THE Federal Government will spend hundreds of millions of dollars to ensure all 1100 ABC Learning child-care centres stay open.
Each of the centres is expected to be sold eventually, so ending the company's domination of the industry and dismantling an empire built over two decades.
Administrators and receivers, representing the nation's big four banks, were called in to take control of ABC Learning yesterday morning after the company's directors decided the business was either insolvent or likely to become insolvent if it kept trading.
"The Government's priority is to ensure working families reliant on ABC Learning can continue to access child care for their children and ABC Learning employees have some immediate stability," the Minister for Education, Julia Gillard, said.
The Government rejected suggestions it would mount a takeover of the troubled company.
It has already promised to spend $300 million in subsidies to keep centres open and has not ruled out spending more money until new buyers are found.
Most centres are viable operations but some are unprofitable.
Chris Honey of the receivers, McGrathNicol, refused yesterday to rule out closing centres in future and declined to comment on suggestions it was threatening to close centres if the Government did not contribute cash.
Sources have suggested the Government could use funds earmarked for the construction of 260 new centres to buy some of the ABC Learning centres.
The Government has been watching the company for several months and appointed a taskforce to begin work on a rescue plan about two weeks ago.
It will work with the receivers, who are owed an estimated $850 million and are calling the shots on the daily operations.
ABC is the nation's largest private child-care operator, with a quarter of the market. About 120,000 children attend its 1100 centres, which employ 12,000 people. It runs child-care centres for many large companies and most of the federal public service. The company also bought up smaller chains and Funding black hole
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centres in regional areas, and it is the only child-care service in many regions. It is those centres the Government is expected to be interested in.
The Government cannot afford to let ABC centres collapse because of the consequences to the economy if working parents are left without child care.
It and the banks are expected to inject cash into the business to cover immediate costs.
It is hoped the centres will be bought by new owners and end up being run as not-for-profit community centres or by small private operators.
Although no single child-care operator is big enough to buy all 1100, industry sources said plenty of private and community providers would be willing to manage or buy the centres.
The organisation representing independent private child-care operators, Childcare Associations Australia, warned the Government not to allow another child-care monopoly to spring up in the place of ABC Learning.
"There needs to be some strengthening of the creeping acquisition provisions of the Trade Practices Act so that history doesn't repeat itself," the president, Amanda Morphett, said.
