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Early childhood education financial and money matters


  1. The details from the press release of Hon Jan Tinetti and Hon Jo Luxton
  2. Early Childhood Education Reaction

1. The details – an abridged version of today’s press release by the Minister of Education Jan Tinetti and associate minister Jo Luxton

“This Budget helps ease cost of living pressures by significantly reducing the cost of early childhood education for parents by extending 20 hours free ECE to two-year-olds,” Jan Tinetti said.

“Based on average costs in 2023, families who were not previously receiving childcare subsidies would save an estimated $133.20 a week in childcare costs if a two-year-old child attended ECE for at least 20 hours a week.

“We are also increasing the rate of the subsidy and introducing additional conditions to help ensure the full value of the 20 Hours ECE subsidy is passed on to parents. This will enhance fee transparency for parents, helping them be better informed when choosing a service.

Extension of the 20 hours free ECE subsidy will be available from 1 March 2024.

“We are also making an additional $322 million available to ECE services to lift the pay for teachers to help them move towards parity with their counterparts in kindergartens,” Jan Tinetti said.

Services that opt-in to the full parity funding rates will be able to access this extra money for their staff from 1 November 2023. The full parity funding rates match the kindergarten funding rates and require opted in services to pay their teachers the full kindergarten pay scale. (This is fantastic news!)

“There is also an increase to subsidies, in recognition of the cost pressures services are facing,” Associate Education Minister Jo Luxton said.

“From 1 January 2024 there will be an increase of 5.3 percent to subsidies for playcentre, kōhanga reo and home-based ECE services. Subsidies for kindergartens and education and care services will also be adjusted, but not by as much given the significant investment for staffing in these services through this Budget.

“The increase is also being applied to the targeted ECE subsidies, Equity Funding and Targeted Funding for Disadvantage. These funds have the dual aims of improving access to and quality of ECE.

These subsidy increases also include a one-off grant of $3 million to support the sustainability of Playcentre Aotearoa, the service provider for playcentres.

2. Early Childhood Education Reaction

Increased funding of various amounts for all ECE services and extending the 20 Hours ECE subsidy to two-year-olds is very welcomed!

The Labour Government is (finally) set to deliver on its promise to make 20 Hours ECE “FREE”. At present parents can still pay as much as $80 or more a week in ‘optional” or top-up charges and by service enrolment policies requiring parents to enrol in additional non-20 hour funded hours.  This will change. New funding conditions will require services that opt into 20 Hours ECE to:

  • set fees by the hour only, for two to five-year-old children, so that any fee charged would clearly set out the number of hours being charged for. The 20 hours associated with 20 Hours ECE would have to be specified as $0 per hour,
  • publish their hourly fees,
  • allow parents to enrol children for only the hours of 20 Hours ECE, if they choose, and
  • provide the Ministry of Education with fee data.

The Ministry is reviewing the conditions relating to optional charges and donations. The existing 6 hour per day limit for 20 Hours ECE funding remains.

At long last funding rates for all teacher-led centres will be restored to being the same as for kindergarten associations. This is something that the OECE identified to be a key problem in the implementation of pay parity, and has campaigned strongly for. It is good to see that the government will be putting all education and care centres (including kindergartens) on the same funding rates in return for paying teachers at pay parity rates.

But there are still further pressing issues that are not being addressed.

The pre-Budget survey conducted by the Office of Early Childhood Education (OECE) showed that while the Labour Government had expressed many policy aspirations, government was perceived to be taking things in the wrong direction for ECE. 

The early childhood sector wants government to improve teacher-child ratios and reduce class or group sizes.  It needs government to fund and implement changes to improve workforce retention and raise the proportion of teaching staff who have specialised early childhood training and qualification.

Alongside that ECE needs government to resource the Ministry of Education to do unannounced regular inspections of services.  Without this we’ll see more services failing to support parents/caregivers well and keep children safe, happy, and learning in quality educational environments. 

Conditions in ECE need to be improved to build and maintain parent confidence in using ECE.  The number of children attending ECE last year was down to 181,000 children, that is 7% less compared with the year before. The number of children in ECE has been reducing every year since 2017 when more than 202,000 attended.

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