Nationalised Childcare? No, thanks.

With ABC childcare going into voluntary administration, we are once again hearing calls for government intervention.  The Daily Telegraph has a poll: Should the Federal Government nationalise ABC Learning?

  • Yes – 100,000 families rely on this company.  It must continue to function.
  • No – this is a free market.  The State can’t prop up every failed business.

Please vote.

UPDATE: Bailed out

The Federal Government will provide up to $22 million to keep ABC Learning Centres open until the end of the year.

UPDATE II: Andrew Bolt has more.

29 thoughts on “Nationalised Childcare? No, thanks.

  1. If ABC closes down, do the staff get transported to dimension X and do the building self destruct?

    Have they actually shut down operations?

    All we have is a breakdown of ownership and management. Either they can be bought our or sections of the business can be reopened by solvent, cash rich smaller operators.

    In other words, this is as traumatic as Westpac buying out St George.

  2. How to rephrease the question in today’s political climate:

    “Yes – 100,000 working families rely on this company. I believe it must continue to function.”

    Am I too cynical to suggest this would alter the votes?

  3. Mark, this is pretty standard form for dailytelegraph polls… quite often the right answer will have the wrong reason attached as well (though in this case, the free market description on the “No” vote is honest enough – even though it’s not exactly a free market with the level of subsidies they receive, etc…)

    And people aren’t worried about the staff, Mark – they seem to think all centres will close down and leave parents in the lurch. Unless the liquid value of their assets is greater than the value of continued operation (which in most cases, I don’t believe it is), then it is unlikely to happen… the company is simply over-leveraged after trying to expand in the US. (Apparently, they may have some dodgy accounting as well)

  4. Have you heard yesterday Ms. Gillard being asked at least TWICE about HOW MUCH is the whole thing going to cost us (taxpayers) and deliverately avoid the issue?

    It is OUR money they are administering, not theirs. I expect a little more respect when we ask about how it is being used (and/or wasted).

  5. There are plenty of other child care providers in the private sector, I don’t really see the need for any intervention if the other providers are able to accommodate the extra kids. Doesn’t the government subsidize child care anyway? I’m not sure.

  6. They subsidise it in the form of the childcare rebate, that’s for sure… of course, other restrictions and regulations push up their operating costs (as well as being a barrier-to-entry for new competitors), but I suspect they come out ahead after the rebates are factored in.

  7. I must admit to a dilemma here. As a libertarian I don’t think the government should get involved in running childcare centres. As a parent with a toddler in an ABC centre 3 days a week I’d really rather not have him turfed out suddenly and have to quit work to help out at home.

    While there should be other providers ready and willing to take over management of the ABC centres, the childcare industry is one of the most heavily regulated ones in Australia, so its not a simple matter of changing the sign out the front. It is possible that centres will be shut down and staff laid off before they can find new management, or before new management can get a childcare licence from DHS.

    So no they shouldn’t nationalise it, but somewhat selfishly I wouldn’t mind them helping out temporarily to keep centres running and fast track the recruitment of new providers for existing centres.

  8. Yes Mark I know that and I’d prefer it. I’m talking about the short term dilemma of where I’m going to put my kid next week.

    I can’t see deregulation happening in a hurry.

  9. I’m with papachango on this. It would be preferable if the licensing regime and subsidies and red tape was gone, however given the reality on the ground some form of transitional assistance seems pragmatic and acceptable so long as the shareholders and previous management get none of it. Especially so if the receivers decide to break up ABC rather than sell the whole thing as a going concern. Clearly ABC is too big to be allowed to fail. The systemic risk is simply too high. 😉

  10. Oh well… Hopefully they won’t be able to afford the internet filter now…

    It’s a dreadful waste of money, but at least it doesn’t hurt anyone (except for ABC’s competitors).

  11. So far, I think the media have been pretty soft on Gillard, and where’s the relevant minister Maxine McKew? Gone underground?

    Anyway, they have been in power for almost 12 mths and it has been an open secret for a few years that ABC Learning is in trouble. The relevant dept would have known this, so why have they done nothing?

    Could it be that the Coalition is relatively quiet because they are complicit? We are talking about hundreds of millions, if not billions, of dollars of taxpayers’ money. It is no small matter.

  12. Been thinking abut this. If governments over capitalize they are stuck with it, if private enterprise over capitalizes the company goes into receivership and the person that picks up the assets at a price that allows a reasonable return marches on. Bit hard on the share and bond holders, but that’s capitalism.

    As for E.D.’s comment, what has this got to do with the government, current or past.

  13. Governments are (supposedly) held accountable for the money they spend because it is not theirs. Apparently the child care rebate represented over 40% of ABC’s revenue.

    If the Govt knew that ABC was in trouble (as I suspect they did), why did they continue to supply it with $1m a day? Perhaps because it was ‘too big to fail.’

    Gillard’s temporary ‘bailout’ works out at around $410,000 a day.

  14. E.D.

    With regard the rebate, was the service provided, I think the answer is yes. I’m sorry but part of the contract for providing the service today is not future provision.

    Twenty million dollars and over 1000 child care centers built. Chicken feed. The interesting question now is who will pick up the assets, the assets will still exist, the losers are the investors and the banks.

    Actually quite a cunning policy implemented by the last government, the suckers are the capitalists.

  15. The ‘contract’ as you put it is for those who do not use childcare services to subsidise those that do. In less politically correct terms this is ‘theft’.

    The ‘suckers’ are the taxpayers of this country that don’t use childcare. And *their* $1.9 billion a year is not ‘chickenfeed.’

  16. Should one subsidized child care is a different question to, should the government somehow save ABC learning or whatever because they knew it was coming. The money was to provide a service, the service was provided.

    If your against government funded child care I assume you were angry when the Howard Government put in place the subsidy.

  17. You may be right that the subsidies were used for their intended purpose. But if the money was spent appropriately, why did the company go bust?

    The child care industry is heavily regulated. If the govt knew something was wrong with ABC, then it is negligent. And if it didn’t know, it is incompetent.

    I don’t care who brought in subsidised childcare, its a bad idea.

  18. it is truly astonishing that 40% of these centres are actually unprofitable despite 40% of their revenues coming from govt!!!

    i was presented with a business opportunity in this industry about a year ago and so looked into the industry in some detail.

    here’s why they are so unprofitable – govt regulations have ensured that each childcare worker can only supervise a max of 3 (i think it’s 3 from memory) babies or 5 toddlers.
    each of these workers now has to receive a 4yr training course at some Uni or TAFE despite the fact that all they really do is to supervise painting sessions. you can imagine the expense side of the ledger starting to build.

    now throw in umpteen Health and Safety regulations, Child Safety regulations and essentially no parent can afford the fees without huge subsidies.

    This industry seems to have been invented solely to showcase the horrors of excessive govt regulation.

  19. Pommygranate

    The industry is fighting for the under two ratio to be changed from five to one to four to one, so it is unlikely to be three to one. There is no four year course for child care providers, it is service industry that doesn’t actually pay it’s employees that well.

    It’s a labor intensive industry, labor is expansive.

    http://www.earlychildhoodaustralia.org.au/early_childhood_news/october_2007_call_to_alter_national_law_on_childcare_ratio.html

  20. I went to Japan. I spoke English. I got a job teaching Japanese kids aged 2-12 English. One of my co-workers was a year 9 drop out.

    There were Japanese staff supervising (likely more qualified than us), but the staff student ratios were still 4:1 on a good day, 8:1 on a bad day. We might have 25 kids, 1 Japanese staff and 2 English speakers.

    It wasn’t a daily day care service, but it definitely seemed profitable consider my boss used to take holidays to Hawaii every second month and she drove an imported US car.

  21. The major source of opposition to pre-school subsidies seems to be that they are an area that didn’t historically get such subsidies and so they are symbolic of government expansion. Thats fair enough. However some commentary just for perspective.

    In my view the case for subsidising pre-school is stronger than the case for subsidising university. And unlike government funding of primary school and high school the government funding of pre-school is more like a voucher scheme and the providers are in most instances privately run. Given a list of spending cut priorities I’d abolish FTB-A and FTB-B and a stack of other things before I’d touch pre-school subsidies. I’d probably take a look at the nearly $3 billion of spending in the federal budget on something called “Recreation and Culture”.

  22. Terje, some would argue that subsidised childcare is also inequitable. Both from the point of view of those who choose to be stay-at-home mums and those who don’t have children or had children prior to the availability of the subsidy.

    There is another group that argue that this is part of a broader conspiracy to create a society of docile citizens dependent on the State.

  23. Childcare perhaps should be tax deductible instead of subsidised, though the tax loss would be a lot higher. If the idea is to get people into the workforce then a deduction makes sense, but in a 2 income family it should only be deductible against the lower income member.

    Childcare also gets used by non-working mums wanting a break from the kids and if they are on welfare virtually the whole cost of the day off from the kids is paid by taxpayers.

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