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Budget 2023 announcement on changes to 20-Hours ECE unravels

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Last updated 7 November 2023

In Budget 2023 funding for 20-Hours ECE was increased by 4.6% and two major changes to the scheme were announced. From March 1, 2024:

  • 20 Hours ECE would be extended to include 2-year-old children.
  • It would become 20-Hours “Free” for families as the government would set new conditions for services in the scheme. One condition was that services would no longer be allowed to require parents to enrol children in more than 20 hours to collect additional revenue from them. A second condition involved introducing transparency in fee charging.
    • Any fees charged for additional hours outside of 20 Hours ECE had to be clearly specified and charged by the hour.
    • Hours of 20-Hours ECE must be expressed as zero dollars per hour.
    • Services must publicly promulgate their fees.
    • Services must provide the Ministry of Education with fee schedule data. 

This announcement was a significant step toward recognition of the right of children in Aotearoa NZ to attend ECE.

But one month after the Budget announcement, Labour announced a U-turn on its Budget commitment to make 20 Hours ECE “free”. It said that the requirement on service providers to allow parents to enrol and use up to 20 hours only would not go ahead due to lobbying by representatives of business operators and private services.

On RNZ’s Morning Report, Prime Minister Hipkins said: “Ultimately they’ve got a business model at the moment which to some extent has been working quite well for them – requiring that transparency might disrupt that.” He said some providers were “fully supportive of the government’s overall direction of travel”, but there “some who are a bit noisier than others who aren’t so keen on the things we’ve been doing”.

After the October 2023 General Election

Under a National-led government 20-Hours ECE will not be extended to 2-year-olds from 1 March 2024.

There is also a high probability that the new conditions for 20-Hours ECE set by Labour will be scrapped. This includes requiring services to make their fee schedule publicly available, to set any fees by the hour (as opposed to daily or weekly), and to show 20-Hours ECE hours as $0 per hour.

National has however committed to supporting the continuation of 20-Hours ECE for children aged 3 to 5. It said its new FamilyBoost tax rebate will be made available on top of existing subsidies including 20-Hours ECE and the childcare subsidy for low-to-middle income families. Families earning up to $180,000 will receive a 25% rebate on any fees paid up to a maximum of $3,900 per year. The fine print is that maximum rebate reduces for families earning over $140,000 and it will not be available for those earning over $180,00.

Neither NZ First nor Act gave a pre-election policy commitment to supporting 20-Hours ECE Funding, but also neither said they wouldn’t. However, Act said it would remove funding from centres whose children consistently fail B4 school checks. NZ First said it would improve Playcentre funding and support those centres that focused on making parents better parents.

No pressure will be felt by the incoming government to increase 20 Hours ECE funding rates in future Budgets because services can require families to enrol in hours above 20 hours for which services charge fees, and optional-charges or top-up charges for the 20 hours are also permitted.

Further information and discussions

Note that the Ministry of Education states that optional charges can continue to be requested for:

  • additional staff beyond the minimum regulated adult/child ratio
  • aspects of provision that are not required by regulation

20-hours free ECE – It is time for Labour to make good on its promise

20-Hours ECE Can Cost Parents a lot of Money

Can my happily settled part-time child on 20 Hours ECE funding be moved to make room for a full-time one?

Some comments we have received:

  • “If I am honest, I actually feel really comfortable with the conditions that were first set out, as I mentioned I am running my centre that way anyway (with parents only enrolling for the hours they want for 20 hours free and not bundling with additional hours and fees) so I know it can be done, granted not easily at times, but I am in it for the children and their families not the money, I guess that is the difference.”
  • “Centres will do exactly what they are doing now, but use different wording, as long as they have room to screw the system, and make money, they will.”
  • “Why can’t the scheme be adjusted to make it workable practicably – offer up 5 free mornings or afternoons only and not set it at 20 hours or 6-hour days that can be really hard to manage if parents are wanting different hours and days?”
  • “All three of my local ECE centres charge fees as well as claiming the government subsidy. At first one centre didn’t so I enrolled there but now they have introduced $20 per 4 hours and there is no option for not paying. They say it goes toward art materials and additional teacher wages.”

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