MEDIA ALERT: STOP PROFITING OFF OUR CHILDREN
WHEN: 10am Monday, 29 November 2021
WHERE: Front lawns of Parliament House, Canberra
WHAT: UWU is releasing a shocking report exposing the financial practices of for-profit providers in Australia. Early childhood educators are calling for more transparency to stop private providers putting profits before children. Dynamic visuals of educators in front of Parliament House and interviews.
Today the United Workers Union (UWU) has released a ground-breaking report exposing how private for-profit early education providers are siphoning off money that should be invested in children to fund lavish lifestyles and transfer profits out of the country.
The report “Spitting off cash” – Where does all the money go in Australia’s early learning sector? finds:
- Hundreds of millions of dollars are distributed annually to shareholders and CEO salaries can top $1 million.
- 20% of revenue through Australia’s 8,300 long day centres -$1.7 billion per year – is collected by five large companies, three of which are based offshore. Parents may be surprised to learn that their local early learning centre is controlled by Swiss bankers or an American private equity behemoth.
- Despite receiving generous COVID relief payments and availing themselves of JobKeeper, four of the six largest for-profit ECEC providers paid no tax in 2020.
- There is a race on to buy up big, with five big and growing companies – G8, Affinity, Guardian, Busy Bees and Only About Children – already accounting for 20 per cent of highly profitable long day care centre revenue.
- An economic model characterised by secure government subsidies and low wages for educators has created an elite of super rich ECEC owners, financiers and executives.
- Financialisation of ECEC has seen the worst excesses of Australian corporate culture including wage theft, aggressive tax avoidance and other misconduct creep into the sector.
Quotes attributable to Helen Gibbons, United Workers Union Early Education Director:
The early education sector desperately needs more transparency and financial regulation.
Australians rightly expect that their tax dollars should fund quality early education and fair wages for educators, not million dollar CEO salaries, transfers to tax havens and Lamborghinis.
Parents would be horrified to learn that this creeping commercialisation comes at the cost of quality care and education for their children and an underpaid and undervalued workforce of educators. For profit services are more likely to be understaffed, to fail to meet quality standards and to commit safety breaches.
Private early education companies are enriching their owners and executives at the expense of the care provided to children and the wages and wellbeing of employees.
CEOs pocket eyewatering salaries and owners enjoy windfall profits. Companies change hands regularly. Many providers are owned by private equity funds. There are multimillion dollar transfer payments to overseas headquarters while no tax is paid in Australia.
Parents and taxpayers have a right to know how their fees and public funding is being spent – not on quality early learning for their children, but on obscene salaries, payouts and profit margins of overseas companies.
If the Federal Government continues to wash their hands of responsibility for the way in which child care subsidies are used, they are endorsing a model which sees parents and taxpayers paying for super-yachts instead of education.
United Workers Union calls on the Federal Government to stop the private sector from profiting off our children and:
- Make what really happens in early education transparent by requiring every business to publish their profit and how much tax they pay because parents and taxpayers have a right to know;
- Cut the fat cats out of early education by investing in not-for-profit and public provision; and
- Regulate how much profit you can take out of early education to ensure taxpayers’ money goes to supporting little children and their educators, and not obscene profits.
The largest for-profit providers in Australia: some key facts
Early childhood education and care (ECEC) is big business. The sector turns over $14 billion annually across 16,000 centres in Australia, and receives $11 billion per annum in public funding. 80% of sector revenue flows from Government. This guaranteed flow of ‘child-care’ subsidies has made the sector attractive to large financial interests who are taking control of long day care, the most lucrative part of the sector.
G8 Education is Australia’s largest for-profit long day care provider. G8 is listed on the ASX and has turnover of close to a billion dollars. It distributes tens of millions of dollars to shareholders annually.
Last December it was revealed G8 had systematically underpaid thousands of its educators over the previous six years. This theft, affecting 27,000 current and former employees, is estimated to total $80 million. In stark contrast to the low wages it pays its hardworking staff, G8 executives are showered with exorbitant salaries and benefits (see Table 4). CEO Gary Carroll has come close to earning a million dollars in recent years.
Think CEO Matthew Edwards recently made $44 million selling his shares when Busy Bees acquired Think.
Busy Bees is a British-based international for-profit ECEC company currently in talks to acquire another 11 centres owned by WA provider Little People’s Place. Little People’s Place is owned by Vijay and Phyllis Narula and estimated to be worth $40 million. Last year Vijay bought Phyllis a $400,000 Lamborghini Urus and the couple enjoy flaunting their wealth around Perth.
Affinity Education Group is owned by Quadrant, one of Australia’s largest private equity firms, which paid $650 million to acquire the business from Anchorage Capital Partners in June 2021. This represented a tripling in value, six years after Anchorage paid $213 million to take the company off the ASX. During this period Affinity posted some of the lowest quality ratings in the sector and allocated one of the lowest shares of revenue to wages (54% in 2019). In 2020 its Chairman Chris Hadley sold his three-storey house in Mosman on Sydney’s lower north shore, to the company’s Managing Partner Marcus Darville for $10.9 million.
Only About Children is owned by American private equity giant Bain Capital. Bain bought OAC in 2016 for what is thought to be about $400 million from the company’s founder Brendan McAssey. The structuring of Bain’s ownership, it is reported, has left OAC highly leveraged with $220 million in debt, ten times its earnings. In the financial year ending June 2020, despite operating at a profit, OAC ultimately declared a loss of $116 million and paid no tax in Australia.
Guardian Childcare and Education was bought by Swiss-based global private equity investors Partners Group for $440 million in 2016 from Malaysia-based Navis Capital. Guardian in Australia is controlled by a Zeuss Childcare registered in London as part of a group structure involving Scottish limited partnerships, a form of ownership criticised for lack of transparency and facilitation of tax avoidance and money laundering.
Mayfield Childcare’s financial reports illustrate the substantial amounts of money that can be generated off a moderate number of day care centres. In the years prior to the COVID disruption, Mayfield paid dividends of eight to nine cents to holders of its 31 million shares. This represented distributions of up to 2.8 million dollars per year.
Child care real estate is touted by some financial analysts as where the real money in the ECEC sector is made. Profit figures for real estate investment trusts (REITs) specialising in ‘childcare’ listed on the Australian Stock Exchange back this view up. Ultimately, the megaprofits and salaries being made through these REITs flow from Australian taxpayers through the Child Care Subsidy (CCS).
ENDS Media Contact: 1300 898 633, [email protected]
