The ABCs of capitalism, childcare and women's liberation

By Linda Waldron

On November 6, ABC Learning, which controls nearly a quarter of Australia’s childcare centres, went into receivership owing more than $1 billion to the banks. Less than two weeks later CFK, Australia’s second biggest childcare company, also went into receivership, after revealing it was losing $400,000 per month. ABC’s ruin accelerated CFK’s collapse as the negotiated $8.5 million sale of its centres to ABC fell through. The Rudd Labor government has advanced $22 million to keep ABC centres operating until December 31.

Contrary to claims in the November 19 edition of Green Left Weekly, the context of ABC’s industry domination was not that “during the 1980s, when profits soared but wages dropped due to inflation, many families survived by having both parents work ... Demand for childcare centres grew. ABC learning was a company that benefited … because at the same time the government did not prioritise increasing childcare places through publicly funding them.”

The introduction of the 1983-1996 ALP-ACTU Prices and Income Accord caused profits to soar while wages dropped. The Hawke-Keating Labor and Howard Coalition governments’ childcare funding reforms created the conditions for the ABC behemoth. Labor viewed childcare as a means to keep women in the workforce and to exert a downward pressure on wages. By contrast, the Howard government’s “pro-family agenda” encouraged women to return to the home in order to undertake the unpaid care of young, infirm and elderly family members. Despite this ideological difference, both parties were united in their push to privatise the childcare industry.

In 1986 the Hawke-Keating government changed funding arrangements for not-for-profit centres, by providing funding on a per child basis, rather than staff costs. In 1990 Labor extended fee relief to the private sector. In 1994 the Keating government provided additional funds to local government and community organisations to increase the number of work-related childcare places. Consequently, the number of commercial places rose from 32,296 in 1991 to 121,600 in 1997, while not-for-profit places rose from 41,086 to 46,300.

In its 1996 report, the Howard government’s economic think tank, EPAC, advised that a 1% increase in fees with no additional public support would suppress demand in 2001 by around 10%. The 1996 Coalition budget cut $40 million from childcare funding. Between 2002 and 2006, while funding rose annually by 14.4%, childcare costs increased by 62%.

Green Left Weekly’s Vanessa Hearman imaginatively claims that “ABC Learning seemed set to continue its success until its CEO, ‘Fast’ Eddy Groves, began to do what investors with a great deal of profit did all over the world. He invested in the subprime mortgage market.” It is true that the collapse of the subprime mortgage market in the US accelerated ABC Learning’s demise, but it is misleading to suggest that Groves simply erred in his investment decisions. Last November industry experts queried how ABC could ascribe a value on its books of $1.3 billion to non-transferable childcare licences that have no tradable value as they cannot be traded. The licences accounted for most of the company’s balance-sheet assets, on the strength of which ABC was able to expand rapidly. In 2004, Australian Community Children’s Services national convenor, Prue Warrilow, advised the Howard government that the ABC model would fail from accumulated debts.

Yet the fiscally conservative Rudd government, as well as the pro-big business Howard government, refused to heed warnings about ABC. In a public forum, earlier this year, Rudd’s parliamentary secretary for early childhood education, Maxine McKew, said: “There are more things to worry about than ABC.” However on November 11, she declared that ABC “is a debt-laden organisation that grew very fast across the country and was allowed to do so. It was literally a ‘let ‘er rip’ situation that the previous government indulged.”

Although the federal government is responsible for accreditation, the Rudd government refuses to address ongoing concerns about ABC’s quality standards. Deputy Prime Minister Julia Gillard said on November 18: “What I would say to parents at ABC centres, if they go to their centre and they believe there is a problem, they should certainly feel free to contact our childcare hotline. Obviously the licensing of childcare centres is done by states and territories, but we will assist and we will immediately pass any complaint on ...” Gillard has so far ruled out public ownership of the failed centres and is instead calling for expressions of interest from both profit-making and not-for-profit organisations.

ABC’s demise has renewed calls to remove the private sector from the childcare industry. On November 20, Australian Services Union national secretary Paul Slape said: “It is clear that commercially driven enterprises may put at risk an essential and vital service like childcare … Local government already provides maternal and child-health services and it simply makes sense that it is the long-term home for childcare services.” The Municipal Association of Victoria has called on the government to consider the “integration of childcare into other early-years programs, particularly kindergarten programs.” The Greens have proposed that a new capital grants fund be made available to community groups and not-for-profit organisations to operate the failed ABC centres.

Not-for-profit, community and local government-run centres certainly deliver higher quality and more affordable services than the for-profit private sector. A 2005 report by the Australia Institute showed that not-for-profit centres outscored ABC centres in areas such as nutrition, equipment variety, staff ratios and staff time with children. According to early childhood researcher Joy Goodfellow, not-for-profit childcare organisations maintain salary costs of around 80% of budgets, while the corporate sector aims to keep salaries below 50%.

Yet even when operated by not-for-profit organisations, capitalism compromises childcare provision. Local governments are dominated by local business identities, real estate agents and ALP career politicians. Capitalist class interests motivate their decisions about the resourcing and operation of local childcare centres. During the 1970s and ‘80s, the well-organised and influential women’s liberation movement placed the needs of women and children at the centre of the childcare debate. With a weak, demobilised movement however, feminist concerns barely enter the current discussion. Instead industry experts and capitalist politicians at all levels of government discuss what childcare models can best meet the needs of the capitalist class.

Childcare is not an essential service because capitalists like Eddy Groves need profit-making opportunities. Nor is it an essential service because children need to be kept safe while both parents work to service mortgages and pay for inflated living costs. Childcare is an essential service because all women have the right to participate fully in society: to pursue meaningful careers, to study, to pursue recreational, physical and social activities. In order for childcare to be a real option for women, it needs to be quality care that prioritises the health and well-being of young children.

Socialist Cuba presents good examples of such quality care. Cubans regard life-long education as a basic human right and considers childcare a key plank of its early childhood education program. Cuba has developed a “child-centred” philosophy focussed on the emotional as well as educational needs of young children. Carinos (“affection”) is an important aspect of the relationship between teachers and children under their care. The Federation of Cuban Women (FMC) plays a critical role in advancing the development of Cuba’s early childhood theory and practice.

Cuban childcare comprises both formal and informal programs, which reach 98% of children under the age six. The children of working mothers, around 18% of pre-school age children, attend the circulos infantiles (“children’s circles”) day-care centres. The centres operate daily from 7am to 6pm and have a 1:7 carer ratio with a 4:15 ratio for under two-year olds. Children can begin attending from six months of age. Meals are provided for free and infants are bathed daily. Each centre has its own doctor and nurses, many have their own dentist and all have ready access to speech pathologists and child psychologists. Parents pay a small fraction of their monthly wage and assist with cleaning, repairs, painting and making toys. If financially possible, parents contribute to providing books and other supplies.

The centres offer a state-regulated curriculum based on language development, art, music, social and environmental studies, science and maths. Childcare teachers have post-secondary qualifications and are paid the same wage and enjoy the same social prestige as primary and secondary professionals. While toys, educational and artistic materials are limited, teachers use recitation, oral discussion and imaginative play and learning to stimulate, entertain and educate the children.

In 1992 Cuba initiated the internationally renowned Educa a tu hijo (“Educate your child”) program. The program relies on resources and participation from family members, the broader community and local circulo centres. Qualified professionals and community volunteers help parents to provide home-based care and education, by organising community-based activities and conducting weekly home visits.

Cuba’s example shows that ‘quality’ childcare — meaning a safe, nurturing, social and educational environment for infants and young children — is only possible when childcare is designed to meet the needs of women and children, rather than the capitalist class.