The ABC’s of money, Singapoor and the banks.

ABC Learning has been in the news lately – with the federal government having to input over $22 million into the company to keep the daycare centres open, after the company went into receivership. 

From the reports, it seems that a lot of the money that went into keeping the company afloat and indeed what underpinned the expansion was federal money in the first place. This ABC News report says that the company was receiving “$1 million a day in child care rebates”. So – Eddy Groves was reliant on our taxpayers money to grow his company.

The Singapore government investment company, Temasek Holdings, is one of the companies that stand to lose quite a bit of money in ABC Learning. In the past year it has spent about $400 million in buying shares in ABC Learning. 

But the major worry is that our banks have also been exposed to major losses. Reports say that CBA has an exposure of over half a billion dollars – with a total of $1.45 billion debt to be repaid within two years. But they are not alone, the other banks exposures are: Westpac – $200 million, ANZ – $182 million and NAB – $140 million.

From what I can put together from different stories, ABC Learning was a juggling act, where the true state of the company was hidden behind the exponential growth of the company.

The question that needs to be asked is: Why did major (credible) financial institutions continue to pump money into the company? Were there no warning signs?

After all as they say – if it seems to good to be true, it probably is.

joni

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12 Responses

  1. I always hated the fact that we were heavily subsidising private companies like this.

    With that much money going into it, the government should have more of a say, or at least more information, on the company they are giving that money to.

    So, much of the money that Groves has lost, is not his, it is ours.

    And now, it looks like we need to spend even more to try and keep some sort of child care industry.

    It is almost criminal in its neglect, both on the part of Groves, who used our tax dollars as his personal play money, and a government who was willing to hand it out in such a careless fashion.

    There had been numerous warnings about the dangers of such a large company controlling such a large proportion of our childcare, all ignored because the ‘free market’ would work it out.

    Well, it worked it out, but the free market sure ain’t paying for it.

    Lets hope a better arangement can be made. Personally, I would like to see it brought back under public ownership, as it tends to reflect a more community concern then, and, when it is our children in question, community is what counts.

  2. I don’t understand privatisation in situations like this.

    My kids went to a community-run childcare centre and it was a wonderful place.

    Surely if you take the profits out this surely the number of community-based centres could be increased. How many centres could have been provided just from the money Groves spent on his jet, his yacht and many properties?

    There are some things that should remain in govt hands – transport, communications infrastructure, water, power, state schools etc. and particularly childcare centres considering the incredible of public money that is directed towards them.

  3. We have to put and end to the “privatise the profit, socialise the debt” mentality that is running rife at the moment.

    The ABC learning centres should be self sustaining. It costs upwards of $80. per day to send a child there and that should be sufficient to run the business.

    Mr Groves is facing (according to the gutter press) a demand of some $44million from his ex wife as property settlement. How is this possible? How can ANY company director bankrupt a business and walk away with their personal wealth intact?

  4. How can ANY company director bankrupt a business and walk away with their personal wealth intact?

    Poor regulations, LL, poor regulations…

    Eddie learnt how the system worked but didn’t understand how good, sustainable business works…a sad case of self promotion until he reached his level of incompetence – he couldn’t run a basket ball team, let alone a global mult million dollar business!

  5. Sans

    Totally and completely agree, essentials for the community need to remain publicly owned. While publicly owned they exist to provide a service to all of the countries citizens. When they are privatised they exist solely to provide wealth to those wealthy enough to purchase shares in them in the first place. So instead of existing to service 20 million aussies they now exist to profit maybe 400,000 shareholders at the most.

    Sale of government assets should be placed to referendums because after all we all own them.

  6. And of course while the Howard government was busily handing over $$$s open-slather to Eddie Groves this same government cut funding to local councils from 1.2% to .6% over a 10 year period.

    Excellent point Shane that all sale of public assets should be subject to a referrendum.

  7. Sans Blog (2) and Shane (5). I agree with you entirely.

    Privatisation has not meant vast amounts of public money are not expended on these services. Until our public services are fully funded the Govt should not even contemplate assistance to private industry.

    And if ‘private’ industry can’t survive without said handouts, it can’t have been that good a business in the first place.

  8. In fact I would not be surprised if Eddy does a runner…he’s cashed up at the moment.

  9. scaper (8), if memory serves me right Alan Bond was persued and ended up in jail for a wee bit (despite a memory loss, that seems to have returned, and soem brilliant acting)…for worse…

    …and we spent millions on trying to extradite Christopher Skase from Spain – Pixie even blamed the Australian Government for his ill health and subsequent death – caused by conscience I always hoped…

    …neither Bond nor Skase were overtly supported by the government spending taxpayer funds out hand over fist, to my knowledge…

    …so what’s in store for our Eddie I wonder…and his Mrs…she was a director too…?

  10. “she was a director too…?”

    Indeed TB Doctor Le Neve was. But we need to look deeper because the current debt now runs to $16 000 per enrolled child. There’s major fraud involved here but I am not surprised.

    If we look deeper we find that the original Chair was a former Liberal Mayor of Brisbane who was widely known as an airhead with a very suspect work ethic. Also on the Board was good old Larry Anthony – an ex-Minister in the Howard government.

    If you look at associated companies, you find that one was headed by a Director-General of Education (sacked) and a number of spivs also associated with the education establishment.

    TB re your comment:

    “a sad case of self promotion until he reached his level of incompetence”

    I beg to disagree. Fast Eddie knew exactly what he was doing. He is not an innocent victim nor was he incompetent. Far from it. Already we know he cooked the books and deceived many, many people for a number of years. Clever? Yes! Immoral? Definitely!

    Jail is not sufficient. His assets should be seized. But that won’t happen will it.

  11. And yet another listed child care company bites the dust

    http://business.smh.com.au/business/cfk-childcare-shares-abc-woe-20081118-6abb.html

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