Abc Learning Centres Information
Chapter 2
ABC Learning Centres
There are few barriers to entry and expenses are low, so the childcare industry is a licence to make money. A Gold Coast real estate agent and 'child-care specialist', Bryan Hayden, says: 'I've got a client and he's got 20 bottle shops, 10 hotels and three child-care centres. I say to him, 'I'm 77 and the child-care business is the best business I've ever seen in my life.' The Government pays subsidies, the parents pay you two weeks in advance and property prices keep going up. 1
2.1 The collapse of ABC Learning, which was the catalyst for this inquiry, added significant momentum to the movement to improve the provision of childcare across the country. That an organisation catering for up to 25 per cent of the long day care market should fail so rapidly following its rise to market dominance says as much about the deficiencies in childcare policy and regulation as it does about the highly questionable business practices of the company. 2.2 In June of this year, a representative from the Australian Competition and Consumer Commission (ACCC) informed the Senate Economics Committee of the ACCC's belief that ABC Learning's failure was not due to a lack of competition but probably 'prudential reasons' such as high levels of debt and acquisitions as well as complicated business practices. 2 2.3 However, any detailed analysis of the financial collapse of ABC Learning is beyond the scope of this report. It has much more to do with issues of corporate governance and requires the attention of the ACCC and the Australian Securities and Investment Commission (ASIC). One submission to the inquiry drew the attention of the committee to the apparent failure of ASIC to examine closely claims made by ABC Learning about the valuation of its operating licences. Although these licences had no trading value, ABC Learning put high valuations on them and then raised additional shareholder funds, in large part based upon such valuations. 3 This matter
ABC Learning Centres
There are few barriers to entry and expenses are low, so the childcare industry is a licence to make money. A Gold Coast real estate agent and 'child-care specialist', Bryan Hayden, says: 'I've got a client and he's got 20 bottle shops, 10 hotels and three child-care centres. I say to him, 'I'm 77 and the child-care business is the best business I've ever seen in my life.' The Government pays subsidies, the parents pay you two weeks in advance and property prices keep going up. 1
2.1 The collapse of ABC Learning, which was the catalyst for this inquiry, added significant momentum to the movement to improve the provision of childcare across the country. That an organisation catering for up to 25 per cent of the long day care market should fail so rapidly following its rise to market dominance says as much about the deficiencies in childcare policy and regulation as it does about the highly questionable business practices of the company. 2.2 In June of this year, a representative from the Australian Competition and Consumer Commission (ACCC) informed the Senate Economics Committee of the ACCC's belief that ABC Learning's failure was not due to a lack of competition but probably 'prudential reasons' such as high levels of debt and acquisitions as well as complicated business practices. 2 2.3 However, any detailed analysis of the financial collapse of ABC Learning is beyond the scope of this report. It has much more to do with issues of corporate governance and requires the attention of the ACCC and the Australian Securities and Investment Commission (ASIC). One submission to the inquiry drew the attention of the committee to the apparent failure of ASIC to examine closely claims made by ABC Learning about the valuation of its operating licences. Although these licences had no trading value, ABC Learning put high valuations on them and then raised additional shareholder funds, in large part based upon such valuations. 3 This matter