The Lucrative Business of Childcare

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The Lucrative Business of Childcare
Sydney’s Child
November 2004

Private childcare is already big business and it can only get bigger.

The merger announcement between ABC Learning Centres and Peppercorn Management and Child Care Centres has created an $800 million dollar empire with responsibility for one in every five childcare places in Australia. Consequently, the quality of childcare in Australia is further threatened, with ABC Learning Centres currently projecting that it will own and operate over 1,200 centres within the next three years. ABC Learning Centres is a listed company, so joint managing director Eddy Groves has an obligation to the company's shareholders to make a profit ($100,000 per centre is his estimate). The obligation is less likely to be to provide the best quality support to the children in its care.

The private childcare sector may argue that making a profit does not interfere with providing adequate care. Their rhetoric is all about providing quality childcare, but with a company model that anticipates an average profit of $100,000 per centre per year, families should question whether adequate care is all that they want.  Parents do not skimp on the quality of their children’s schooling. They pay big bucks for a perceived better education at private schools. However, the same cannot be said for private childcare. Higher costs do not necessarily translate into better quality in a fledgling industry that is struggling simply to provide access for all.

A philosophy that says we can make money by caring for children does not fit the analysis of early childhood professionals. They say that the first six years of life are the most crucial, the ones in which we give children the best start and provide a foundation for the rest of their lives. The evidence is clear. Supporting the development of the first year of a child’s life is far more critical in terms of their social, mental and physical development than which school they attend. The best people to do this childhood development work are parents. Unqualified childcare workers have a limited understanding of child development, and while they might be ‘great with kids’, they are in essence babysitters.

Private childcare centres need unqualified staff because they are are cheaper to employ. Private childcare centres will rarely employ more than the quota of qualified staff required by legislation. They will employ the minimum number of staff necessary to meet child/staff ratios – ratios that are legislated but are still of concern.

Hypothetically, a scenario that could occur in any centre is for two adults to have responsibility for six children who are all under six months old. These workers would struggle to keep up with nappy changes and feeds, let alone provide the kind of one-on-one stimulation necessary for children’s development at this age. And, one of these adults does not even need to have had any formal training in early childhood development.

Anecdotal evidence suggests that McDonalds gives their staff more training before they allow them to sell burgers than private childcare services give to their unqualified staff. Marketing companies often pay their telemarketers more than childcare centres pay their qualified childcare workers. Where would you prefer to send your child? To a non-profit centre that spends every dollar on extra equipment and resources to support its staff to provide the best developmental experience possible, or to a for-profit centre that may limit its resource and equipment budget to make sure it meets budget targets?

We are a society that 'contracts out' our responsibilities: aged care services, children’s services and schools. We don’t like to hear that the services we rely on for support are not of the quality we expect. When staff at a childcare centre leave a child locked inside when they go home for the day, or an aged-care facility is found to give residents kerosene baths, those of us who have entrusted that organisation with the care of our loved ones naturally become defensive. Their failings invite judgement on our decision to use that service. The criticism cuts to the core of our guilt: that we are unable to provide the support we are paying others to give.

But the quality of care we would give to our children or our parents cannot always be matched by paying someone else to do it. Consequently, we need to pull our heads out of the sand, understand that private childcare is limited in its ability to support the development of our children and make informed decisions about our children’s early years, especially when the federal government’s National Agenda for Early Childhood so clearly drills home the importance of young children’s development. We need to use this knowledge when making decisions about what childcare services we will use, if any.

In the recent election, political parties offered a few dollars' tax relief for families and made unfulfillable promises about interest rates. Once again they are appealing to families' pockets rather than to their hearts and minds. While this is going on, your local childcare centre could have joined the world of big business and be  part of a company worth more than 700 million dollars, twice as much money as the federal government has allocated to their National Agenda for Early Childhood. We desperately need some perspective in the debate, and we desperately need better quality childcare services. .

Daniel Donahoo is a Fellow at OzProspect, a non-partisan, public policy think tank. He has worked in the Children’s Services sector at local and state government level.

This is an edited version of an article first published on Online Opinion

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