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Details on the Childcare Subsidy Increases and What this Means for our Sector and Parents

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Childcare Subsidy Changes.
November 7, 2022.

The income thresholds for families to qualify for the WINZ childcare subsidy are to be lifted from 1 April next year, as well as subsidy amounts. 

Prime Minister Ardern said this will help to tackle the cost-of-living crisis for families and give more parents, especially mothers, the choice to return to paid work by making childcare more affordable.

The lift in income thresholds is long-overdue – the number of children supported has dropped from 50,000 in 2010 to fewer than 25,000 this year. Many more families will now qualify.

Beehive Press Release

Radio NZ Checkpoint programme: “The government’s touted its $189 million boost to childcare subsidies as a way to get more parents into full-time work, and to fill labour shortages. But some parents are dubious it’s worth a return to the workforce – and if it will it put extra money in their pockets. Our reporter Katie Todd has been crunching the numbers.”

Will the increased subsidies help parents get back to paid work?

Maybe not. NZ already has a record level of female participation in the workforce, so any increase in work resulting from the subsidy is likely to be quite small. Those that want to be in paid work have mostly found a way to do it, and there’s no shortage of jobs and employers at present willing to be flexible about hours of work. So come 1st April next year, we do not expect to see a sudden increase in enrolment numbers in early childhood education and care.

Will the subsidy increase help parents with the cost of living?

One thing to note is that Government has no control over childcare fees. Services set their own fees.

By the time the subsidy increases take effect in April of next year, any ECE service that wants to, may well have raised its fees, effectively wiping out any, or all, potential fee reduction from the subsidy increase.

But families who previously didn’t qualify for the subsidy because they earned too much will likely enjoy some very welcome fee reduction.

What else is needed?

Pay parity for early childhood teachers with schoolteachers needs to be delivered or there are not going to be the teachers to work in the early childcare and education services.

Ardern said that Free ECE for all is her big wish.  Well, here’s a thought – the Labour Government could deliver on its promise of providing 20 Hours Free ECE (read “a broken promise”).

Ardern also said that she wants parents to “stay home and be a primary caregiver if they choose to”.  But if the government honestly supported this, then we would see the subsidy going to parents, to give parents financial choice to care for their child or to use it for childcare.

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