Public First Program


Shane Elson


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+61-4-1349 7828

Mar 2008 # 1

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Back to Editorials 2008

Kids Business

As Edmond Groves swans around the US trying to flog off bits of his failing empire, mums and dads are getting worried. Now, as it happens, these mums and dads are also tax payers and, so it transpires, they have contributed mightily to the fortunes of Edmond, his missus and a few others in the inner ABC circle. 

I found it rather interesting that in the huff and puff of last week’s media’s examination of the fall and fall of ABC little attention was paid to the real issue. That of the privatisation of public services and goods. That debate, if you follow the silence of the media, would seem to have been settled years ago. 

While I am all for high quality, low cost child care, I am also for equitable distribution of wealth and regulation to prevent the accumulation of wealth by tax payer subsidised, for profit providers of child care (and a range of other services and goods). 

ABC Learning has grown enormously over the last ten or so years. The growth in ABC’s profits and Edmond’s personal wealth can be tracked alongside the rise in child care subsidies paid from our taxes to provide a service that was, historically, in most cases, provided by local councils operating on small budgets with much parent input and assistance. The few private centres were reserved for the rich who were adverse to the thought of their little ones coming into contact with the spawn of the great unwashed.  

Profits are not that hard to make when one is providing a government funded essential service. Indeed, the lucrative arrangements the privateers lobby for ensure that they don’t really have to work that hard to keep up the payments on the penthouse, planes and cars. With about 45% or $207 million of the profits of the ABC centres coming from our taxes we are, I would argue, entitled to an explanation as to why this is ‘good’. But I won’t hold my breath. 

Little talked about in the media fracas over Edmond’s diminishing fortunes last week was mention of the former Howard Government Minister for Children and Youth Affairs, Larry Anthony. Larry lost his seat in 2004 and was very quickly invited to join the Board of ABC. Perhaps this was just a small way to repay Anthony’s legislative assistance because it was he, as the responsible Minister, who pushed through the bill that gave hefty subsidies to parents who were then, under the law, forced to pay that to the child care provider they “chose”. 

However, “choice” was, in many areas, soon reduced to choosing the closest ABC centre or the one further away. ABC, if you remember, was hauled before the Australian Consumer and Competition Commission, when it successfully tried to take over the second biggest child care provider, Child Care Centres Australia. This is where it gets interesting and we see the nexus between politics and big business revealed yet again. 

Child Care Centres Australia had two high flying liberals on the Board, Andrew Peacock and Michael Kroger with Peacock the company’s Chairperson. Now, with Larry Anthony and Former Brisbane Lord Mayor and prominent liberal, Sallyanne Atkinson on the current Board of ABC, one wonders how much Edmond is ruing the fact that through his networks within the Liberal party he successfully achieved a commitment from the Howard government that, should they be re-elected, they would pour almost $700 million into direct child care subsidies. Easy money by anyone’s standards I would think. 

However, that little earner crashed and burned along with JW Howard on the evening of November 24, 2007. I suggest that unlike a wise investor, Edmond had put almost all of his political investments in the Liberal party and when they no longer guaranteed a steady income his worm, as they say, turned. 

It’s also worth remembering that Edmond doesn’t care much for the workers he employs. You might recall that in 2003 and 2004 he fought against charges that his centres were responsible for the safety of the tiny tots who attended. No, Edmond argued, if little kids escape then it’s the lousy staff I employ who should be held liable. He lost. 

Not content with telling his staff to bugger off and take responsibility, he wasn’t too kindly disposed to allowing government inspectors to check he met the rules. With heavy, deep pockets (no doubt full of taxpayer’s money) he challenged the Victorian government all the way to the Supreme Court. He lost and the inspectors moved in. 

On both counts, Edmond truly believes that he and he alone knows what’s best for the little ones. He denied that cutbacks in staff and services via orders to reduce the amount of toilet paper available, reducing lunch sizes and other basic items, would affect the quality of care his centres could offer. It seems that flying around on his private jet might have reduced his ability see the trees for the forest. 

And so it is that Edmond is now jetting around the US trying to do deals to unload some of his debt and if he is lucky, score a green card and do a Rupert on us. But that’s not all Edmond is doing. There is one last card to be turned over as the house of tax payer funded cards crumbles. 

You probably haven’t heard of a little ‘trust’ fund called “The Australian Education Trust”. It’s managed by the Directors of Austock Property Management Ltd. The directors of the “responsible entity” all come from corporate backgrounds with extensive interlinkages. Companies with interests in the trust include Mirvac – you might know of them as the rapacious developers of once public land and National Australia Bank – who also bank-rolled Edmond. 

In their 2007 Annual Report we find that 97% of the income the trust obtains comes from, you guessed it, ABC Learning. What is also of interest is that the profit that ABC provides for the trust is …, you guessed it, 45% of total profits derived from the trust. Am I paranoid or is there a pattern emerging here? Tax payers contribute 45% of ABC profits; ABC provides 45% of Australian Education Trust profits. Nah. Cant be. But that’s not all. The 2007 Annual report also notes that by 2010 the trust will “acquire interests in 3 schools in Victoria and New South Wales”. With such a vertical integration of education being proposed, it will soon no longer be the state providing ‘cradle to the grave’ ‘social’ services but private, for profit companies. 

Children, it seems, are lucrative business investments. As units of production they are relatively attractive. The main research and development, along with the clean up of toxic wastes, is done by the family leaving the profits to be stripped off by the corporates. 

No doubt, as the creditors close in Edmond will be hoping that Kevin 07 can ride in and save his bacon. Then again, if Kevin does ride in and save the day, it will be you and me that contribute directly to the fortunes of those whose biggest worry is if they have to sell the Bentley or the Porsche to make to next payment on the jet.

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