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Tuesday, 11 November 2008
Page: 37


Senator PAYNE (3:58 PM) —I thank Senator Hanson-Young for moving the urgency motion this afternoon. We are here debating this particular urgency motion about the collapse of ABC Learning Centres because, quite simply, the government has comprehensively failed to deal effectively with this problem. The impact of this failure on thousands and thousands of Australian families is indeed likely to be significant and also has the disturbing potential to be long term. It is also a serious failure for all Australians who look to the government for, hopefully, responsible economic management, sadly missing at this point in time.

It is no surprise, but there have been signs of trouble at ABC Learning Centres over many months. The government was so slow to respond that, apparently, it is still working out a contingency plan. In fact, in February this year the ABC Learning share price dropped by 60 per cent. Financial analysts at the time expressed concern about the adverse effects on families who are relying on those centres for child care.

Let me go through a little more of the chronology so that we can see where the gaps have been. Four months later, on 23 June, the Parliamentary Secretary for Early Childhood Education and Childcare, the Hon. Maxine McKew, put out a press release on ABC Learning, but it was on a fee hike, taking effect from 1 July this year. At the end of July, ABC Learning then flagged a pre-tax loss of over $400 million for 2008.

On 21 August a voluntary halt on trading on the ASX was called for ABC Learning Centres. Then a month later at estimates—and my colleague Senator Bernardi was engaged in the discussion at the time—an officer from the Department of Education, Employment and Workplace Relations told the hearing that the department was alive to the question of what would happen to ABC Learning Centres if the organisation failed. One is glad that the department was at least alive, but we are not sure what the alternative was. These issues are very serious for Australians.

On 6 November ABC Learning went into voluntary receivership. The following day the Deputy Prime Minister announced a bailout of $22 million to ensure that the centres stay open until the end of December. The coalition has indicated, through the Leader of the Opposition, the shadow Treasurer and the shadow minister, Mrs Mirabella, that support for the children of families affected by this collapse is welcome. But in reality the government still does not have a proper contingency plan. It cannot say with any specificity what the $22 million will actually be spent on and how it will actually help those Australians whose jobs and childcare places are fundamentally at risk and, most importantly, for many people—and Senator Hanson-Young also referred to this—whether there will be any security for parents after Christmas. Consider the impact of the collapse and what it has done to Australian families: we have 120,000 Australian children attending ABC Learning Centres across the country. We have about 16,000 people employed by the company, many of whom also have children who attend the centres. In the event of centre closures, even if they are able to find a new job, they will be without care for their own children.

ABC Learning caters for between 20 and 25 per cent of the Australian childcare market. It also provides a significant number of reserved places for the children of Defence Force personnel, which is obviously a very significant factor. The organisation has received considerable amounts of money—$300 million in subsidies from government this year and, reportedly, it has a debt of close to $100 million, which is predominantly owed to the banks. The coalition is concerned about the failure of the government in handling this entire problem.

Most importantly, the government should have been able to provide certainty to the thousands of parents who have children in ABC Learning Centres, but we are still waiting to see with any certainty what clear path lies ahead. That degree of uncertainty is clearly reported in newspapers, as well as anecdotally and by our constituents, and is very disturbing to Australian families. I referred earlier to aspects of the chronology of the past few months, but really the government’s time frame for action has been embarrassingly slow.

In September the government set up an education department task force to deal with the collapse, and that was four months after the trading of shares of ABC Learning ceased. They said they were working on a contingency plan but, as far as a contingency plan is concerned, we remain in the dark. We have a promise of $22 million but not a lot of detail around that. It is detail, it is information that Australian families need at this point. Essentially, they are now telling families that they need to wait until mid-December to hear more—that is, just two weeks before the guaranteed funding expires on 31 December. That two-week period immediately before Christmas—and we all know what that is like for families; it is fraught at the best of times, let alone at a time where stories of the global financial crisis are impacting on people’s consciousness and people’s psyche and where they now also have to face this problem—is not enough time if families need to find alternative care. It is not enough time if employees need to find alternative jobs in what is a difficult and uncertain employment market. It is not as though jobs are just going to fall off so-called Christmas trees.

There is evidence that this uncertainty and the lack of a clear plan may also be causing the company to haemorrhage even further. We would all have seen reports in the Australian this morning that the ABC Learning Centres are suffering from serious understaffing and seeking temporary employees from a range of sources. Also in today’s Australian the Deputy Prime Minister said it is up to the receiver to provide details about the 40 per cent of ABC Learning Centres which are apparently and reportedly regarded as unprofitable. But this is very important information. The government has a responsibility to acknowledge this information; it needs to be provided to Australians who have their children in care in this particular system. Some 60 per cent of ABC Learning Centres could be entirely profitable, and we need to absolutely acknowledge that. The problem is that, when you talk about 40 per cent being unprofitable, you end up with speculation. That does not help anyone in this process. It causes families and staff themselves in all of the 1,040 centres to be much more anxious about what is going on and causes them to perhaps then pursue plans to find alternative care for their children and alternative employment for themselves. And the problems will just cascade.

The very serious personal impact of this problem needs to be acknowledged by government, as does the package. Speculation has the potential—and this is very unnerving for those involved in businesses and those whose families have children in the centres—to severely damage the prospect of the currently profitable centres remaining just that. As far as we can tell, notwithstanding the fact that the task force has been in place for over six weeks, there is no evidence of any particular consultation with other industry stakeholders. There have certainly been no reports or statements of that.

The chief executive officer of KU Children’s Services, which is actually Australia’s second largest childcare provider and the largest provider of not-for-profit child care, was quoted in the last couple of days as saying that they had made offers of help but had not had a response back from government. I understand that they are not the only other providers to have done that. There was a forum scheduled for today, to be chaired by the Parliamentary Secretary for Early Childhood Education and Childcare, but it was an already scheduled meeting of the National Children’s Services Forum. It is not, as far as we can tell, an ABC Learning specific meeting, but it is now being used to portray the government as consulting industry leaders on the issue. I hope it is useful. I hope it does actually do something, but to pretend that it is a response to this particular issue is not accurate at all.

The coalition have made numerous calls for the government to provide details of the contingency plans, but they do seem to us to have been very reluctant to do so. In fact, they have gone so far as to try to blame the previous government for the situation in which ABC Learning finds itself, but it is state governments that license childcare centres, not the Commonwealth. One would have thought that the Deputy Prime Minister would be aware of that. If there was such a concern about the rapid growth—


Senator Jacinta Collins interjecting—


Senator PAYNE —It is not rubbish that state governments license childcare centres. That is in fact the case. Had the Deputy Prime Minister been concerned about the rapid growth of ABC Learning childcare centres then perhaps she might have contacted her Labor colleagues in every state and territory some 12 months ago, after the election, and raised the matter with them, but there is no evidence of that either. This approach is a hands-off approach. It is a dangerous approach. It is dangerous for Australian families at a very difficult time of year and at a very difficult time in the Australian economy. The government should acknowledge that this needs better care, hands on the wheel, not off the wheel, and a more responsible approach all round.