Corporate Child Care in Australia: Is it in the Public Interest?

1. Corporate Child Care in Australia: Is it in the Public Interest? Jennifer Sumsion Charles Sturt University, Australia

2. In Australia, corporate child care = ABC Learning • ABC Learning owns / operates 1,158 child centres (21% of total 5,372 centres; 29% of 3,886 for profit centres) • The next largest provider (not for profit provider) operates 145 centres • The only other remaining corporate provider operates 44 centres (Citigroup, 2007)

3. ABC Learning Centres Limited Annual Report 2006

4. ABC Learning’s global expansion • UK: 48 of 15,605 centres (0.3%) • USA: 1,150 of 120,000 centres across 39 States (1.1%) (includes franchises in Hong Kong, Indonesia, Philippines as part of Learning Care takeover) • NZ: 77 of 1,700 centres (4.5%) • China: subsidiary (123 Global Holding) and joint ventures planned for 2008 (Citigroup May 07, June 07 )

5. ABC Learning’s plans for UK • Owns / operates 48 Busy Bees centres • Soon to acquire 88 Leapfrog Nurseries (in total, 0.8% of all centres) • Anticipated total of 250-300 centres (1.9%) • “…happy to sort of take it slow” (Eddy Groves, CEO) (ABC Notes Prospectus, 2007; Inside Business, 2007)

6. Number of ABC Learning centres

7. ABC Learning’s net profit A$m

8. A corporate success story…(?) Investment analysts increasingly refer to: • high risk • poor visibility (i.e. transparency) • aggressive expansion • ‘mature’ Australian market • low occupancy rates in USA • vulnerable to ‘brand damage’ / (reputational risk) • share price underperformance (Citigroup, June 07)

9. But is it in the public interest? • What “is good for the community as a community” (Stone, 2002, p.21) • Where “governments and economic and social institutions exist to serve people, rather than the reverse” (Davies, 2004, p. 305) • A social contract between business and the general community articulating reciprocal obligations (Davies, 2004)

10. Public interest: A contentious construct What is in the public interest changes as circumstances change and as values and perceptions of the society change (Davies, 2004) “It is not in the public interest if the activities of a corporation take unfair advantage of public goods, distort functioning of markets, externalize costs, produce ‘bads’ (undesired or harmful goods), acquire excessive (or any?) power over people, or otherwise erode the health of society and the natural environment” (Davies, 2004 p. 178)

13. What crucial questions need to be asked? • Is maximising returns to shareholders inconsistent with providing high quality ECEC? • Is providing high quality ECEC sufficient? • What, exactly, do we perceive to be under threat? What evidence do we have of that threat? • Are we losing sight of the bigger picture by focusing so much attention on just one of many potential threats (corporatisation) to quality? • What are the costs of corporate success?

14. Crucial questions … • Does ABC Learning’s size / profitability bring undue influence to conversations with government and to its membership of policy communities? (Ball, 2007) • What are its “flows of influence”? (Ball, 2007, p. 129) • How does ABC Learning manage reputational risk, given that its reputation is a crucially important resource?

15. How to scaffold a critical analysis in the absence of empirical data? • litmus tests e.g.,‘Would we be concerned if this was happening in the non-profit sector’? • Cribb & Ball’s (2005) ethical audit framework focusing on goals, obligations and dispositions (see Sumsion, 2006) • Opportunity costs i.e., the costs involved in choosing a particular direction or course of action over another (broad ranging impact / cost - benefit analyses)

16. Public interest as a possible scaffold? What might a social contract between business and the general community articulating reciprocal obligations involve?(Davies, 2004) • transparency • trust (that motives go beyond self interest) • recognition (that obligations go beyond profit maximization) • civic engagement - contribution to strengthening social and democratic fabric • conducive / contribution to economic growth / economic stability

17. Reciprocal obligations / relations What is the nature of relations between corporation, public and the state and how are they changing?

18. Public perceptions of ABC Learning(a tentative, partial analysis)

19. Purcal & Fisher (2004) • analysed ‘interim approvals’ in NSW (ie exemption from employing a university qualified EC teacher despite the centre being licensed for more than 29 chn) • for-profit services had 79.4 % of interim approvals despite comprising only 52.3 % of all centres requiring an EC teacher • one unidentified provider had 31 interim approvals (17.6 % of all approvals) for its 65 services requiring an EC teacher, even though it operated only 4 % of all centres requiring teachers.

20. Rush (2006)N= 578229 respondents from 81 community-based centres77 respondents from 30 ABC Learning centres

21. Rush (2006)less commonly reported findings

22. Rush & Downie (2006) • 20-30 min telephone interviews [N=20] with subsection of 77 ABC Learning employees who responded to survey • explored survey questions / responses in more depth [arguably loaded questions] • data indicated wide range of views; concerns seemed little different from concerns generally reported in literature about working conditions in long day care (except for a culture of secrecy – referred to by 25% of participants)

23. Harris (2007) • Interviewed 20 women in Townsville (North Queensland) whose children attended long day care centres (14 x community-based, 2 x independent for profit, 5 x corporate) • 9 participants indicated centre met their ‘quality vision’ (6 x community, 2 x independent, 1 x corporate) • 4 participants indicated centre did not meet their quality vision at all (3 x corporate, 1 unspecified)

24. Australia: A watershed? “No other country in the world has allowed a single company to assume such a commanding position in the market: Australia has, in effect, embarked on a vast national experiment” (Brennan, 2007, p. 226)

25. Pessimistic perspective “What begins as the provision of a service to fulfill collectively determined socio-political purposes ends up as a drive to find mass-produced goods that can be sold profitably. The collective needs and values that the service was originally created to serve are gradually marginalized and finally abandoned”.(Leys, 2001, p. 4)

26. Optimistic perspective Stakeholder activism in the form of: • demanding a social contract, and that the terms of the contract be explicit and transparent • demanding corporate social responsibility reporting for for-profit human services provision that is supported by taxpayer funding • devising / having input into the development of an audit tool that could be used for an externally initiated audit to assist in circumventing ‘window dressing’ reporting

27. Considerations for the UK| • What, if any, social contract could be established with childcare corporations? • What safeguards are already in place and what might need to be introduced? • What requirements for transparency are in place / need further development? • What forms of checks and balances are appropriate and feasible? • How will empirical data be obtained? What data would be most useful? • What would an effective impact / cost-benefit analysis involve?

28. References ABC Learning Centres Pty Limited. (2007). ABC Notes Prospectus. ABC. (2006). Financial Report: For the Financial Year Ended 30 June 2006 Retrieved 4 November, 2006, from http://abclcl.republicast.com/ar2006/republicast.asp?page=1&layout=1&control=yes&zoom=100. Ball, S. J. (2007). Education PLC: Understanding private sector participation in public sector education. London and New York: Routledge. Brennan, D. (2007). The ABC of child care politics. Australian Journal of Social Issues, 42(2), 213-226. Cribb, A., & Ball, S. (2005). Towards An Ethical Audit of the Privatisation of Education. British Journal of Educational Studies, 53(2), 115-128. Davies, G. (2004). Economia: New economic systems to empower people and support the living world. Sydney: ABC Books. Harris, N. (2007, July). Women's Reflections on Choosing Quality Long Day Care in a Regional Community. Paper presented at the Australian Social Policy Conference, Sydney. Leys, C. (2001). Market-driven politics: Neoliberal democracy and the public interest. New York: Verso. Purcal, C., & Fisher, K. (2004). Review of the early childhood teachers shortage interim policy for the NSW Department of Community Services, Office of Childcare. Retrieved 12 December 2004. from http://www.sprc.unsw.edu.au/reports/ECTFinalReport.pdf. Rush, E. (2006). Child care quality in Australia (Discussion Paper Number 84). Canberra: The Australia Institute. Rush, E., & Downie, C. (2006). ABC Learning Centres: A case study of Australia's largest child care corporation (Discussion Paper Number 87). Canberra: The Australia Institute. Stone, D. (2002). Policy paradox: The art of political decision making. London: W. W. Norton and Company Ltd. Sumsion, J. (2006). The corporatization of Australian childcare: Towards an ethical audit and research agenda. Journal of Early Childhood Research 4(2), 99-120.