Eddie Groves is hardly the pin up boy for arguing that the private/for profit sector is an appropriate provider for essential community services. However, the lessons from the collapse of his overly intricate bubble structure are wider than don’t trust an ex milkman. There are basic neo-liberal assumptions behind the funding of child care at the Federal levels that are essentially flawed and have not delivered value for money to government or quality services to all children or parent users.

The basic premise under the present program, inherited from the last government, is that by funding subsidies for parental fees, they will operate as informed consumers in a near perfect market. The theory goes that parents will make choices that will both contain costs and ensure quality of care for their children. Therefore, apart from a toothless form of national accreditation, there was no need for any relationship between the Federal government funders and the providers of services to ensure reasonable fees and equitable distributions of services.

Parents were confronted with no choices because of shortages of services and/or high fees in areas where land was expensive, or too many “choices” of glitzy new centres in cheap fringe land that competed against the older, shabbier not for profits. This meant an oversupply for older children and in certain LGAs and long waiting lists and desperate parents in others. This mal-distribution came because funding that allocated places on a planned basis in earlier policies, was not seen as necessary because the market would determine locations!

In addition, the subsidy funding per child is per capita so does not reflect the extra costs of staffing ratios for younger children, so there were fewer places on offer for these. There is no capacity to fund better qualified staff in disadvantaged areas, which is one reason why the government is about to offer extra funding for preschool teachers. Private operators generally opposed any improvements in staff child ratios and pay rates as these reduced profits, and fees went up whenever subsidies were raised. Many services were therefore unaffordable to low income users, or went for least expensive staff options with lower qualifications than were needed by the children.

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In contrast, the same Government’s funding for nursing homes controls the number of beds and the fees that can be charged for subsidised beds. The contrast suggests that the child care funding changes in the 90s reflected market ideology rather than any common sense, so it was no wonder that cowboys like Eddie Groves saw opportunities. Eddie competed by driving local costs down in cheaper fringe areas, building centres to drive out competition and then buying up competing losers. That is why he has 40% of uneconomic centres with too few enrolments. There are also questions of service quality that arise when trying to run what should be a local community services like a chain of laundromats.

It is quite likely that many of the underused centres are in areas with other underused capacities, and could be safely closed. Such information needs to be urgently sought, rather than just subsidising the financial mire while trying to work out who owns what. An urgent census of waiting lists and unused places would give the government the data it needs to decide what services need to be saved.

The obvious “partner” in this should be local governments that have often run child care services and can also estimate local needs. There are also many not for profit centre managers such as the NSW KU, who can advise on management needs, who I gather have not been contacted. Short term management leases of centres to such organisations may allow time for sorting out this mess without pouring more good money after bad.

These groups and other child care experts can both help sort out the current mess and advise the Federal government on better ways of using the very substantial funds (2B plus) it provides to these services. These solutions need to start from the premise that child care is not an appropriate service to leave to market forces. While not ruling out the role of private operators, the Government has to introduce controls over how funds are used and where. Only this way can quality, accessibility and affordability be ensured.

Are you a parent with a child in an ABC Learning Centre? Are you an ABC Learning employee or a very literate two-year-old with a tale to tell?

If so, send your tips, experiences to boss@crikey.com.au, submit them anonymously here or SMS tips and photos to 0427 TIP OFF.