Magazine of Socialist Action in Australia

Nationalise ABC Learning!

Reading Time: 2 minutes

Not one closure – Not one job loss

Australia’s biggest childcare operator, ABC Learning, was placed into voluntary administration this week. The company, which operates more than 1200 centres across the country, is the latest victim of the global credit crunch.

ABC Learning borrowed extensively to expand its operations into the US and Britain. It almost quadrupled the number of centres it operated worldwide in the short period of two and a half years. A big chunk of the company’s capital was subsequently mixed up with the sub prime loans market in the US.

The sub prime crisis and now the credit crunch has forced up the interest payments on these loans. It is estimated that ABC now owes lenders, which includes Australia’s big four banks, more than $1.2 billion!

With one in every five child care centres in Australia run by ABC, and long waiting lists in every city, the Federal Government was under severe pressure to intervene.

If ABC went under, and widespread closures took place, it would create problems for thousands of working parents and would be a community disaster. ABC accommodates more than 120,000 children and employs more than 16,000 staff. It is for this reason that the Government has been forced to step in with a $22 million lifeline which will allow ABC to operate until the end of the year.

This is on top of the hundreds of millions of dollars that the Government gives ABC annually by way of subsidises for childcare placements. Some reports have suggested that up to 44 per cent of ABC’s revenue comes directly from federal childcare subsidies. This equates to about $1 million every day!

The Government has said that they will use the next two months to ‘decide what to do next’. More than likely they will suggest that the company is restructured and sold off to a series of smaller operators. It is also not ruled out that they will be forced to give ABC more tax payer funded handouts.

Just as with every company that goes into administration, the commercial creditors will be prioritised to recover their debts above the workers who will be seeking their employment entitlements. The workers have been told to continue working for the next two months even though at this stage their entitlements are not secure.

The childcare workers union, the Liquor, Hospitality and Miscellaneous workers Union (LHMU), is in a very powerful position. The pressure is on the union to launch a campaign involving both childcare workers and parents. Such a campaign should call for ABC Learning to be taken into public ownership and should not rule out industrial action. On the basis of public ownership the workers could be paid decent wages and childcare could be made free.

It is clear that a restructure of ABC would be totally inadequate. The childcare sector needs to be taken out of the hands of the profiteers. It is a matter of urgency that ABC is nationalised under workers’ and community control. This is the only way that both the service and the worker’s entitlements can be guaranteed.

The Socialist Party demands:

Not one closure – Not one job loss
No more running childcare centres for profit
No more Government hand outs to the profiteers
Open the books – show the public where the subsidies have gone
Free childcare for all and decent wages for all childcare workers
Nationalise ABC Learning under workers’ and community control

By Dean Roberts


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