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.
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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.
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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.
โThere is high uncertainty concerning the quantum of potential reputational or financial impacts the incident could create,โ 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 Brownโs 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 companyโs relentless pursuit of a profit.
The Creative Garden Early Learning Centre in Point Cook, where the accused man had worked.Credit: Justin McManus
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.
โIt was profit at all times,โ she said.
How does this not come at the expense of child welfare and additional resourcing needed to weed out abuse?
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As the ACCC report on childcare showed last year, labour accounts for 70 per cent of a centreโs 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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