Goodstart slides deeper into red as ACCC flags more sector regulation

afr.com:

The country’s largest childcare provider, Goodstart Early Learning, has slid deeper into loss and called for a government-backed wage subsidy to resolve a major shortage in workers and the sector’s poor financial performance.

Regulatory reviews had confirmed “the workforce is in crisis and the government needs to step in”, Goodstart chief executive Ros Baxter said. “A funded wage rise for educators is a no-brainer at this point.”

G8 Education CEO Pejman Okhovat. The business has cut an unusual deal in which it is offloading 31 underperforming centres – and paying $26 million to a smaller operator to take those facilities.  Glenn Campbell

Brisbane-headquartered Goodstart is the nation’s biggest operator with almost 650 centres. Having started from the remains of collapsed ASX-listed ABC Learning, the company is now backed by charities. It posted an $85.3 million loss last financial year, according to accounts lodged late last month, deeper than the previous year’s $65.7 million loss.

“It has been a tough year for the … sector,” Dr Baxter told The Australian Financial Review. She cited factors including the COVID-19 pandemic disrupting enrolment, spending more for staff and “unprecedented increases in key cost areas like rent, utilities” and “record” competition.

The loss comes amid signs of other poor performance in the sector. Goodstart’s ASX-listed rival G8 Education has even cut an unusual deal in which it is offloading 31 underperforming centres – and paying $26 million to a smaller operator to take those facilities.

Childcare centre operators say the sector is facing tougher regulation and work-from-home trends have cut into Monday and Friday attendance. Still, some are also eyeing higher profits because of new