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It’s not as easy as “ABC”?

This contribution has been submitted to Webdiary by a student in the Online Journalism unit for the Masters in Media Practice and Masters in Publishing courses at The University of Sydney as part of the unit's assessment. The topics covered in the pieces awaiting publication are interesting – and diverse. We hope that Webdiarists will enjoy reading them, as well as giving these aspiring journalists plenty of constructive commentary.


It’s not as easy as “ABC”?
by Jillian Wolfe

ABC Learning, a leading organisation with many political links, is another of Australia’s blue chip companies on the verge of collapse. Its problem, as has befallen the property and banking sector, is too much debt. What’s difficult to fathom is the social impacts of this on our community with all the dependencies on the services they provide. It’s easy to ignore a broken bank as just another greedy institution and that deserves their demise. Not so when you are the nations largest childcare provider to hundreds of thousands of working families. The challenge here is whether the government should intervene and nationalise a private sector entity to ensure delivery of a vital piece of social infrastructure. It is time to look at this potentiality, surrounding which there is presently no debate.

What failed? The business, the leaders or the customers?

ABC Learning undertook massive debt and overseas expansion. This is a reflection of greed and is inconsistent with social outcomes or values shown by the Kindergarten Union as opposed to ABC Learning.

ABC Learning grew on the government incentives to parents to support more child care places. So what were they doing expanding overseas? They were acting in their shareholders interests without due regard for the children’s interests. The Government may need to inject capital to stabilise the company should there be a lack of interest in a potential infrastructure fire sale.

The customers with the government rebate in tow were more likely to take on a larger mortgage. Mum and Dad both work to pay the mortgage and the children attend childcare. With the potential collapse of ABC Learning these families will be faced with the possibility of one parent having to give up work to care for the children.

With household mortgage debt at record levels, John Howard’s experiment is about to fail, dismally. All those families with two incomes, and children in ABC Learning centres are about to learn their DEF’s.

Sarah Brown* and her husband have two children currently attending an ABC Learning centre in Western Sydney five days a week. Between them they earn approximately $120,000.00 a year which supports their $400,000.00 mortgage. More than 25% of their salaries, including government rebates, go toward childcare fees. When I asked Mrs Brown how her circumstances would change should the ABC Learning centre close down she showed concern. “We have no family living in Sydney. All our family are in Brisbane, so we can’t call on Grandparent’s to help out with looking after the kids. So it would be a case of either of us having to give up work, which would be difficult (because) we need the money to pay our mortgage”.

If Mrs Brown was to give up her job (being the lower paid of the two) it would force the Brown’s into a situation where they would incur massive mortgage stress. “It is something that we have looked at and we may have to sell our house and probably, possibly move back to Queensland even”.

So Eddie, you might have centres in Australia, New Zealand, America and the United Kingdom, but have you stopped ever to consider the mortgage belt that will pay for your greed?

*name changed for privacy reasons


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How firm is the roof over your head?

Hi Jillian, I’m from your Online Journalism class, and as you know, I am here to comment and contribute my feedback to your piece of writing. Starting from the title, I thought it was very creative and had given much thought to it. It is also an important social issue amongst the lower and middle class families, which forms the majority of the population in Australia.

Moving on to the content, I really like the informative way that you have taken in this piece. I would possibly think that this would be a viable piece of news for the newspapers. However, what really questioned me was, hyperlinks? I thought that if hyperlinks were included, it would have given a bit more back up to your writing. (eg. This could be implemented to DEF, as I read DEF, I started to query...).While you have identified the potential consequences of the collapse of ABC learning, the solution you have suggested i.e. injecting capital to stabilize the company, may not be the only answer. In Singapore, the government runs ‘community centres’ which provide childcare services in government built housing towns and caters for the middle and lower middle class, who critically need, as you correctly use the example of the Brown family, such childcare services. The rich will always be able to afford privately run childcare services. The Singapore model could be one the Australian government should study.

Although I do feel really sorry for the Brown family and other families under similar circumstances, I do wonder, how will children actually grow up to be closely knitted to their parents? Interaction with kids are crucial in parenting hood and for the kids’ childhood. This is really a big problem for many families.

However, I enjoyed reading the interview as it has given a bit more life to your piece, and it is good to hear views from others.

Over extending and over borrowing - just crazy

Jillian, a piece of interest to me as I knew a child care centre owner who sold to ABC. I followed the whole saga with interest at the time. It seemed to me ABC was taking considerable risks in its haste to expand to the extent it was, at the price it was.

I find it hard to understand how some families arrive at the financial decisions they do. To take out a $400 000 dollar mortgage with a combined income of only $120 000 necessitating on top of the large interest bill, the payment of a quarter of what they earn in child care fees so they can finance that huge mortgage, is financially naive.

A lot of people have built very large homes necessitating these huge mortgages when a more modest and cheaper home would have sufficed.

Low equity will always bring one undone if interest rates blow out, let alone if one is dependant on a double income and unemployment rises with the loss of one of those jobs. They might save the childcare fees if one parent is forced out of the workforce, but that would probably not be enough to save the home with such a debt.

Of course on top of that many families have high levels of credit card debts due to unwise discretionary spending. The level of personal debt in this country has skyrocketed in the past decade or so.

I think however that if the Government is going to subsidise these childcare centres to the extent it does through tax breaks for families, then it should regulate the industry more. It is pointless giving the tax break just to see the child care centres raise their fees the way they are doing.

The same situation occurred when the government subsidised the price of hay in the big 1982 drought. Merchants simply built the subsidy into their price through price hikes, so farmers were no better off. And I notice doctors always put their fees up when the Medicare rebate goes up. So patients still are out of pocket by the same amount.

Never mind ABC


Look at this disgusting rort on taxpayers. And weep at these lying scum. I grew up with farmers and I know they would steal the pennies off their dead grannies' eyes given half a chance.

ABC Learning

Jillian: "ABC Learning undertook massive debt and overseas expansion. This is a reflection of greed and is inconsistent with social outcomes or values shown by the Kindergarten Union as opposed to ABC Learning."

Many an entrepreneur (vide the 1980s) has come unstuck trying to build an empire on a mountain of debt. Alan Bond's Bond Corp was the classic Australian case.  If the whole thing is highly dependent on borrowed capital, with a high debt to equity ratio, then it is likely to be easily affected by an unexpected income dip and/or increase in costs. For example, an interest rate rise can tip a delicately balanced operation over the cliff. That appears to be what happened to ABC: it had over-reached and assumed too much stability in the conditions that enabled it in its rapid growth phase.

The sad thing is that the Federal Government was counting on the private sector to relieve it of having to spend on education in early childhood, which most experts agree is the most important phase of a person's life. Ironically, now it will likely have to step in and prop up ABC to stop the rot.

It's not always a good idea to leave things to the markets. ABC's pre-schools may well finish up going cheap, but  it takes particular qualifications and skills to run them. Nobody can just buy in and learn as they go.

It should be in a Masters' Course

"with all the dependencies on the services they provide" ; "and that deserves their demise" - these expressions are not clear.   What are they meant to mean?

Please use apostrophes if you wish to use contractions. 

"It is time to look at this potentiality, surrounding which there is presently no debate." - if this sentence got any clumsier, it would fall over.

You have used the word "outcomes".

ABC is not a "they"; it is an "it".

Again, this is commentary (and slanted commentary at that) not reportage.

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