Child-care rebate bad for kids

• Ross Gittins
• June 6, 2008
• Page 1 of 3 | Single Page View

Child care rebate Photo: Danielle Smith

It's a funny thing about the Rudd Government. It's terribly bright-eyed and bushy-tailed, intelligent and hardworking, anxious to make the world a better place. Except? Except that wherever your reforming eye turns, you keep running up against the election promises it made to set the status quo in concrete.

Consider the great economic rationalist experiment with the "marketisation" of child care. The problems of the new child-care "industry" were outlined in a recent speech by Professor Deborah Brennan, of the Social Policy Research Centre at the University of NSW.

In the early 1990s, the previous Labor government decided to extend public subsidies to users of private, commercial child care rather than continuing to use capital grants to expand the supply of places in not-for-profit community centres. It was argued that the demand on taxpayers had been too great and that it was discriminatory to deny fee subsidies to parents using for-profit care.

The private provision of child care has expanded rapidly since then, particularly with the advent of the now troubled ABC Learning Centres, which listed on the stock exchange in 2001. It adopted an aggressive strategy of acquisitions, taking over centres run by community groups and individual owner-operators.

There are no official figures on the proportion of long-day-care places now owned by ABC. It's commonly thought to be about 30 per cent, though it's also said to have reached 50 per cent in Queensland and Victoria.

When you turn child care into a market - particularly a market highly subsidised by the government - it shouldn't surprise you when one player starts buying up the others. There may even be sufficient potential economies of scale - in this case, at the administrative level - to make this an improvement. This, presumably, is the reason ABC Learning Centres' takeover seemed to worry the Howard Government not one bit.

But Brennan points out that this degree of concentration isn't common in other countries. Until its recent divestiture, ABC was the second largest provider in the United States market, but had only a 2 per cent share of that market. It is the largest provider in Britain, but has a share of only 2 or 3 per cent. Continued...

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