The child care multinational that was trying to expand into Canada has collapsed. But the fight to protect Canada from privatized early learning and care services is not over.
ABC Learning collapsed in November and is now in receivership. The corporation was the largest child care business in the world.
The resulting chaos, government bailout, and revelations about the company’s sketchy financial arrangements, are further warnings that Canadian governments should not rely on the market to provide early learning and child care. A well-funded public child care plan must be part of a package to kick-start the Canadian economy when Stephen Harper ends his Parliamentary shut-down.
ABC, which operated more than 2,300 child care centres in four countries, owed $1.6 billion and had been struggling since earlier this year. Forensic accountants and lawyers are now combing through the wreckage to piece together the real story about the company’s books and subsidiaries.
In Australia, 120,000 children are in ABC centres. The crisis affects their families, as well as 16,000 workers at the centres. At least 55 centres will close as of January 2009 – and a further 241 have been identified as unprofitable, leaving their status uncertain.
A government press release highlights the way decisions get made when child care is seen as a profit centre, not a public service. “Under the Corporations Act 2001…the receiver has an obligation to maximize the value of the assets. This means that under normal circumstances the 241 unviable centres would be closed.”
Instead, the government is stepping in with a short-term bailout. The financial lifeline will keep the centres open until March 2009, adding $22 million to the more than $300 million in public funds that is coming to ABC this year through subsidies to parents facing spiraling fees.
For many years, academics and experts - many of them women - had been warning about ABC’s shaky structure and poor-quality care. But no-one wanted to listen.
On commentator writes about books that ‘resembled a spider’s web’, obscuring the truth about the company’s complex structure and questionable finances.
ABC’s founder and chief executive, Eddy Groves, resigned under shareholder pressure in late September. Other ABC executives now accuse him of being less than forthcoming about the corporation’s books.
Australian child-care expert Deb Brennan, who toured Canada last year with a warning about corporate child care, points to the roots of the crisis – policies that CUPE and others must prevent from taking hold in Canada. She says ABC came to dominate in Australia thanks to a government decision in the 1990s to extend public subsidies to users of private, for-profit care rather than to expand non-profit care. While the government promised the policy shift would lead to greater choice and lower fees, the opposite proved true on both counts.
Last fall, CUPE helped uncover news that 123 Busy Beavers, a corporation closely linked with ABC, was expanding into Canada. The first targets were in BC, Ontario and Alberta. CUPE and other child care advocates raised concerns about ABC’s track record of lower quality of care, as well as the trade dangers of a multinational delivering early learning and care services.
The Canadian buying spree never took off, although 123/ABC has bought 11 centres in Alberta. Now, a new facet of the corporate approach to child care is being exposed in Canada, as a corporation with links to 123/ABC seeks to profit from child care real estate. At least one Educare executive, Leslie Wulf, has also worked for 123 Busy Beavers.
CUPE is supporting in-depth research into the problems with privatized child care and will continue to monitor developments, while working with our allies for a cross-Canada, public child care program.
As the Child Care Advocacy Association of Canada points out, it’s crystal clear what hasn’t worked in Canada. Their statement on the ABC meltdown points out that with the exception of Quebec, “Canada’s market-based approach relies on groups and individuals to build spaces and it relies on parents to pay most of the operating costs. Canadian governments have failed to provide families with access to quality, affordable child care services. In fact, multiple international studies confirm that Canada has one of the lowest levels of public investment in child care in the developed world.”
The market approach to child care simply doesn’t work. In the current global economic crisis Canadian governments need to develop public early learning and child care services that support children, their families and the country’s economic recovery.