Parliamentary Speeches
Ministerial Statement - The Future of ABC Learning
15 Sep 2009With the announcement of the sale process for the remaining ABC Learning Child Care centres late last month - it is fitting to update the Parliament on ABC, as the future of all remaining centres near final resolution.
When ABC collapsed late last year there was a very real risk that hundreds of Australian child care 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 1000 child care centres nationally, who provided care for 120,000 Australian children from almost 95,000 Australian families. And let's not forget the workers, with over 16,000 ABC staff members also left at risk of unemployment.
It's important to remember that each of these statistics represents real parents - who literally woke up one day - not knowing whether their child care centre would remain open or in the case of the dedicated ABC child care work force - 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 child care 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 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 - we could have asserted that this was not a place for Government given 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 no wrongdoing of their own.
It is fitting that we as 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 closer examination of their books it became clear 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 assessed.
And as a consequence of this assessment the Receiver announced on 10 December 2008 that a total of 720 ABC 1 Group centres had been identified as profitable and would continue to operate, 55 would unfortunately close on 31 December 2008 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 that 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.
And 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 that ABC2 Group centres were sold to 78 different operators, bringing greater diversity into the Australian child care sector.
34 of these former ABC centres are now operated by not-for-profit organisations with Mission Australia the largest not-for-profit buyer with 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 ABC 2 Group centres of the 262 that were originally deemed unviable ultimately failed 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 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 level of Governments and local families to identify opportunities and avenues for alternative care.
In relation to the ABC 1 centres - 705 centres remain in the hands of the receiver, McGrathNicol, who have 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 any potential purchasers that quality of care is a key consideration and we will be closely monitoring the services that they provide.
And 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's 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 child care sector in Australia.
Because of our intervention - all new applications for Child Care 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 child care sector.
We have also strengthened administrative processes so that there is now a requirement on the operator of child care centres to give parents 30 days written notice of their intention to close.
And we have passed legislation to enhance the child care 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 child care hub which includes information on locations, fees, services and early learning programs via a searchable database of more than 8000 child care 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 over night.
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 Child Care 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 child care workers were protected from the collapse of ABC.
And a result that not only demonstrates that as a Government we understand the critical importance of early education and child care to our children, but also its critical importance 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.