Relentless push for profit is failing our kids

4 hours ago 3

The childcare operators that employed alleged child sex offender Joshua Dale Brown have said there is no indication so far of any negligence on their part. But it may not be a coincidence that the 20 childcare centres where Brown worked were privately owned.

There are many uncomfortable truths facing state and federal governments scrambling to avoid a crisis of confidence in the childcare sector, which cannot afford an exodus of children that would jeopardise its already fragile viability amid rising staff costs and shortages.

Joshua Brown is alleged to have abused eight children who attended the Creative Garden Early Learning Centre in Point Cook between April 2022 and January 2023.

While Education Minister Jason Clare this morning called for a speed-up in reforms, including more stringent checks, his colleague, Clare O’Neil, cautioned against relying on this “silver bullet” for good reason.

“A lot of these predators would pass a working with children check – they don’t have anything in their history that indicates as a problem,” O’Neil said.

That means more intensive work is needed in the centres to pick up on problems and potential warning signs as they occur. And there is plenty to pick.

Documents tabled in a recent NSW parliamentary inquiry detailed multiple cases of physical abuse in childcare centres, and not just by male staff.

‘There is high uncertainty concerning the quantum of potential reputational or financial impacts the incident could create.’

Macquarie analysts

One example was a worker who repeatedly slapped a baby and laughed as it screamed; another worker wiped a child’s face with their vomit-covered pants.

Once again, there is no silver bullet, but one remedy is so-called “line of sight”, meaning no childcare worker can operate out of sight of a colleague, not even in the children’s bathroom or nappy-change area.

We are not just talking about extra staffing levels. The introduction of this measure would also need changes to the layout of many centres at a time when rents for childcare operators are already rising strongly, as the ACCC reported last year.

Keep in mind that the government is already spending billions of dollars each year to cover the affordability gap between what families can pay and what it costs to operate a decent centre.

Whatever the solution, it will be expensive, but the cost of inaction could be worse.

Childcare services already operate with a massive fixed cost base of staffing, rent and consumables such as food for the children. At ASX-listed G8 Education, which has more than 400 centres, roughly 80 per cent of fees are consumed by these daily operating expenses.

At industry giant Goodstart, a not-for-profit operator which has 650 centres, it is 83 per cent.

That means a small percentage change in the occupancy rate at a centre can be the difference between breaking even and losing money hand over fist.

This will be a particular issue for profit-making operators as shown by G8 Education, which owns the centre of the crisis this week, Creative Garden Point Cook.

G8 was worth a billion dollars in May. Then the news hit this week, and as analysts pointed out, it is hard to say what impact the issue will have on the overall business, which is now worth around $800 million.

This includes the risk of an exodus of customers with its occupancy levels already at a lower-than-expected 64 per cent as of April this year.

“There is high uncertainty concerning the quantum of potential reputational or financial impacts the incident could create,” Macquarie analysts said.

From information currently available, four of the centres where Brown worked were owned by G8 Education.

Another nine were part of the Affinity Education group, although Brown’s work history is under review after errors emerged in early data it provided. Affinity is owned by Quadrant Private Equity and has featured heavily in media reports this year that alleged abuse in some centres it runs and pointed to the company’s relentless pursuit of a profit.

The Creative Garden Early Learning Centre in Point Cook, where the accused man had worked.

The reports include those from the ABC, which highlighted the pressure on Affinity managers to make a profit.

Former centre manager Letiha Loveday told the ABC of an environment in which financial targets were paramount, as were harsh consequences for failing to meet them.

“It was profit at all times,” she said.

How does this not come at the expense of child welfare and additional resourcing needed to weed out abuse?

As the ACCC report on childcare showed last year, labour accounts for 70 per cent of a centre’s costs, making it the obvious source of savings by squeezing staffing to the limit.

If commercial operators are at the heart of the problem, who should pick up the bill to make their centres safe while they focus on making a profit?

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