial collapse of ABC Learning seemed inevitable and fairly obvious, following the cessation of trading on the stock exchange several months earlier.

Yet, when the inevitable happened and ABC Learning went into receivership on 6 November, the government was caught extremely flatfooted. The so-called contingency plans that we had been promised amounted to nothing more than a quick fix with the allocation of $24 million of taxpayers’ money and the taking of a hands-off approach. So much for the so-called contingency plan. No wonder they kept it under wraps—they actually did not have one.

Once the dust had settled a month later, ABC was it divided into the ABC1 Group, which included 720 centres that would continue to operate under the administration of the receiver, and the ABC2 Group, which included 262 centres that were deemed unviable and which required an additional $34 million to continue to operate until their future was determined. Many thousands of families faced uncertainty as the future of the ABC2 Group was decided. In addition, 55 centres were forced to close almost immediately, a very unfortunate and regrettable situation that affected many families.

Yet, with all this turmoil in the childcare industry, what was the Rudd government’s response to help provide security and certainty? Apart from the short-term fix of throwing tens of millions of dollars at the problem so that families were not immediately left in the lurch, what was their solution? Did they release details of the vacancy rates across the country so that the industry had a better indication of where there were supply and demand issues? No, they did not. After repeated requests they have continued to refuse to release the data on vacancy rates for childcare centres across the nation. In fact, there has been no data released publicly since April of 2007, under the former government. You have to ask the question: why do they refuse to do so?

Did Labor review their flawed election promise to build 260 shiny new childcare centres across the country? No. They ploughed ahead with planning to build the first 38 of these centres, although not one has yet been completed. Just stop and think about that for a minute. We had childcare centres closing, anecdotal evidence that there was a serious oversupply of places in some areas and evidence that there was a lot of commercial interest in purchasing even those ABC centres deemed unviable, but we had the government, driven by blind ideology, pushing ahead with a promise to build even more centres and stubbornly refusing to provide details of vacancy rates. It beggars belief.

Then we had the whole process of the sale of the ABC2 Group, which was conducted by a court appointed receiver that the government requested—a receiver, PPB, that was headed by Mr Stephen Parbery, who, until his appointment, was a consultant to the government task force that was supposed to be coming up with an ABC Learning contingency plan. First, the government set a ridiculous deadline of 31 March for the sale of ABC2 centres. The government’s task force head, Michael Manthorpe, told Senate estimates on 25 February that the receivers would indeed meet the deadline. Less than three weeks later the receivers requested an additional six weeks to finalise the process.

The whole sale process of the ABC2 Group lacked transparency and accountability. More than 290 buyers ended up pulling out at the final offer stage. My office was inundated with potential buyers who had been forced to pull out because they simply were not provided with the financial information they required to make a sound business decision. I am talking about very basic information like lease details, room sizes, licence transfer arrangement and details of staff entitlements. The Rudd government apparently had four staff working with PPB on a daily basis, but the public and the industry had very little feedback on the sale process.

Despite the fact that it was being underwritten by the taxpayer, there was no transparency whatsoever. We know that some centres were apparently sold for very nominal rates. We know that some centres went to non-profit organisations. We do not know how much they paid for them or on exactly what basis the decision was made to award the centres to those organisations. Nor, indeed, do we know on what basis any of the applications from private companies were put above others. There are still many questions unanswered.

The minister comes before the House today with an ‘all’s well that ends well’ approach in her ministerial statement, which really sheds no further light at all except to tell the House what we read in the papers last week: that the sale process for the ABC1 Group would commence shortly. I thought the minister might outline exactly how the $56 million in taxpayers’ funds was ultimately spent—many parents and taxpayers out there are looking for those answers; whether there were any funds left over; and how much ultimately was used for both the ABC1 and ABC2 groups of centres. I thought we might finally get some accountability on the whole process, but that was obviously wishful thinking. That is not the way Labor operate.

Instead, what we got from the minister today was a fairytale with Labor as the heroes: ‘It’s all okay, because we said so. Aren’t we wonderful? Give us a pat on the back.’ Of course they threw in the obligatory accusations that the former government did nothing about child care. They have not realised that they are in government, not in opposition, and that their job is both to govern and to be answerable for their spending. Instead, they refuse to accept responsibility for the tens of millions of dollars they have spent in the area of child care with this ABC problem.

Let me remind the minister that it was the coalition that introduced the childcare benefit. It was the coalition that uncapped family day care and outside school hours care places so providers could set up to meet demand. We introduced the CCTR to prevent parents from having high out-of-pocket costs; introduced the childcare access hotline so parents could ring one line to find out where places were available; and started work on the childcare management system, which is a huge administrative weight lifted off the shoulders of providers, who can focus more on children than on paperwork. We also released hot spot data to show where the market was tight.

Perhaps the most misleading comment in the minister’s statement, however, is her assertion that the government have ‘taken strong action to support the future stability of the childcare sector’. On the contrary, the government’s controversial regulation impact statement in relation to the proposed so-called reforms has been an absolute disaster and their lack of consultation with parents and failure to reveal exactly how much their reforms will cost have plunged the industry into even greater uncertainty. In fact, just yesterday the management of ABC Learning warned that the government’s reforms could force up the cost of child care by as much as $20 a day. This comes on top of an independent economic analysis that found costs would rise by at least $13 a day.

Yet the government has consistently said it would only be a few dollars a week, and the minister arrogantly has dismissed concerns by claiming that the government will share the cost of price increases with parents. This is not entirely true, as the CCR is actually capped. It also conveniently ignores the fact that any increase families are forced to pay will be a breach of Labor’s pre-election commitment to slashing childcare costs. The minister, who is in the chamber, was part of the pre-election promise that the Labor Party, when in government, would slash childcare costs. We have seen anything but. Far from providing stability for the childcare industry, the Rudd government has only increased pressures on costs for families while failing to consult with the industry or demonstrate exactly how quality improvements will be made. (Time expired)