Willoughby City Council leases Devonshire Street Children’s Centre to private operator

Willoughby City Council has turned over the lease of its Devonshire Street Children’s Centre, located in Chatswood New South Wales, to “a highly regarded provider” as part of a broader plan to alleviate “significant financial pressure” being felt by the Council as a result of high inflation, “cost-shifting from the NSW Government, severe rate capping” and COVID-19 era losses.

 

As well as supporting Council’s financial sustainability, the move has been designed to guarantee ongoing quality care to the families of the 72 children who attend care at the service.

 

In exchange for the leasing rights, the Council will receive an annual licence fee (plus annual CPI escalations) in an agreement worth more than $3 million. The agreement also gives a goodwill payment to the Council and shores up funding of building upgrades.

 

Since the late 1980s, the Council’s total losses while operating the centre have ballooned to $3.9 million, including a $364,000 loss in 2021/22, putting the centre’s viability in doubt, a statement from Willoughby Mayor Tanya Taylor said.

 

The incoming operator has been in place since 2015 and currently has 10 centres across Sydney, including one in Chatswood, which meet or exceed national care quality benchmarks.

 

The leasing decision, the Mayor said, would help ensure the centre stayed in place and was “a win for families, staff, residents and ratepayers”.

 

“I respect the views of the many parents and indeed children who spoke at Council meetings and wrote and spoke to Councillors and staff ahead of this decision,” Mayor Taylor said.

 

“It’s understandable that we received this feedback, given that for most parents, the selection of a childcare centre is a highly considered, emotional and important decision.”

 

“However, the Council took the view that this decision was the right one, given it will ensure the delivery of quality care for Willoughby families, ongoing employment by staff and an important new revenue stream for the Council.”

 

The current philosophy of care of the service will be maintained, along with its curriculum, cultural education programs and fee schedule, she added. 

 

“In addition, the centre’s current staffing model will remain in place with staff offered continued employment with the new provider.”

 

Mayor Taylor emphasised that Willoughby Council, like many others, was “under significant financial pressure,” and that a long-term financial plan had “highlighted some serious concerns about Council’s financial situation in the coming decade”. 

 

“All Councillors have an important responsibility to make sensible financial decisions. Monday night’s resolution was one of those decisions,” she added.

 

“Given the Council’s future financial scenario, the centre’s losses could have forced the Council to close the centre if it remained a Council-owned business.”

 

“In addition, by continuing to operate the centre, the Council was retaining a high legal risk profile. This problem comes about from the difficulties of the Council trying to meet changing and complex regulatory requirements, licensing standards and child care regulations while being the operator of just a single centre.”

 

In contrast, she continued, “we now have a positive outcome where the centre’s future has been guaranteed and an important new source of funds has been created to help the Council continue to deliver important services and projects to the community.”

 

The Devonshire Street site will be retained under Council’s ownership, and the Council is currently finalising the agreement with the selected tenderer and working to ensure that all the necessary terms and conditions are formalised and internal processes are in order before publicly naming the tenderer, as well as liaising with staff currently employed by the service. 

 

To review the Mayor’s statement in full, please see here.