By TR EMERITUS

Last month, NCMP Yee Jenn Jong of The Workers’ Party outlined an alternative proposal for affordable and good quality childcare by involving all existing operators in a contestable public good model for childcare. He argued that the proposal will bring down the cost of childcare for all operators (‘WP’s proposal for transforming the child care sector‘).

The response by Minister of State for MCYS, Mdm Halimah Yacoob was that the median fees of non-profit operators is consistently below industry median. The message we have always been hearing from MCYS is that non-profit operators and in particular, anchor non-profit operators like PAP Community Foundation (PCF) and NTUC First Campus are doing consumers a big favour by bringing the cost of childcare down.

Is this really true – that PCF and NTUC are operating as non-profit entities helping to bring down the cost of childcare services for Singaporeans?

TR Emeritus (TRE) went to talk to some private operators in the childcare industry to find out. Understandably, the private operators prefer to remain anonymous for fear of antagonizing the establishment.

Currently, a typical NTUC centre charges fee of about $642 per month for full-day childcare (fees range from $588 to $674 for void deck centres but most are at $642). It typically will have a MCYS-approved capacity of between 70 – 100 children depending on the size of the centre. Let’s take 80 children for illustration.

The revenue for this centre then works out to be 80 x $642 pm, which is over $51,000 a month. If one is to include some miscellaneous charges of about $3,000 per month on average, the total revenue of a typical NTUC childcare centre will be about $54,000 a month.

On the cost side, these so-called anchor “non-profit” operators get a special rate of $2,000 a month from HDB for renting its void deck. This is based on “non-profit” rentals of $2-$4 psm and a typical centre size of 500 sqm for the 80 children.

A centre with enrollment of 80 children would require around 12-15 staff based on MCYS recommended staff-to-student ratios at different age groups and the need for two shifts. That would translate to about $25,000-$30,000 per month in manpower cost (i.e, average of about $1,600-$2,500 per staff). Other costs such as food, materials and utilities will not exceed $10,000 per month.

A simple cash flow statement per month for such a typical centre would be as follows:

Per Month Amount Remarks
Monthly Cash Inflow    
Fees $51,000 80 students x $642 monthly fees
Misc revenue $3,000 Registration and miscellaneous payments (estimated monthly avg.)
Total cash $54,000  
     
Monthly Cash Outflow    
Rental $2,000 $2-$4 psm x 500 sqm
Manpower $28,000 12 – 15 staff
Others $10,000 Utilities, food, materials (excluding depreciation)
Total cost $40,000  
     
Surplus $14,000  

Work out the simple mathematics and you can see an operating surplus of $10,000-$15,000 per month per centre. Multiple that more than 120 times, which is the number of centres NTUC currently owns, the majority of which are in low-rent sites enjoying special grants. That would give NTUC cash flow surplus of $14 to $22 million a year with an annual operating revenue of about $78 million for their childcare “business”.

The above mathematics has not factored in setup, furnishing, maintenance and recurrent manpower grants which anchor operators will get. MCYS has stated recurrent grants for anchor operators will run in $30 million a year.

Indeed, NTUC First Campus’ annual reports show that it has been profitable since incorporation in 1992. That’s an achievement even a for-profit operator will find hard to beat in this competitive business.

Its 2011’s net profit for the Co-operative and Group was $4.7 million and $1.7 million on the back of 32% increase in revenue to $84.3 million. Most of these would come from childcare operations and the rest mostly from SEEDS Institute, which trains preschool educators funded mostly with generous government subsidies.

But one has to ask, what happened to the estimated $14 to $22 million supposedly cash surplus a year compared to the announced group net profit of $1.7 million last year? Presumably, asset depreciation will account for some but it’s unlikely to be a lot since they get generous set-up and maintenance grants as an anchor non-profit operator. Talking to the private operators, all of them point to 1 thing. That is, a large chunk of their 120 centres’ operating surplus is probably used to pay for the high costs of maintaining their HQ which undoubtedly comprises of the many fat cats earning fat salaries inside the HQ. Indeed, their 2010 report shows a very high corporate administrative HQ cost of $23 million!

It is interesting to note that full financial details were given in 2009 and 2010 annual reports but are missing in 2011’s report. Hence, there are no financial details in 2011 report to see how much higher corporate administrative HQ cost may have gone up by.

The number of NTUC centres started to grow rapidly from 2010 with the Anchor Operator scheme. This is set to rise further as they will continue to get many more choice low-rental new sites from unannounced quota of child care centres by MCYS.

PCF does not publish its financial report online. Hence no analysis can be done. According to sources, PCF now has 90 childcare centres, up from just a few before the Anchor Operator scheme started. PCF started off well with fees lower than NTUC’s but the newest PCF centres have started to charge fees at about the same rate as NTUC ($600+).

NTUC and PCF may be kings of childcare here due to special privileges. However, when it comes to overseas operations, they fail miserably. NTUC’s premium brand is called Little Skool House International, which was set up in the 1990s. After so many years, the only international centre they had was in Hanoi, opened in 2009 to much fanfare.  According to industry sources, that centre has ceased operations after just 1 year. It is not listed in NTUC First Campus’ website anymore. Perhaps they operate best only in Singapore with the so-called Anchor “non-profit” operating status to protect against competition.

Private and other non-profit childcare operators operating cheaper than PCF and NTUC

Now, what’s interesting is that one can actually find private and other non-profit childcare operators charging fees even lower than that of NTUC and PCF (i.e, $642 pm)! This is despite not getting recurrent grants and private operators having to pay higher competitive rents (currently at $10,000 a month but this is going to increase soon due to dwindling supply of the many void decks and places which have already been reserved for the expansion of the Anchor “non-profit” operators, NTUC and PCF).

The following are some of the monthly fees charged by private and other non-profit childcare operators:

• Non-Profit:

  1. ABC Children’s Place in Tampines – $480
  2. Chee Hwan Kog Child Care in Hougang – $470
  3. SGM Little Kidz in Rivervale – $450

• Private:

  1. Bearrington Childcare in Sengkang – $580
  2. Early Learning Centre in CCK – $560
  3. Bubblesland Playhouse in Sengkang – $630
  4. Island Playhouse in Pasir Ris – $580

They can even operate at lower than NTUC’s and PCF’s fees of $642 despite not getting the type of advantages NTUC and PCF get as anchor operators!

Can you imagine what childcare costs might be like if we allow these operators access to the same grants and rent privileges as the Anchor Operators? Of course, once the private ones get to enjoy these privileges, MCYS would have the rights to regulate their fees.

Bottom line is, why should parents be paying $642 to “non-profit” anchor operators like PCF and NTUC if part of the fees go to feed the fat cats in their HQs? Parents would rather their fees go to pay for better teachers at the centres!

So, based on the cash flow statement of a typical NTUC centre above, if they are truly for non-profit purpose, they ought to be charging ($40,000/80) = $500 a month for childcare. And if other non-profit centres have their kind of privileges, it is estimated that they can easily knock off another $100 from their fees to around $400 pm). Wouldn’t Singaporeans be able to truly benefit with the lower charges?

And so, do we still think that the anchor operators are really non-profit entities and doing Singaporeans a favor?

Who’s doing who a favor?

 

You May Also Like

企图以假炸弹驱赶示威者 男子承认触犯骚扰罪

为了向示威者发出警告,一名男子在芳林公园附近的地铁站出口处,放置一个装满旧玩具,包括一个玩具手榴弹的袋子,因此在《防止骚扰法令》下被逮捕。 59岁的司机何喜秀(Ho Hee Hew,译音)今日在庭上承认有关的控状。 据文案指出,嫌犯于2017年9月16日下午在克拉码头地铁站骑脚车,并在经过该地铁A出口的台阶时停下。 副检察官Thiagesh Sukumaran指出,男子当时带着早前在其他地方发现,装有一塑料盒子旧玩具的棕色纸袋,并将袋子中的部分东西丢出来,随后一边环规四周查看是否有其他人,一边将棕色袋子丢在距离芳林公园很近的地铁站A出口处。 他指出,当时有约800人在该公园举行静坐示威,抗议当届总统选举实施保留制度。该示威活动是在哈莉玛宣誓就任总统后的周末展开。 在何喜秀离开现场后,地铁站的站长发现有关“可疑”袋子,并且联络警察部队的公共交通保安指挥处(Transcom)。而为了调查该袋子,地铁站出口处被封闭了约15分钟,影响了20名乘客。 法庭指出,公交保安指挥处官员调查发现袋子中物件并没有威胁性物件,而且也没有干扰到示威活动,当局也透过闭路电视录像,成功将何喜秀逮捕归案。 被告表示,他不同意示威者的意图,因此留下袋子希望惊动示威者,并迫使他们离开。 副检察官对法官表示,男子的上述行为应该给予5000元的罚款,以作为警惕。…

Police dismiss claims of racism following incident at Bishan MRT Station, netizens on the fence over who was in the wrong

In a Facebook post on Wednesday (10 July), the Singapore Police Force…

Price of motorcycle COE hits another new high

By SGCharts.com The price of motorcycle COEs (Cat D) has hit yet another…