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In light of the current uncertainty surrounding giant childcare provider, ABC Learning, Professor Deborah Brennan has argued the government must reassess how it supports the childcare market.
Rethinking Australia's early childhood market
In 'Child care: Not as easy as ABC', an article published in The Age on 29 February 2008, Professor Deborah Brennan of the University of New South Wales' Social Policy Research Centre argues that the uncertainty about the future of ABC Learning calls for a reassessment of how the childcare market is supported by the Australian government.
'At the very least, the anxiety generatedjavascript:submitbutton('save'); by the collapse of the company's share price should make policy makers and politicians reflect upon the consequences of Australia’s heavy reliance upon a single provider.'
Status of the Australian childcare market
In Australia, private businesses such as ABC Learning provide about 70 per cent of long day care services. While other countries have a high proportion of commercial childcare services, Australia is the only country where such a monopoly exists.
ABC Learning's founder Eddy Groves claimed the business owned 30 per cent of the Australian long day care market. However, in the US and UK – where ABC Learning is one of two of the largest childcare providers – this figure is estimated as being much lower: at two–three per cent. In many European countries, governments are responsible for the delivery of child care as a community service and profit-making is not permitted.
Problems of corporate care dominance
Professor Brennan argues that it is not the presence of private childcare centres, but the dominance of a single corporate provider that is worrying.
Brennan says the Australian government's 1990 decision to exchange operational subsidies to non-profit care providers for a market system in which parents can choose where they wish to spend the subsidy was intended to increase competition, lower prices and improve quality, but for many it has resulted in less choice overall.
'The reality for many parents is that their options have been reduced. Many small owner-operators have sold out to ABC or to one of the corporate chains that ABC has now absorbed. Community-based child care, highly valued by many families, has been marginalised in many parts of Australia and barely exists in some communities.'
Further problems caused by dominance of corporate childcare providers exist in the fundamental differences between the interests of shareholders and children. As Brennan writes, 'Shareholders seek high returns on their investment while children require high-quality care that is expensive to deliver.'
'Australia’s regulations are well below the levels suggested by international research and early childhood educators have lobbied hard to strengthen the regulations governing group sizes and staff qualifications. Their efforts have been resisted by powerful private providers.'
Early Childhood Australia's position
Early Childhood Australia expressed concerns similar to Professor Brennan's about the wider questions raised by the sale of ABC Learning. In a media release issued on 28 February 2008, CEO of Early Childhood Australia, Pam Cahir, said:
'The only way to achieve high-quality care is to have regulations that reflect the evidence about what is necessary to provide quality services, and for the government's accreditation system to also reflect this evidence and drive up childcare quality through a focus on continuous improvement.'
Read Early Childhood Australia's media release: ABC Learning situation raises wider questions'.
Call on government to reassess childcare support
In her article, Professor Brennan warns that the increase in tax rebate to families assists with cost in the short term, but these subsidies will lead to higher prices in the future.
'During the election campaign, Labor made a commitment to increase the childcare tax rebate to 50 per cent of out-of-pocket expenses (that is, the amount paid by parents taking into account child-care benefit). This is a gift to for-profit childcare services. They will be able to lift their prices knowing that the taxpayer will be footing the bill for at least half the cost of any increase.'
Brennan argues that this means the federal government needs to explore alternative subsidy structures in order to cap costs, rather than adjust tax benefits.
Read The Age's 'Child care: Not as easy as ABC'.
In their 28 February 2008 media release, Early Childhood Australia warned that the new federal government must be very careful in how it deals with the questions raised by the sale of ABC Learning:
'The government must ask itself whether childcare services – which are so core to the development of young children, not to mention the long-term productivity of the country – need some form of protection from the vagaries of the market.'
Early Childhood Australia CEO Pam Cahir addresses many of these questions in her article 'Implementing the government's promises on early childhood', which appears in the new issue of Every Child magazine.
Further reading
View these related items on the Early Childhood Australia website:
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