Abc Receivers To Spell Out Child-care Viability

The Age

Monday December 1, 2008

By COLIN KRUGER

ABC Learning's receivers are expected to whittle down the list of unviable child-care centres this Wednesday from the 386 that were named as "under review" last week.

With few expected to make the jump to the list of surviving centres, the announcement is instead expected to highlight the larger problem of how to ensure the survival of what will be a substantial number of loss-making centres.

The only certainty is that the Federal Government will have to pick up a bill that could run into hundreds of millions of dollars if the places for the 30,000 children being cared for in the troubled centres are to remain safe.

This became obvious last week when the receivers, led by McGrathNicol's Chris Honey, named the centres guaranteed to remain open next year, and those remaining "under review".

The announcement effectively ring-fenced the profitable centres that may offer some return for banks owed $1 billion, from the centres that would only lose more money and are of no further interest for the receivers, who act on behalf of the banks.

It's the downside of the grand plan ABC Learning founder Eddy Groves had for corporatised child care.

Union and industry representations have already been made to Government over what may be the only long-term solution for the unviable centres - remove the significant cost of rent with a capital injection to acquire the land and building.

"Most community centres rely on a local government, church, or university building, or capital funding of the kind once provided by the Federal Government," said Barbara Romeril, the executive director of Community Child Care Victoria.

She said a lot of unprofitable ABC centres could be made profitable as community-based centres on this basis. "Certainly we've put that idea to (Deputy Prime Minister) Julia Gillard's advisers and directly to (parliamenary secretary) Maxine McKew," she said.

The solution would not be cheap, with the cost of ABC Learning centres averaging around $1 million, according to land records obtained by BusinessDay, and data from the company's biggest landlord - Australian Education Trust.

With 386 centres currently on the unviable list, the bill could exceed $300 million.

A spokeswoman for Ms Gillard said: "As the minister has indicated previously, the Government has no intention of buying child-care centres."

Ms Gillard told the Ten Network's Meet the Press program yesterday that the Government would be in a "better position" to make decisions when the receivers provided their latest update this week.

But any solution is likely to take time.

With only one month to go before the centres are expected to close, more time may be needed, and it would come with an inevitable cost.

The Federal Government and ABC Learning's bankers kicked in a combined $50 million last month to keep the loss-making ABC centres open for the remainder of the year.

A similar amount might be required from the Government to keep these troubled centres open for the first two months of next year while a viable proposal to keep them going is worked out.

The union representing ABC Learning's 16,000-strong workforce, the Liquor, Hospitality & Miscellaneous Union, is pushing for this proposal in Canberra with further injections from the Government and banks.

"I think the banks have to come to the party to allow due process to occur," said the union's national secretary, Louise Tarrant.

ABC is not the only problem. CFK Childcare has yet to confirm how many of its 39 child-care centres - which are now for sale - are unviable, or how long they can remain open.

© 2008 The Age

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