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Transcript of press conference: Melbourne: 14 November 2008: ABC Learning.



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The Hon Julia Gillard MP

Minister for Education. Minister for Employment and Workplace Relations Minister for Social Inclusion. Deputy Prime Minister 14 November, 2008

Transcript

Press Conference Melbourne - ABC Learning

ABC Learning - Press Conference

JULIA GILLARD: Last Friday I announced that the Government had made an arrangement with the

receivers of ABC Child Care Centres and that the Government would be providing up to $22 million to ensure

that ABC Centres across the country stayed open until 31 December.

On that day I also announced that the Government would be working with the receivers and with the creditors

of ABC Learning to ensure that in December we could announce to parents what will be happening in 2009.

All along, the Government has been very concerned to provide certainty to working mums and dads around

the country that rely on having child care in ABC Learning Centres.

Today I just wanted to provide a brief update of what has happened in the time in between.

Firstly, in the period in between, we have announced that there is a registration of interest process for those

who are interested in owning and operating ABC Learning Centres. We know that there are for-profit entities

and not-for-profit organisations that have an interest.

We have asked those organisations across the country to register their interest with the receiver. In addition,

the Government has arranged for representatives of an insolvency practitioner, PPB, to become embedded

with and work with the receiver to work through this difficult situation. The Government for some time has

been receiving expert advice from PPB, a specialist firm of insolvency practitioners. We believed it was

important that they worked with the receiver as the receiver goes through this difficult situation, works

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through the circumstances of each centre and then works through future arrangements for each centre.

In addition, the administrator of ABC Learning approached the courts and received sign-off for the

arrangements that had been made between the receiver and the banks to enable ABC Learning Centres to stay

open until 31 December this year. This was a procedural step necessary to formalise the arrangement so the

arrangement I announced last Friday of ensuring ABC Centres across the country would be open until 31

December this year. An arrangement was made last Friday. There was need for a formal tick off about matters

between the receivers and the banks and that occurred yesterday.

Of course, throughout this period the Government has been able to provide information to anxious parents,

both through our hotline and through the www.mychild.gov.au website. Those sources of information are still

available for parents and employees and indeed anyone else who is concerned about the situation and wants

information. The number is 180 2003 and the website is www.mychild.gov.au. We understand that mums and

dads around the country continue to be concerned. They have the security that care will be provided for their

child until 31 December this year. We anticipate beyond that date many centres will be open. We are working

through the insolvency practitioners who are working with the receiver, and through my department to ensure

that in December I can make a statement about long-term future of each centre.

So I’m happy to take any questions.

JOURNALIST: Can you rule out any more government money?

JULIA GILLARD: The amount of government money made available is the amount.

JOURNALIST: So there won’t be any more?

JULIA GILLARD: There’s not a need for any more government money. Before we struck the arrangement

with the receiver, we obviously worked with the receiver to ascertain the likely amount of money necessary to keep open the centres that the receiver believed were unprofitable until 31 December. The amount of money

we therefore made available, the up to $22 million, is sufficient to meet that need. So there is not a need for

extra money.

JOURNALIST: Not even in the long-term?

JULIA GILLARD: Well, the arrangement that we made was to guarantee centres would be open until 31

December this year. We did that because we wanted parents to have certainty. We also wanted to have a

period in which we could work with the receiver to announce the long-term arrangements. That’s what we’re

doing, that’s what we’ve been working through in the past week and we will continue to work through until we

are able to make that statement in December. But I just wanted to be very clear about that. The arrangement I

announced last Friday of the up to $22 million, that is sufficient to ensure centres around the country remain

open until the 31st December this year.

JOURNALIST: So that’s … I can interpret that as you’re not really prepared to talk about that next year yet?

When it comes to money?

JULIA GILLARD: Well, the reason that we put in place these arrangements is so parents had certainty and

so we had time to work with the receiver so we can make a statement about the future of each centre and we

will do that.

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JOURNALIST: The receivers are saying parents should re-enrol their children for next year, but you’ve sort

of said today that many of the centres could be open, which suggests to me that some would be closing for

pure, for whatever reason. What would you say to parents now who have to start thinking about re-enrolments?

JULIA GILLARD: Well, the receiver has communicated with parents and asked them to consider re-enrolling in 2009. What I would say to parents is the Government wants to support parents’ choices. Parents

choose their child care centre on a range of criteria about how it fits their needs, about how that child care

works for them and works for their family circumstance. So parents will continue to make all of those

decisions.

The Government’s role isn’t to make those decisions for parents—they’re decisions that parents make. Our

role is to support parents when they make those decisions. What we’ve done with this funding arrangement,

for example, is to ensure that parents have choices. Obviously parents have chosen to use ABC Learning. We

wanted to make sure that those centres were there and available for them until the 31 December this year.

JOURNALIST: But we know with ABC … in some parts of the country, that’s the only option in the local area

that there isn’t actually a choice for parents to go down the road and sometimes if they even want to go down

the road that child care centre is full. If those ABC Centres are going to have to close next year has the

Government planned for that?

JULIA GILLARD: Well I don’t think frankly it pays to speculate about those sorts of matters. We’re on a

process which is going to give people certainty. I think people would understand we’re talking about a

company where the receiver was appointed one week and a day ago. That receiver has to do an enormous

amount of work to establish the financial circumstances of this company and each centre and then to work

with those who have expressed interest in operating these centres for the future. That work has to happen,

that work will happen. The Government is working alongside the receiver in that process. That’s why we’ve

embedded with the receiver, specialist insolvency practitioners and we will be in a position to make a

statement, a full statement, about the future in December, but that work needs to happen in the meantime.

JOURNALIST: Is there a possibility that some centres may actually close before Christmas?

JULIA GILLARD: No, the Government has worked with the receiver. The funding arrangement I announced

last Friday was a funding arrangement sufficient to ensure all centres would remain open until 31 December

this year.

JOURNALIST: Is there any evidence that parents that are trying to get their kids into alternative ... is there a

flight from ABC of people trying to get their kids into alternative centres?

JULIA GILLARD: Well, look I see that there have been media reports about this and interviews with

individual parents. As I say, parents choose their child care for a variety of reasons. What’s our job? Our job,

as the Government, is to support parents being able to have choices and also to provide in these difficult

circumstances certainty for parents. That’s why we announced the funding arrangements that we did last

week. And I want to be very clear about this: the funding arrangement I announced last week is sufficient to

ensure each and every ABC Learning Centre will be open and providing care until the 31st December this year.

JOURNALIST: It’s a bit like a run on the banks isn’t it? Now you’re in the position of … I mean, child care’s

obviously important. You want to reassure parents, you’ve given some money. What you say now, between

now and December is going to affect how many people take their kids out or try and look for some other

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centres, isn’t it?

JULIA GILLARD: Well, we wanted to be as upfront and transparent with parents as we’ve been able to

about this. We wanted to be clear with them. We wanted to share information with them. That’s why in

Parliament this week, I was making very regular statements about what else had happened in relation to ABC

Learning Centres. We want to be upfront, transparent, share information. We understand parents are anxious.

We understand they want to know what’s going on.

JOURNALIST: Would you concede that your statements will affect the future viability of the company?

JULIA GILLARD: Well, what I would say is parents want information; we’re providing all the information

we can.

JOURNALIST: Were you providing information about which centres were unprofitable at the moment?

Given 40 per cent were unprofitable, people are trying to organise enrolments for 2009. Are going to give

them updates on the service? I assume that’s three weeks people have a decision to make. Will the information

on transparency extend to letting people know which centres are unviable at the moment, or unprofitable, so

people can make an informed decision about whether they should try and re-enrol for a centre that hasn’t got

an economic value?

JULIA GILLARD: Well, can I just make one point and then I’ll directly answer your question, and the point

I would make is this: when we are talking about centres that are unprofitable under the ABC business model,

we should not assume that that means that someone else won’t want to operate those centres. Obviously the

ABC business model is a unique model. We’re talking about the biggest private child care provider in this country; we’re talking about a floated company; we’re talking about a company that went into international

ventures and arrangements, including in the US. So a centre that may be unprofitable under the ABC Learning

Centre model, may still be a centre that someone else, either a for-profit operator or a not-for-profit operator

would want to operate and believed that they could operate is viable for the long term. So, it’s a bit more

complicated perhaps than assumed in the question.

To give you a direct answer to the question you’ve asked: the receiver is working through all of this

information. Obviously what the receiver had in the early days was preliminary information—all of it needs to

be checked. I announced in Parliament this week the process the receiver is going through. It’s a very

extensive process with them out getting information from centres. They are checking that against the original

documents. So, for example, the centres that are leased, they are getting the original lease documents—all of

that very in detailed work needs to be gone through as we work through for the future of these centres—that’s

happening now.

But I will stress again it is not as simple as saying, because a centre is unprofitable under the ABC Learning

model that there wouldn’t be anybody who wants to operate that child care centre in the long term.

JOURNALIST: Do you expect to have all of that information before you issue that update in December?

JULIA GILLARD: When we issue the statement in December we want it to be a comprehensive statement,

which will make clear for parents what the future is for the centre they use.

JOURNALIST: Should one provide anything about [inaudible] market dominance? Does there need to be

some regulatory changes there? Competition regulations?

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JULIA GILLARD: Well clearly both the Prime Minister and I have indicated a great degree of concern about

this. We’ve indicated a great degree of concern about the circumstances where a Liberal Government

uncapped child care places and then just let the market rip. And amongst the things that should’ve been done

that weren’t done, there was no National Quality Plan; no National Workforce Plan; no plan to bring child care

to those areas that were desperately short; no plan at all about how this system was going to operate.

We‘re working through those, piece by piece, and we’ve been doing it all year.

National Quality Standards, a National Workforce Plan, our plan to invest in 260 child care centres around the

country. The Prime Minister in Parliament talked about the market concentration issues. You may be aware,

that the Government has indicated that it believes we do need to do more on what are called ‘creeping

acquisitions’. These are circumstances where a big player continues to acquire assets in a market. The ACCC

has asked for more powers into this area and my colleague Chris Bowen is working through that, including

working through a consultation paper about what those additional powers should be.

JOURNALIST: Just on the issue of ANZ and rumoured job cuts, what’s your advice to ANZ management?

JULIA GILLARD: Well obviously businesses, I’m not going to be able to give advice to businesses right

around the country on the circumstance of every individual business but what I would say generally, we’ve

been very frank with people, these are difficult times.

A global financial crisis is the biggest development in international financial markets since the Great

Depression. We’ve been very clear that the global financial crisis is going to touch this country. It’s going to

have implications for our real economy. We are not going to be immune. And in being very clear with people that we are not going to be immune, we’ve been very frank, we expect unemployment to rise.

What I would say to people in these circumstances, whoever they work for, is the Government wants to make

sure we are there supporting them. The Economic Security Statement was an investment in jobs. It was an

investment in around 75 000 jobs, it included 56 000 new productivity training places to help people get skills

they need to get a job, even in these difficult circumstances. We’ve kept 10 000 of those places to assist with

structural adjustment in industries that are particularly affected by this downturn.

JOURNALIST: With the four groups that have come to Government offering to buy parts of ABC, what

percentage of their offers covers… how much of the 1040 child care centres…how many does that cover across

the four?

JULIA GILLARD: My understanding is the receiver has had a range of enquiries, that people would have

seen in the media that there have been a range of people that have indicated interest. Obviously all of that is

going to be compiled and worked on as we work our way through to this December statement.

JOURNALIST: Is one of those Early Learning? Is that one of the companies that… [inaudible]?

JULIA GILLARD: I’m not in a position to confirm that for you. You’d need to approach the receiver for that

information.

JOURNALIST: There were four private and then some not-for profit as well…is that right?

JULIA GILLARD: Well you would have seen in the media, we’ve seen not-for-profits indicate an interest as

well as for-profit companies. But to get an up to date list, I am not the collector of that list. There’s a

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registration of interest process with the receivers so that’s an enquiry that would need to be directed to the

receiver.

Thank you

Media Contact:

Deputy Prime Ministers Press Office 02 6277 7758

media@deewr.gov.au

Non-media queries: 1300 363 079

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