The ABC’s of the childcare industry

The industry has been aided and encouraged by increasing Australian Government assistance for parents looking to put their children into day care.

Under the Howard Government, an effort to increase the nation’s birth rate resulted in actions such as the baby bonus. Meanwhile, several family payments to assist in affording childcare, predominantly the Child Care Benefit, were paid out to encourage parents back into the workforce.

Australian Government budget papers suggest that appropriations for childcare support were $1.8 billion in 2008-09, or about $2,250 per child enrolled in care. More than 800,000 children are expected to use government-subsidised childcare this year.

As a result, the industry has gone from strength to strength. In 2010-11, the industry is set to be worth around $7.3 billion, having grown by 2.1% each year in real terms since 2005-06. The industry has exhibited very strong growth over the past decade, even taking into account the recent shake-up of consumer confidence during the global financial crisis, which temporarily applied the brakes.

In 2008-09, the industry went backwards for the first time in over a decade, as consumers reduced the amount of time their children were in care, and relied on family and babysitters instead. As unemployment rose in 2009, families had less to spend on care, and also more time to provide care themselves.

The increase in part-time work also gave parents greater freedom to care for their own children. In 2009-10, the industry made headway, although only growing by a comparatively small 0.7%. A similar jump in industry revenue occurred in 2010-11, as households found more room in their budgets for childcare, and confidence continued to return to the market following the ABC collapse.

The biggest beneficiary of governmental largesse has been ABC Learning. Founded by Eddy Groves, ABC grew from nothing to have nearly one-third of the Australian childcare market in the space of five years. However, an ill-timed, highly leveraged move into the US market coincided with the credit crunch, and the company soon found itself unable to service its debt. The company was entered into administration in December 2008, as reports of dishonest financial practices began to proliferate.

While there were fears that many of ABC’s 1,200 centres would close, government intervention was extended indefinitely. Many non-profit operators stepped into the breach, and the majority of former ABC centres still operate today. Adding to the doom and gloom of late 2008, major provider CFK Childcare also entered into voluntary administration. CFK was not heavily indebted like ABC Learning, and its collapse can be attributed to a lack of economies of scale in the childcare sector.

Industry outlook
Despite the industry’s turbulent recent history, however, the future for the childcare industry in Australia remains bright. Demand is strong and expected to grow over the coming five years.

Continued government support, increases in the female participation rate, and a mini baby boom will all contribute to 4.7% average real growth in revenue over the next five years.

This good news is conditional on shrinking margins for operators. Government regulations, mandating higher staff-to-child ratios and higher levels of staff qualifications, are likely to increase wage costs for operators. As wages make up the single largest cost for childcare providers, operators trying to make a profit in the industry will find themselves increasingly feeling the pain. This is one of the factors leading to the dominance of the industry exerted by non-profit operators, which promises to be the defining story of the industry going forward.

Key success factors:

Ability to alter mix of inputs in line with cost. An optimum number of places and age mix of children to ensure profitability.
Ability to take advantage of government subsidies and other grants. Government assistance is available to operators and crucial to the viability of many child care centres.
Compliance with government regulations. Industry operators must apply to the National Childcare Accreditation Council and complete the accreditation program within 18 months. Following the ABC Collapse, the level of regulation within the industry is increasing.
Easy access for clients. Location is an important factor affecting the profitability of a childcare services. Supply-demand factors affect occupancy rates and the fees that can be charged.
Optimum capacity utilisation. The maintenance of high occupancy rates is crucial to success. In order to be profitable, a centre must have an occupancy rate of at least 70%.
Ability to attract local support/patronage. Marketing skills are important in filling places.
Robert Bryant is the general manager of business information firm IBISWorld.

http://www.smartcompany.com.au/professional-services/20100901-childcare.html

Warren mothers take action on childcare

Two local mothers are behind a proposal for a new childcare centre at Warren in central New South Wales.

Michelle Martin and Belinda Mulchay identified the need for the facility after they were unable to get suitable long-term day care for their children.

Ms Martin says she has struggled to find adequate long-term care for her children.

“It’s very difficult to get all of your children in on the same day, which makes it very difficult for working parents in particular,” she said.

“A lot of the care available in Warren at the moment doesn’t operate during school holidays, which can also be another problem, and basically the demand for childcare is far outweighing the positions that are available in Warren at the moment.”

The shire council has approved plans to demolish a building opposite the Warren pre-school and construct the centre on the same site.

Ms Martin says the size and cost of the facility will depend on how much demand there is for childcare places.

“We did a small sampling back about 12 months ago, but now a year down the track, as you can imagine, people’s needs have changed, and we are now looking for people to give us an idea of what care they may require or how many children they have that they might need care for,” she said.

“[The information] will definitely assist us putting the figures together when we go and ask the bank for some money.”

It is hoped the childcare facility could cater for more than 40 children and create 11 new jobs.

Construction is set to start early next year.

http://www.abc.net.au/news/stories/2010/08/31/2998016.htm

Regional childcare places at risk

COUNTRY families could miss out on child care because the state government has not provided accurate and timely advice to a major service provider, opposition spokeswoman for children and early childhood development Wendy Lovell says.

Stepping Stones is a private company based in Tasmania that operates outside-school-hours care programs in Bendigo, the Goulburn Valley, Colac and Wangaratta, employing 42 staff.

Ms Lovell, State Liberal MP for Northern Victoria, said programs were run at St Therese’s Kennington, Holy Rosary, White Hills and Eaglehawk North primary schools. She said she was told by Stepping Stones CEO Chantal Williams on Thursday that the company had no choice but to close its

Victorian outside-school-hours-care programs because of increased regulation introduced by the Brumby government.

Ms Lovell told the Bendigo Advertiser yesterday that the Department of Education and Early Childhood Development had agreed to meet Stepping Stones this week to discuss the future.

A government spokesperson said: “We know these are important services for families, which is why the Department of Education and Early Childhood Development is continuing to work closely with Stepping Stones to assist them to continue the provision of outside-school-hours care.

“Stepping Stones has agreed not to proceed with any OSHC closures at this time and has agreed to meet the department this week.’’

Ms Lovell said according to Ms Williams, the company was given conflicting and untimely advice about the need for two staff to be on duty – a regulation introduced by the Brumby government last year.

“The Brumby government confused Stepping Stones about the requirement for two staff to be on duty, then told them at the last minute – when it was too late – how to go about applying for an exemption.’’

http://www.bendigoadvertiser.com.au/news/local/news/general/regional-childcare-places-at-risk/1926494.aspx

Essence dips into Coast childcare

ESSENCE Property Group has expanded its Gold Coast presence, dipping its toe into the childcare market with a $2.4 million investment at Coombabah.

Bambini Early Childhood Development — a company associated with the growing property group — will open its first centre next month as it rolls out its Queensland childcare expansion program.

Essence Property Group is a diverse development company which is relocating from Brisbane to the Gold Coast at the end of the year.

The group already has made a substantial local investment, with another affiliated company outlaying $8.9 million for a site at Biggera Waters earmarked for the Harbourside Markets.

The Essence empire, which includes Bambini and Essence Food Group — a company embarking on quality European-style tastes — will move to the Harbourside Market site when construction is completed.

The Coombabah site, up the road from the yet-to-be-built markets, is the debut Gold Coast centre for Bambini Early Childhood Development.

It has also secured land in Caloundra with plans to open early next year and is scouring the southeast for further sites.

Owner and licensee Gabrielle Guifre said the company previously owned two centres in Brisbane, but saw the Coast as a region for expansion.

She said the company would be looking for freehold and leasehold sites from the border to as far north as Cairns.

At Coombabah, the company bought an existing centre and began ’significant’ renovations.

Ms Guifre also has established a childcare management system, Eternal Echoes, to help maintain consistency across all future childcare sites.

“We have had to put a lot of thought into that, because if we are doing centres from the Gold Coast to Cairns you want to be able to run them efficiently,” she said. “We have built a website and an intranet for staff so we can communicate effectively with them.”

She said the Bambini model would be ‘completely different’ from other childcare models, distancing the company from the collapsed ABC Learning Centres.

“It is not just a business in our eyes. We feel a moral obligation to support the staff,” she said.

“We appreciate and respect every interaction with parents and children in the community.

“With the expansion, we are not going to be just taking any centre on. We are going to be investigating the quality of care missing in a certain area before we just buy one.”

She said the company would relocate to Harbourside Markets at the end of the year.

Construction on that concept starts next month.

Essence Food Group will take out a handful of the stores in the centre and offer the city quality European food.

She said there would be synergies between the fresh produce at the markets and that offered at the childcare centres.

Bambini Early Childhood Development is taking enrolments for children aged 15 months to five years.

http://www.goldcoast.com.au/article/2010/08/28/251311_gold-coast-business.html

Pay to have littlies learn what they do anyway

Want to get rich quick? It’s easy! Just tell parents that their toddlers are dolts. First, assure them their tykes are cute and precious, and could well turn out to be geniuses. But hint that unless their little bundles of potential get heaps of help, very soon, in the form of educational classes, toys, teaching and tapes, sorry, but all bets are off.

How else to explain the burgeoning business of baby and child stimulation? I’m not talking about early intervention for kids with issues. I’m talking about early intervention for kids with parents who have an extra buck left in their wallets.

In this ”Hurry up or fall behind!” baby culture, along come the child-stimulation leeches – er, ”experts” – to convince us our kids are going to sit there like lumps unless we get crackin’.

As the company Gymboree explains on its Facebook page: ”Designed by experts, our age-appropriate activities help develop the cognitive, physical and social skills of children as they play.” In other words: we need full-blown experts to teach our kids how to play.

As if play is so complicated. As if our kids could totally blow it. (No, sweetheart! You’re wiggling all wrong!) You’ve got to wonder how did we develop any cognitive, physical and social skills in the dark days before professional baby stimulation? How did Edison figure out that whole light bulb thing without a single ”Fun with Electricity” video? How did Maurice Koechlin design the Eiffel Tower without taking a single Lego class? How on earth did Bach take to music at all, considering he was born a full 300 years before anyone offered the first clapping class for six-month-olds?

”The marketplace has been brilliant in convincing parents who are already anxious about their children that if they don’t have these fancy toys and devices and classes, their child will be left behind,” says Roberta Golinkoff, the chairwoman of the school of education at the University of Delaware and a co-author of Einstein Never Used Flash Cards.

She says: ”I find Gymboree kind of benign. But the kind of motor activities the children engage in” – looking, listening, banging, bouncing – ”they would engage in, anyway.”

Speaking of which: have you heard about Walking Wings? These are a sort of marionette-like contraption that you attach to your kids to hold them up as they learn to walk. According to the package, the product ”helps baby learn to walk balancing more naturally”.

More naturally? More naturally than pulling themselves upright the way 300,000 years of Homo sapiens have done without Walking Wings? But see? Once again, if the industry can convince you your kid might not do something 99.99 per cent of the species does automatically, it can sell you almost anything.

Which brings us to the latest product I just heard about: Babysmartees. These are T-shirts billed as a revolutionary breakthrough because they feature 100 per cent black designs on 100 per cent white backgrounds.

What I might call ”cheap printing” the company’s marketing campaign calls ”infant stimulation”, because the black-white contrast is supposedly so compelling. And guess what? ”An infant stimulation program can improve a baby’s curiosity, attention span, memory, and nervous system development. Newborn babies who are stimulated reach developmental milestones faster, have better muscle co-ordination …”

Yada, yada, Yale.

Oh, please. You know what contrasting materials you really need to stimulate a child? Life! Trees against the sky. Rocks on the beach. Ants on a sandwich. You can’t get more high-contrast than – hey wait a second! Brainstorm!

Are you a new parent? Do you have $29.99? If so, have I got a product for you! It’s high-contrast. It’s educational! Put it on your head, your kid will laugh. Hold it a few metres away, she’ll crawl towards its, maybe even walk – early! But wait! There’s more!

If you brush the ants off, you can eat it! I call it the ”Baby Stimulation Get-Ahead-Now Picnic Peanut Butter Sandwich.” And I’m open to venture capital.

Lskenazy@yahoo.com

Lenore Skenazy is founder of the movement Free-Range Kids and will appear at the Festival of Dangerous Ideas at the Sydney Opera House in October.

http://www.smh.com.au/opinion/politics/pay-to-have-littlies-learn-what-they-do-anyway-20100826-13u3b.html

New government must fix tax, welfare distortions

AT last the election is over. Unfortunately the campaign produced more spin than substance and the task facing the incoming government is to take action on strategies that really will move Australia forward.

Of course, there is a range of issues that need attention, but I suggest one of the most pressing is fixing the distortions caused by the way Government benefits are out of kilter with the tax system.

It is grossly inequitable and despite many promises over the years, not one party has had the guts to tackle it head-on.

Think about the type of young couple Australia needs.

He works full time earning $65,000 a year and they have three children, aged 9, 6 and 3.

The two elder children attend school and the youngest is attending an approved childcare centre at a cost of $20,000 a year.

They cannot afford to buy a house and are paying rent of $400 a week.

She is very keen to return to the workforce to try to save a deposit for a house and is doing a training course.

You would think they would have trouble making ends meet on a salary of just $65,000 a year, but they are doing well, thanks to all the Government largesse. Their Family Tax Benefit A is $10,739 a year, their Family Tax Benefit $3909 a year and they receive a Large Family Supplement of $288 a year.

This all boosts their after-tax income by $14,936 a year.

Their childcare costs are only $6528 a year after the childcare benefit of $6944 a year and the childcare rebate of $6528 a year is taken into account.

They also receive $3917 a year in rent assistance.

Now let’s put the figures together.

His gross income is $65,000 less tax of $11,639, while his total Government assistance is $32,325.

Thanks to a wide range of benefits handed out by a succession of governments, they now have a total family income of $85,686 a year after tax.

These people are not bludgers and their dominant goal is to get a home of their own to give their kids a solid foundation.

You can imagine how delighted they were when she finished her training course and was immediately offered a job on $55,000 a year.

Their joy soon turned to dismay when they did the sums.

The moment she starts work they will lose Family Tax Benefits A and B, the Large Family Supplement and the rent assistance, while their childcare benefits will drop to just $8944 a year.

They will lose $23,381 a year in government benefits and there will be extra income tax payable of $12,661 a year.

In short, all the family will see for the extra $55,000 she earns will be a net improvement in their position of $18,958 a year.

She will lose almost two-thirds of her salary and will face the hassle of full-time work and the costs of getting there.

To make matters worse, the two elder children will have to attend before and after-school care Monday to Friday.

This could cost an additional $7000 a year.

The family cannot make much progress in their plans to buy a house unless the wife returns to work, but it is hardly worthwhile when the family will lose almost two-thirds of what she earns.

You can guess what will happen. She will decide to stay at home, the family will continue to be locked out of the housing market and the economy will be short of what could have been a valuable employee.

Is this really the future we want for our country?

http://www.perthnow.com.au/business/new-government-must-fix-tax-welfare-distortions/story-e6frg2rl-1225908241895

Childcare fees may rise up to $35 a day

WORKING parents are paying up to 10 per cent of their net income on childcare — and face a further hit under proposed regulations.

A recent OECD survey found Australian families paid among the highest sums in the developed world for childcare, ranking 12th out of 32 countries.

The revelation comes amid a row on childcare reforms, with some private centres warning of possible rises of between $3-$35 a day a child.

The Labor Party wants to bring in a COAG-approved national quality framework over several years, saying that after rebates it will cost parents $3 a day more.

The new rules will improve child/staff ratios, and wages and qualifications for staff.

But Liberal leader Tony Abbott said before the election he would freeze the reforms, questioning the impact on operators and parents.

The private childcare sector says fees could balloon by up to $35 a day a child — before rebates — under the changes.

The Child Care Centres Association of Victoria said many parents would not be able to afford care with the changes, and different ratios could cost 3000 places.

Association chief executive Frank Cusmano said that while the industry welcomed improvements, he disagreed with Government cost estimates.

“This is a classic case of well-intentioned initiatives having unintended consequences, which, in this case, will see families priced out of well-regulated, quality care and into unregulated backyard care,” he said.

But the Community Child Care Association estimates the changes would mean about a $5 a day rise, saying most centres were already operating above minimum standards.

Executive director Barbara Romeril accused the private sector of running a national scare campaign, saying increases of up to $35 a day were not justifiable.

“They are running a scare campaign. It’s nonsense,” she said. Even a $5 a day rise could be unaffordable for low-income families.

Mr Cusmano denied he was scaremongering

Community child care costs $65-$85 a day, while private centres charge $65-$100.

St Kilda East Child Care Centre director Paula Kruger predicted that fees there would rise by about $10 a day.

http://www.heraldsun.com.au/money/money-matters/childcare-fees-may-rise-up-to-35-a-day/story-fn312ws8-1225909707017

Children ‘wrongly diagnosed’

DOCTORS are being pressured to diagnose children with behaviour disorders to get them extra assistance in schools, labelling many with diseases they probably don’t have, researchers warn.

South-western and western Sydney have become hot spots for children, especially boys, being given diagnoses of behaviour disorder and emotional disturbance. The children are then enrolled in special schools and support classes, according to research soon to be published by Macquarie University academics.

Macquarie University researcher Linda Graham said three separate studies pointed to ”pressures on paediatricians to inflate diagnoses so kids get support in class”.

The research shows enrolments for “behaviour disorder” rose in NSW special schools by 254 per cent between 1997 and 2007, while kids with physical, hearing and visual disabilities fell 60 per cent over that period.

In support classes in regular NSW primary schools, emotionally disturbed diagnoses rose 139 per cent, while in support classes in regular NSW high schools, autism diagnoses grew by 280 per cent, emotional disturbance increased by 348 per cent, and behaviour disorder by 585 per cent during the same period.

Behavioural disorder diagnoses sharply rose from 2002, when NSW began building special schools for children with behavioural problems.

Children are ”being diagnosed with things they don’t have”, Dr Graham, a fellow with the Centre for Research into Social Inclusion, said. . South-western Sydney, which accounts for 17.5 per cent of total enrolments in NSW government schools, has 26.5 per cent of enrolments in special schools and support classes, while western Sydney accounts for 13.7 per cent of total school enrolments but 17.8 per cent of enrolments in special schools and support classes.

Northern Sydney, with 11.5 per cent of school enrolments, has only 5.7 per cent of children in special schools and support classes.

Australian Medical Association paediatrics spokesman Choong-Siew Yong said he was not surprised at the disparity: parents in wealthier suburbs could afford non-government assistance for struggling children.

Dr Yong said sometimes schools will tell parents their child’s behaviour ”matches other kids with particular problems” and recommend they take the child to see a paediatrician to seek a diagnosis and therefore see if the child is eligible for special education funding assistance.

But Dr Yong said only a very small number of parents come looking for a particular diagnosis for their child and that paediatricians were ”not placed under undue pressure”.

”I don’t think people are lying and ripping off the system,” Dr Yong said.

While parents are increasingly clamouring for greater funding for assistance, the researchers have shown special education costs rose from 7.2 per cent in 1997 of NSW government school recurrent payments to 12.8 per cent in 2007.

NSW Teachers Federation deputy president Gary Zadkovich said there was ”no clear outcome” in the debate over whether too many children are being diagnosed or overmedicated.

”I can say unequivocally more students are presenting in Australian schools with special education needs just because of developments in medical science,” he said.

http://www.smh.com.au/nsw/children-wrongly-diagnosed-20100821-139p6.html

OPINION: Dr Sharman Stone – The Real Facts about Early Childhood Education and Care

The Gillard Labor Government’s hurried attempt last Friday to set up a website about facts on child care is a clear attempt to cover up their own failure to look after Australian families.

Dr Sharman Stone, Shadow Minister for Early Childhood Education and Child Care, said the website was nothing more than Labor propaganda.

“On Thursday 12 August in Sydney, Minister for Early Childhood Education and Childcare, Kate Ellis announced she had launched a child care facts website “so that parents can get the information they need to make an informed choice on Election Day.”

“The Rudd Gillard Labor Government has failed to list on the website its budget cuts put in place at the expense of Australian families such as reducing the Child Care rebate by $278 and capping it for four years,” Sharman Stone said.

“Australian families are being forced to pay for the three years of reckless spending of the Rudd Gillard Labor Government.”

“There is no mention on the website of the budget cuts that families will have to bear under a re-elected Gillard Government such as, removing the start up payments for Family Day Care, or the abolition of Commonwealth funding for Occasional Care.

“Labor has recently announced that it will support a move to fortnightly payments from July 2011, but they failed to mention that on the first day as Prime Minister Julia Gillard had the opportunity to support the exact same arrangements through amendments to the Child Care Rebate Bill that were passed through the Senate.

“Instead the Gillard Government asked that the Bill be held over to the next sitting of Parliament after the election. This is political spin at its worst at the expense of Australian families,” Sharman Stone said.

“The website is more about trying to discredit the Coalition’s early childhood education and care policy rather than offering real information to Australian families about the increase in child care costs.

“The Coalition is committed to ensuring the implementation of a high quality, affordable and accessible early childhood education and child care system,” Sharman Stone said.

A re-elected Coalition Government will:

• seek to reduce the out of pocket expenses of families by introducing weekly payment of the Child Care Rebate to service providers;

• increase the child care rebate to $7778 per child indexed annually;

• re-instate funding for Occasional Care ;

• review the National Quality Agenda for Early Childhood Education and Care to ensure it takes appropriate account of cost and workforce impacts on the child care sector and;

• re-establish the Federal Planning and Advisory Committee to ensure that future accreditation for new child care centres is on a demonstrated as-needs basis.

http://www.news.com.ag/index.php?option=com_content&view=article&id=188:the-real-facts-about-early-childhood-education-and-care&catid=18:local-news&Itemid=52

Bigger uniforms for our fat kids

THE expanding waistlines of Geelong students are forcing suppliers to custom-make school uniforms.

Geelong-based uniform businesses are stocking larger and larger outfits as childhood obesity continues to grow.

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Coastal Uniforms owner Ann-Maree Peacock said it was common to get overweight children needing larger clothes.

“The older kids are the chubbier, or the more overweight kids,” Mrs Peacock said.

“I have made quite large pants around the middle. It is a case of having to custom make them because they won’t fit into them otherwise.

“I mainly do tracky pants. You get so many odd sizes.”

Uniform shops also revealed the extent of the obesity problem with some year eight girls wearing size 32 skirts, while primary school students were wearing size 22 in a dress.

Pants are also being made with 122cm waistlines for year nine students, while size 46 shirts are becoming common for boys.

Some shops are making a point of stocking extra-large sizes on their shelves to stop children and parents feeling embarrassed about needing a special order.

A Plus Uniforms owner Susan Whetton said she had a mixture of normal and bigger-sized students buying uniforms.

“Every year some students need bigger sizing. There are pockets where it is noticeable,” Mrs Whetton said.

“We have had two extremes. We have had a tiny girl in size four and a polo in size 28.

“I still have the same sizing, I don’t keep a lot of the bigger sizes in stock.”

In the period between 2007 and 2008, one-quarter of all Australian children aged between five and 17 years were overweight or obese.

The figure equates to a 21 per cent increase from 1995.

Deakin University childhood obesity expert professor Boyd Swinburn said the eating habits of children had changed.

“The marketing and taste of the food is much better now, especially with fast food,” Prof Swinburn said.

“With globalisation and increased trade access, you can get just about anything.

“All the stuff around bigger-sized clothing is all just a symptom of coping with bigger body sizes.”

Prof Swinburn said obese children suffered physically and mentally.

“They are obviously more at risk of diseases and complications like knee problems, back problems and adult diabetes,” he said.

“Then there is the social aspect with teasing and bullying.

“(It is up to families) to be good role models and eat healthy and involve their children in exercise.”

http://www.geelongadvertiser.com.au/article/2010/08/16/201301_news.html