ABC's grip on child care

The concentration of the child-care industry will be addressed by the Federal Government as part of its long-term plans for the sector.

As the Government scrambles to deal with the collapse of ABC Learning, which had one quarter of the child-care market, the industry believes now is a good time to address the company's stranglehold.

"It [was] monstrously irresponsible of the previous government to have allowed this state of affairs to occur because of the direct consequence of this level of market concentration," the Prime Minister, Kevin Rudd, told Parliament yesterday.

"We will deal with the competition policy questions and other market concentration questions once we are through the current mess."

The Federal Government has already announced it will spend $22 million to keep ABC centres open until December 31 but their future beyond then is unclear.

The Treasury Secretary, Ken Henry, told the National Press Club that the Government's $22 million lifeline was appropriate. He said he believed only a "relatively small" number of centres would eventually have to shut.

"Most of them indeed are [viable], and most of them may not be called ABC Learning, but they'll still be there," Dr Henry said.

Administrators and receivers were called in to take control of ABC Learning last week after its directors decided the business was insolvent or close to it.

About 120,000 children attend ABC Learning centres. About 400, or a third, of the centres were found to be unprofitable when receivers had their first look at ABC's books.

This week the Government announced it had engaged the insolvency company PPB and was "embedding" some of its staff, as well as departmental officials, with the receivers, McGrathNicol.

It is also seeking expressions of interest from child-care operators keen to buy ABC centres.

Private and community operators have expressed interest. Some are believed to want to buy back centres they sold to ABC Learning. Continued...