20 Hours ECE Policy to Remain Basically the Way it Was Before except for Extension to 2 Year-Olds

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In Budget 2023 it was announced that along with extending the 20 Hours ECE subsidy to 2-year-olds the “Free” would be put back into the 20-Hours. This announcement was a significant step toward recognition of the right of children in Aotearoa NZ to attend ECE.

Parents would have access to up to 20 hours of preschool education for their child at no cost. 20 Hours ECE funding paid to service owners would be increased by 4.6%.

It would be optional for service owners to be part of the 20 Hours Free ECE scheme. If they decided to opt-in to the higher rate of funding for up to 20 Hours Free ECE per child, then they had to allow parents to enrol only in up to 20 hours if that was what they wanted. This is a change from the current funding rules that allow services to insist parents enrol in and therefore pay for childcare hours in excess of 20 hours. Moreover, services can ask parents to pay a top-up fee (also known as an optional charge).

However, this week the government announced a U-turn on its policy to make 20 Hours ECE free. It said that the 20 hours only condition would not go ahead. It has made this U-turn after intense lobbying by the representatives of business operators and business operators themselves.

Top-up fees or optional charges are also on the cards to be allowed to continue.

The only real change will be a requirement for services to show what their hourly fee is, both for each of the 20 hours and the hours above 20 hours. This is a funding rule that the Ministry of Education could have set a long time ago when the 20 Hours ECE policy first came in.

In future, the government will feel less pressure to increase funding rates for 20 Hours ECE because it is confirmed (again) that service providers will cross subsidise the 20 hours with additional fees. It also means that services that operate morning/afternoon sessions only or do not structure enrolments to have children attending longer than 20 hours will continue to be financially squeezed out of the ECE sector.

The National Party has so far supported opponents to 20 Hours ECE being made free for children.

Further information and discussions

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?

Dr Sarah’s Observations – special publication on funding

Budget day ECE article

On Morning Report, RNZ, 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”.

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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