RICHARD AEDY: The Government’s offer of $22 million to help keep the companies child care centres going for now has been criticised by the Opposition as lacking in detail. How exactly will that money be spent? Well, here to tell us is the Deputy Prime Minister and Minister for Education, Julia Gillard. Welcome to Life Matters.
JULIA GILLARD: Thank you very much.
RICHARD AEDY: How will this $22 million be spent?
JULIA GILLARD: The $22 million is there to support centres that the receiver believes are unprofitable. Normally when a receiver is appointed to a business, the first thing that they would do is close or rationalise sections of the business that are unprofitable. Preliminary data indicates that under the ABC business model, around 40 per cent of ABC centres are unprofitable. What we have said is that the Government will provide up to $22 million. It will be used to support those centres. Particularly it will be used to make up the difference between the costs of running those centres and what is earned from running those centres to keep them going til the 31 December. Then we will work out solutions with the receiver right across the board.
But I do want to stress this: the receiver obviously has legal obligations to the creditors. They’re standing in the shoes of the manager of the business. They’ve got a set of obligations about looking at centres and working out whether or not they’re unprofitable under the ABC business model. That doesn’t mean that those centres will necessarily close and it doesn’t mean that they wouldn’t be sustainable, viable, long-term centres in the hands of another operator.
RICHARD AEDY: Well, what … we go through to the end of the year, what is going to happen, what can you say about what might happen after this two months?
JULIA GILLARD: What I can say is there is absolutely certainty and security for parents in this two-month period, and we understand that for mums and dads around the country their child care arrangements are a foundation stone that lets them get on with everything else in their lives, including their work commitments. So we wanted to provide that certainty and security. During the two-month period, we will work out with the receivers and with the creditors what will happen over the longer term and we will make an announcement in December about that, so every parent at every centre knows what’s going to happen next.
RICHARD AEDY: You still wouldn’t want to be a parent at one of those centres for the next four weeks or so until that announcement comes, because they’re going to be very anxious and concerned.
JULIA GILLARD: We understand that parents are anxious and concerned. We’ve understood that from the first minute that ABC Learning indicated it was going into voluntary administration and a receiver was appointed. And so what we’ve done is act immediately and decisively to provide certainty for parents. They know their centre is going to be there providing care until the end of this year. There’s also a dedicated information line if they’ve got any concerns. They should ring it—that number is 180 2003. And they can get updates through our www.mychild.gov.au website. I understand that people will be concerned and they will be thinking about the longer term. The answers that they need will be available to them in December. We have to work through a process here. The receiver was only appointed late last week and we are working through that process. But in a context where parents at ABC Centres have got certainty that they can drop the kids off today, they can drop the kids off tomorrow, and their child care arrangements will continue until 31 December.
RICHARD AEDY: The longer term uncertainty though would also mean that staff will be looking to leave too, thinking of their own futures. In fact, it’s been reported this is happening already, I mean through no fault of you or your Government. This crisis, ‘cause it is a crisis, could get worse before it gets better.
JULIA GILLARD: Well I understand that parents are anxious and staff are anxious. But clearly with the centres continuing to work as usual ‘til 31 December, the receiver has made it clear and the Government echoes the words of the receiver that ‘people’s jobs are there for them’. So for people who work at ABC Centres, who provide all the care for kids for the centres, they can go to work and work as usual and they will be paid as usual. And whilst I understand this is an uncertain period, can I say the following things: obviously we inherited a child care system where ABC had become the dominant private sector player, the biggest player. It’s got into trouble. Now ultimately the receivers and the regulators will be the people who analyse and tell the world why it got into trouble, but it got into trouble. We didn’t want centres closing immediately with all of the disruption, all of the amazing disruption that would’ve meant for parents. That’s why the Government has been working on this situation and we acted decisively to step in to make sure there was certainty ‘til 31 December.
RICHARD AEDY: The not-for-profit sector, in particular KU Children’s Services which is the biggest one of them, has been wondering publicly why you haven’t gone to them to try to work on a solution together.
JULIA GILLARD: Well, we will be prepared to work with the receiver and the creditors of the ABC Learning and everybody of goodwill around the country who wants to assist with this situation. We will be working with whoever steps forward. And I think there will be some for-profit operators who express interest. There will be not-for-profit organisations that express interest and I think that’s fantastic and we will be working through a process with all of them. But obviously the receiver has been in harness now for a very few short working days. Their first job is to get across all of the circumstances and financial matters associated with this business. They’re working on that but they’re working on it in a context where we know that centres are open providing care. And then ultimately we will be working with people who are interested in the long term so we can make the announcements about the long term future that I’ve talked about, and those announcements will be made in December.
RICHARD AEDY: On Life Matters today, my guest is the Deputy Prime Minister and Minister for Education, among other things. Julia Gillard is with me now to talk about what’s happened with ABC Learning.
The Victorian not-for-profit child care provider, Try Youth and Community Services, apparently they’re interested in buying up to 40 centres. I think these are in Melbourne and the east of the state. You might be … although technically the receiver, might do alright with 60 per cent, but still leave perhaps tens of thousands of kids and their families unsure at the end of the year?
JULIA GILLARD: Well I don’t want to speculate or make any assumptions here and I particularly want to make the point that as the receiver works through this and looks at an individual centre and says, ‘under the ABC business model, this centre is unprofitable,’ that doesn’t mean that in the eyes of another operator that they won’t view that as a perfectly viable centre that they would quite like to run. So we can’t make the assumption that because the receiver says a centre is unviable that it will necessarily close. The situation is more complicated than that. The ABC business model is obviously a unique business model for a business of its size that has grown as quickly as it has grown that is highly geared for debt and all the rest of it. Other people operating different business models might well be prepared to step in and take over centres the receiver thinks is unprofitable.
But if the broad-brush of your question is: will not-for-profits be listened to, consulted, worked with, and possibly have a role in the shape of the future for the ABC Learning Centres? My answer to that is yes, and we’ve got to work through with them just as we’ve got to work through interested for-profit players, got to work through with everybody a process. The receiver is there—they’re the one who has the legal obligations dealing with all the financial matters, day-to-day managing business. The Government is working with and staying in close touch with the receiver to help design the solution.
RICHARD AEDY: Looking a bit more broadly at how this happened and perhaps at the future of child care of Australia, ABC Learning still does account for a quarter of the private child care sector. How healthy is that?
JULIA GILLARD: Well I’ve indicated publicly, I’m very concerned about how we got to this situation. And I think we got here because in 1999, the former government took the caps of child care off the number of places. Now taking the caps off the number of places was not an error. Obviously we needed to respond to growing demand. What was an error though was taking the caps off the number of child care places and then not closely managing the development of the child care system afterwards. So when we came to Government there were no National Quality Standards for child care, there was no national workforce plan, although centres around the country were telling us they couldn’t get the qualified staff that they needed. There was no view about bringing child care to places that were undersupplied. There was really no view about how this system was going to be managed and developed and kept sustainable for the long term.
And since our election, we’ve worked through those issues one by one. We’re working through National Quality Standards and Maxine McKew, the Parliamentary Secretary, is leading that endeavour. We’ve introduced new workforce measures—paying the TAFE fees of people who want to be child care workers so they don’t have to pay; making sure that there are more university places for the people who do early childhood education; and we’ve got our policy to develop up to 260 new centres around the country. Now, of course, we need to also respond to these circumstances with ABC Learning. But what’s it telling us generally? What it’s telling us generally is this has been an unmanaged system with a national government that wasn’t keeping its eyes on the situation and wasn’t working through the policy issues. This Government takes a very different view. There’s nothing more important to us than early learning and child care.
RICHARD AEDY: Julia Gillard, thank you very much for joining us on Life Matters today.
JULIA GILLARD: Thank you very much.
RICHARD AEDY: Julia Gillard’s the Deputy Prime Minister and one of her several portfolios is education. This is Life Matters on ABC Radio National.
ENDS