December 2008 - Update on CFK Childcare and ABC Learning

Only one week after ABC Learning, Australia's largest childcare provider, was taken over by receivers, the second-largest provider – CFK Childcare – has also been placed in receivership.

Although the future of centres owned by both organisations remains uncertain, the Federal Government has provided funds to permit all of ABC Learning's centres to remain open until the end of 2008 and has indicated that there is interest from both the not-for-profit and private sectors in operating the centres next year.

ABC Learning goes into receivership

On 6 November 2008, ABC Learning – who own 1200 childcare centres in Australia and New Zealand – voluntarily called in receivers. The company, which employs 16,000 people and provides care to an estimated 120,000 Australian children, owes $1.1 billion.

Following the ABC Learning crash, the Federal Government announced that it would provide $22 million to receivers, to ensure that all centres could stay open until 31 December 2008, and the receivers have begun to look for new operators.

Deputy Prime Minister Julia Gillard indicated that there is already keen interest from both non-profit and for-profit organisations in taking over centres. Not-for-profit organisation YMCA, who already operate 550 centres across Australia, are considering acquiring 100 of the centres, and Try Youth and Community Services, another not-for-profit organsation, have said they are considering up to 40 centers.

Read The 7.30 Report's 'ABC Learning goes into receivership'.
Read the Deputy Prime Minister's media release 'ABC Learning - Press Conference'.
Read the Herald Sun's 'YMCA makes play for ABC Learning child centres'.

Collapse of CFK Childcare

On 12 November 2008, a week after ABC Learning's collapse, the second-largest childcare provider in Australia, CFK Childcare, announced that they had also gone into receivership, after being unable to complete a $8.5 million sale of centres to ABC Learning.

Executive Vice President Rebecca Reilly of the New South Wales branch of LHMU, a union for childcare workers, acknowledged that the union had been aware that CFK had financial issues:

'We were really concerned that it was another big corporate player that was trying to buy up centres at an amazing speed, with possibly not the planning or the infrastructure in place to make sure these centres are in the right places.'

Read The Age's 'CFK Childcare placed in receivership'.

Following CFK Childcare's announcement, Early Childhood Australia's Chief Executive Officer Pam Cahir cautioned that the collapse of both dominant childcare providers would lead to closures and increased pressure:

'It's almost inevitable that there would be [longer waiting times]. I don't want to create panic here but I do understand that families are worried about the ability to access services.'

Sue Lines, Assistant Secretary of the LHMU said that the current situation was evidence that the government should nationalise the at-risk centres:

'The government needs to be more involved in the sector if a buyer is not found. We also need greater regulation in child care so that we are not in this precarious position again.'

Similarly, Director of the Centre of Work and Life Barbara Pocock said that the current situation was evidence that child care 'should be a public service, because the provision of quality child care is not profitable. That has been proved in past weeks.'

Read the Sydney Morning Herald's 'Children sent overseas as child-care crisis worsens'.
Read Bloomberg.com's 'Rudd urged to nationalize child care as ailing centers go under'.

Federal response

The Federal Government has not yet indicated whether it will provide financial support to keep CFK Childcare centres open, as it has done with ABC Learning. Deputy Prime Minister Julia Gillard said that this was a new situation that required research before considering similar support.

Julia Gillard stated that the Government was working on managing the issue of creeping acquisition – the situation in which ABC Learning continued to acquire assets within the childcare market – and were working on granting the Australian Competition and Consumer Commission extra powers in this area.

The Federal Government has also launched a website – www.mychild.gov.au – and a hotline – 180 2003 – to keep families and workers informed of the childcare situation.

Parliamentary Secretary for Early Childhood Education and Child Care Maxine McKew has reflected on removing the separation of care and learning:

'Our job as policymakers is to ensure young children have access to a calm, stimulating environment run by professionals.

'We need to start thinking about early learning in the same way we think about our school system. And schools across the country are doing just that, putting maximum thought into the design of buildings and programs for pre-primary children.'

The Federal Government has committed to establishing 260 additional early learning centres on or close to schools.

Read the Sydney Morning Herald's 'Tackling a big learning curve'.




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