VIDEO: The parents who feel let down by the childcare system

LISA BRYANT, CHILDCARE POLICY EXPERT:  Keeping children safe is really expensive and profits depend on keeping things very, very cheap.

ASHLEA COEN:  We just trusted that they knew what they were doing.

MELISSA DIAS-HARRISON:  There would be no incident reports, people wouldn't know what would have happened.

GINA CASS-GOTTLIEB, CHAIRPERSON, ACCC:  We are not delivering accessible and affordable childcare for the most disadvantaged members of our community.

STEPHANIE ZILLMAN, REPORTER:  Two-thirds of the childcare sector is run by for-profit enterprises and a growing section of the market is backed by private equity firms and investors. In part it’s the guarantee of government subsidies that’s making it so attractive.

ASHLEA COEN:  You know, when you're going through those moments, you are kind of in survival mode. At that point in time, all I cared about was her surviving this.

STEPHANIE ZILLMAN:  In August 2022, Ashlea Coen handed her daughter’s childcare centre an allergy action plan for her nine-month-old baby, Ada, who had a severe dairy and egg allergy.

The centre confirmed it was already egg free and wouldn’t serve Ada any dairy products.

ASHLEA COEN:  We trusted that when we handed in that piece of paper at the front desk, they then knew what they were doing, and they put all of the procedures in place to protect her.

STEPHANIE ZILLMAN:  Ada was attending a Guardian Childcare and Education Centre in Melbourne - part of a nationwide chain of 150 centres.

ASHLEA COEN:  Probably the biggest red flag that we realised later was the high turnover of staff and it just seemed to be a revolving door of faces in the centre. It seems every time we dropped her off, there seemed to be a new face there.

STEPHANIE ZILLMAN:  Within weeks of being informed of Ada’s allergies, an educator from the centre phoned Ashlea.

ASHLEA COEN:  The lady said, “Oh, Ada’s been fed a teaspoon of yoghurt, and she seems to be reacting. We don't really know what's going on. Does she have an allergy to, to dairy?”

STEPHANIE ZILLMAN:  That phone call led Ashlea to believe the staff weren’t trained to enact Ada’s allergy plan which meant administering adrenaline via an epi-pen and calling for an ambulance.

ASHLEA COEN:  In the car, I was on the phone to the ambulance, we turn up to the centre, and walk into her room.

We were very confused that they were sitting her on the lap and not really doing anything.

She was really red, and her eye was all swollen and I could hear that she wasn't breathing very well. She had rapid breathing, and it sounded very wheezy.

PARAMEDIC:  Let’s have a look at the arm there. Swollen little face.

STEPHANIE ZILLMAN:  Ada was in anaphylaxis. It’s a life-threatening allergic reaction that can restrict or even block the airways.

PARAMEDIC:  Have a look at your back. Oh look at those muscles.

STEPHANIE ZILLMAN:  After a night in hospital, Ada recovered. When the family returned home Ashlea listened to a voicemail left by an educator at the centre the previous day.

VOICE MESSAGE:  Ahhh hello there Mummy. Now we’ve given her a Telfast (anti-histamine) because you know actually her reaction is not very, very serious .. just a little bit ahh sneeze so we try to give her a Telfast. Can you please call us back? Thank you.

ASHLEA COEN:  Hearing that voice note that her saying that her symptoms weren't serious and, you know, she's just, she's just sneezing a little bit, versus walking into the centre and seeing how unwell she was. That was quite disturbing.

STEPHANIE ZILLMAN:  7.30 put detailed questions to Guardian about the incident and did not receive a response.

Experts say there’s no shortage of policies and regulation in the sector.

LISA BRYANT:  They have people working away in their back offices creating the most perfect policies but there's a difference between having a policy and having it implemented on the ground.

STEPHANIE ZILLMAN:  Lisa Bryant has been a policy expert and consultant in the early education sector for more than 20 years.

LISA BRYANT:  The things that we know keep children safe is having a lot of staff, really experienced staff, and really highly qualified staff.

Whereas in the last few years, that's not what we've got as that drive to make profits has intensified.

STEPHANIE ZILLMAN:  There’s huge money at play behind the scenes. Market spectators estimate Guardian Childcare and Education is worth around a billion dollars.

Other major chains have recently been bought and sold for hundreds of millions of dollars.

LISA BRYANT:  So all of these companies consequently, that are trying to make lots of money out of providing childcare, they do it by cutting costs, and where is the place that the easiest to cut costs? It's on your wages.

STEPHANIE ZILLMAN:  The government has been under sustained pressure to increase wages for the early childhood sector where the minimum wage is around $23.00 an hour.

ANNE ALY, MINISTER FOR EARLY CHILDHOOD EDUCATION:  We have said that we are willing to come to the table, and we are at the table, and we are at those negotiations, and we will see what the outcome is.

GINA CASS-GOTTLIEB:  The conditions for educators are not as good as the conditions for instance, working in preschools. In addition, they have fewer holidays, they face a requirement in their own personal time to do training.

STEPHANIE ZILLMAN:  While the latest boost to the childcare subsidy has reduced costs for families by around 11 per cent, the government acknowledges that services consistently raise their fees which can subsume additional government funding.

ANNE ALY:  The behaviour of the market results in increased fees that eventually can undo some of the benefits of increasing the childcare subsidy.

STEPHANIE ZILLMAN:  Earlier this year the ACCC released its inquiry into market forces and profitability in the childcare industry. It offered a stocktake on the state of the sector.

GINA CASS-GOTTLIEB:  It would be very difficult to go back to a blank page. 

This is why we have proposed continued close monitoring and the credible threat including power for there to be price intervention.

STEPHANIE ZILLMAN:  The inquiry found while some centres are struggling to stay afloat, others are generating profit margins as high as 50 per cent.

In order to achieve that, large providers operate at scale, meaning lots of centres that are full. 

GINA CASS-GOTTLIEB:  For real estate investors and developers, building childcare centres and then being landlords of childcare centres are very attractive.

It has the underlying guarantee from the government funding that there will be a income flow in the manner of rents. It also has, in the case of childcare centre providers, providers and tenants of good standing so that it delivers, importantly, on a well-placed foreseeable income flow.

ANNE ALY:  The ACCC review has found that the not-for-profits do deliver better quality, and at a lower price. But again, this is where and this is why we need to reform the sector.

STEPHANIE ZILLMAN:  In late 2023, a new player listed on the Australian Stock Exchange. Nido Education Group has become the second largest listed operator in the industry.

It’s already up to 52 centres and has more than 30 under construction.

MELISSA DIAS-HARRISON:  We drive past the Nido every day, and see what a beautiful centre it is, and how much money they've invested on the building and in the landscaping.

STEPHANIE ZILLMAN:  Last year Melissa Dias-Harrison enrolled her son in a brand-new Nido childcare centre in the suburbs of Perth. 

MELISSA DIAS-HARRISON:  We noticed the problems straightaway. The issues with his clothes being wet, and him smelling like he hadn't been cleaned properly. There were several times he came home with a soiled nappy that hadn't been changed for hours as far as we could see.

We'd get notifications a couple of times a week that another staff member was leaving, and another staff member was leaving.

STEPHANIE ZILLMAN:  There were also injuries, some without explanation.

MELISSA DIAS-HARRISON:  He would have bumps and scratches. He had a couple of bumps on his head even and there would be no incident reports, people wouldn't know what would have happened.

STEPHANIE ZILLMAN:  Melissa emailed concerns about conditions at the centre to the Nido area manager, and head office. 

A local manager replied, ‘I appreciate there are a lot of new faces around the service, which are new to the team, members of our sister services or agency staff.’

Dissatisfied with their responses, she withdrew her son after six weeks.

7.30 contacted Nido but they did not respond. 

MELISSA DIAS-HARRISON:  We were seeing signs of neglect already. We just weren't willing to stick around and wait for the worst to happen.

STEPHANIE ZILLMAN:  7.30 has spoken to current workers within the country’s biggest childcare chains. None would come on camera, fearing they'd be sacked or face legal action.

They told us:

•           We are illegally operating everyday. Every day we are out of ratio.

•           Often there is not enough food for the children.

•           Babies aren’t being given water. Nappies aren’t being changed.

•           The chef was included in our staff ratios at one stage.

•           I have been expected to have five babies alone in my care as ‘under roof’ ratio is being upheld.

EMMA RATTENBURY, EARLY CHILDHOOD EDUCATOR AND TRAINER:  The under the roof is a colloquial term for the understanding that ratios are calculated across an entire service and not within a room.

There might be enough educators within that service at that point in time, but they're not working directly with children and that's where that rule and that regulation is being misused.

STEPHANIE ZILLMAN:  Emma Rattenbury is an early childhood education trainer and educator in Wollongong.

She’s seeing her peers leave the sector due to industry conditions.

EMMA RATTENBURY:  If educators aren't feeling well supported throughout their day at the service, then their ability to do that will eventually run out and that's very frightening for the sector.

REANNA KIERNAN, FMR EDUCATOR:  At the end of the day, they just need bodies and that in the buildings. So I think that was the realisation and that's when I just said, this, I'm not doing this to myself anymore.

STEPHANIE ZILLMAN:  On the Gold Coast, early childhood educator Reanna Kiernan recently left the industry for good over staff shortages.

REANNA KIERNAN:  I think that led to a lot of the burnout as well, because not only were we responsible for four babies, which in my opinion, is way too high to begin with, we sometimes, you know, there was two educators in the room where sometimes had nine babies, even 10 babies at times, you know, and with all of those individual routines, it gets really difficult and really stressful to maintain that duty of care.

STEPHANIE ZILLMAN:  She says the misuse of under the roof ratios is a persistent problem.

REANNA KIERNAN:  If parents knew what was happening most of the time in regards to things like ratios, or under the roof, or any staffing and things like that, I don't think they would feel comfortable enough to leave their children.

STEPHANIE ZILLMAN:  7.30 approached the two main childcare industry groups that represent private operators in the sector. Both declined to be interviewed.

The minister says the government is working to reform the sector.

ANNE ALY:  There is a lot of work to do. I do not shy away from that and I do not I do not disagree that we have work to do to ensure that parents expectations of quality and safety when they send their child to early childhood education and care are met.