In just 20 years, ABC Learning has become the world’s biggest provider of childcare. It’s now a multinational company with businesses in the United States, the UK, New Zealand and educational facilities in South East Asia. Former milkman, owner of the Brisbane Bullets basketball team and CEO Eddy Groves is a self-made man who now runs a multi-billion dollar company. It’s a business success story to inspire anyone looking for fabulous wealth as an entrepreneur.
Yet, it’s difficult to imagine Eddy Groves and his company ever getting the soft-focus treatment from Australian Story. Why is that? Apart from the idea of making millions from caring for kids, here are just a few of the reasons we don’t like Eddy or his business.
- Much of Groves’ wealth is earned from the Australian taxpayer through family assistance payments, with the company hauling in up to $1 million a day from the federal government. ABC Learning is Australia’s most subsidised company. Financial analysts in favour of ABC stocks have called it “legislated growth”.
- When a toddler escaped from a childcare centre in Hoppers Crossing in Victoria in 2004, the company was fined $200 for inadequate supervision. But the company appealed the decision, seeking to blame its low-level staff, thereby challenging the well-established legal principle of vicarious liability, which implies companies are responsible for the actions or omissions of their employees.
- The Wal-Mart effect. As an acquisition-hungry behemoth, it has the financial clout to run smaller operations out of the industry, challenge regulators, and lower competition. Industry watchers also have concerns over the privatisation of childcare. The ACCC has ordered ABC to close centres in some regional areas and not open them in others.
- Employee complaints over cost-cutting, overly strict budgeting and the impact of staff workloads on the quality of supervision. Parents have complained that advertised menus did not match the food their little one was served. And, some centres have replaced real grass with synthetic grass.
- Accusations of political cronyism. Just five months after losing his seat at the 2004 election, Larry Anthony, the former Minister for Children and Youth Affairs, found a new job as a non-executive director at ABC Learning. As the ALP’s Tanya Plibersek said at the time: “As a minister he set up a situation where childcare fees went through the roof, and now he’s on the board of the company that will benefit most from those fee increases.”
- Problems with accountability. According to this article, Queensland Maintenance Services (QMS) did $100 million worth of work for ABC between 2003 and 2006, and QMS director Frank Zullo is Eddy Groves’ brother-in-law. The work was not tendered, nor was it noted in the company’s public documents that the work was given to a family member.
- The cheek of ripping off the Australian Broadcasting Corporation’s acronym. Kids love watching ABC TV. Critics say it was a cynical move to co-opt the national broadcasters name in a bid for some name recognition.