A year after scandal, childcare giant faces financial peril and mass closures

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Commercial childcare giant G8 Education shocked the market this week with the brutal news that it planned to shut 40 centres, which will leave thousands of parents, and the future of about a thousand staff, in peril.

But what really set alarm bells ringing was its claim that the sex abuse scandal it was mired in last year was only a modest factor in this drastic decision, which was deemed necessary to keep faith with investors if not the children in its care.

G8 boss Pejman Okhovat blamed a combination of factors including rising costs and their impact on affordability, competition from new centres, and declining birth rates. As G8 points out, these are issues that should be impacting on the entire sector.

“The near term operating environment continues to be challenging, with global inflation, declining birth rates, rising interest rates and cost-of-living pressures for families influencing occupancy and operating conditions,” Okhovat said, as G8 has reported a steep drop in occupancy levels to just 56 per cent.

“While new supply continues to enter the sector, the pace of growth is slowing. We continue to respond to rapid regulatory changes, differing in each state and territory, which further adds complexity and cost to compliance, staffing and daily operations,” he said.

Parents, childcare operators and their employees are not the only ones who should be alarmed.

Taxpayers pour more than $20 billion into childcare each year, with the vast majority of this money going to commercial providers looking to make a buck.

Some of the rise in costs, like CCTV in centres, is to prevent a repeat of the behaviour alleged........

© Brisbane Times