By the year 2006 the Howard government was pouring $1.7 billion a year of public money into its child-care benefit scheme, including $128 million a year in subsidies straight into the pockets of Fast Eddy's booming company. Thirty-two months later and ABC Learning has collapsed under debt exceeding $1 billion, Groves has been forced to resign, his estranged wife is suing him for $40 million, and the Rudd Government is temporarily propping up ABC Learning's 1100 child-care centres across Australia with a $22 million handout that ends on December 31.
What happens after that, who knows?
But clearly, back in March 2006, when the Groves corporate bandwagon was belting along, sweeping up admirers and investors as fast as it was piling up 44 per cent of its income from Howard government subsidies, nobody was listening to people like Jennie George (Federal Labor MP), not even her own party. George's parliamentary speech that March night came during debate on a piece of 2005 budget legislation the Labor Opposition was trying to amend.Now that Fast Eddy's career has collapsed, leaving chaos and family heartache in the child-care industry in this country, ( George's speech is worth recalling. Some excerpts:
"When you look at the [latest] data, in June 2002, which is quite dated now, we see around 113,000 children [across Australia] were not able to access child-care, either because no places were available or the cost was prohibitive. So something is fundamentally wrong with the administration and planning of child-care services in this country. This bill has a very limited scope in proposing one minor change when I think the system needs drastic overhaul…
"At a time when [government spending] on child care since 1990 has risen tenfold to around $1.7 billion a year … the Howard government has allowed the system to become dominated by private providers for whom the profit motive is primary. Child-care provision has become a licence to print money. As Mr Groves, CEO of the largest private conglomerate, said recently, 'You cannot help but make money.' He confirmed ABC Learning Centres had received 44 per cent of its income from government subsidies - that is, $128 million of its $292 million last year. This company has spent around $700 million on acquisitions and takeovers. It now controls about 930 centres, with the aim of expanding to 1300 by mid-2008…
"No wonder their recent announcement of $88 million in profits was described as appalling by the National Association of Community Based Children's Services [which] argued these profits could go to far better use in making child-care more accessible and more affordable. The truth is companies like ABC Learning have tapped into a rich seam of taxpayer funding underpinning its earnings and profit levels. What worries me is that often these healthy profits are coming at the expense of decent staff conditions and quality facilities …
"Companies like ABC Learning can cherry-pick the market, free of government constraints. Company profits are under-pinned by taxpayer funding, yet taxpayers' interests are left to the mercy of the marketplace, free from government intervention, free from any overall consistent planning, and free from any form of regulation …"
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