Early childhood sector says big Budget wins may make things ‘worse’

The extension of 20 hours free early childhood education to 2-year-olds could have unintended consequences that lead to higher fees and fewer providers, say some in the industry.

Last week’s Budget saw $1.2 billion in funding announced to extend the subsidy which is currently available to 3- to 5-year-olds, potentially saving families about $133 in childcare costs each week.

Education Minister Jan Tinetti​​​ said it would help ease cost of living pressures as childcare was “one of the biggest costs families faced.

“This is a win-win for families with young children; it will reduce costs, remove barriers to early learning and allow parents to return to work or take on more hours if they can.”

Last week’s Budget also saw an extra $322 million available to early childhood education (ECE) services to lift pay for teachers and move towards parity with their kindergarten counterparts.

While the news was largely welcomed by the industry and parents, a group of early childhood education leaders representing about three-quarters of providers has now called for a “rethink” of the “unworkable” 20 hours fees free conditions and pay parity consultation.

Te Rito Maioha chief executive Kathy Wolfe said the policy was announced without any prior consultation with the sector, which might have uncovered “large unintended consequences”.

The proposed 20 hours were funded at the highest possible ratio of children to teachers – currently one-to-10, she said, adding childcare centres operated at a much lower and safer ratio than what the 20 hours is funded for.

While an extension of the subsidy was potentially good news for families, centres would be unable to charge families who only used their free 20 hours to pay for the additional teachers needed, Wolfe explained.

Service providers were unsure if the additional funding in the Budget was enough to make it cost neutral for them or whether the additional funding needed would lead to increased parent fees.

Providers were also still unsure of the “conditions” which would be imposed to ensure the full value of the subsidy was passed on to parents.

Wolfe said this could result in “exactly the opposite intention of the policy” and would make the high cost to parents “worse” or lead to centre closures.

The funding announcement comes as the Ministry of Education seeks feedback from the sector as part of its pay parity funding review, with consultation open until June 6​.

In the proposed new system, there were two distinct funding streams – a teacher salary subsidy and an operating subsidy, the ministry’s ECE policy general manager John Brooker​ earlier explained.

In the teacher salary subsidy, there would be different funding for under 2-year-olds and over 2-year-olds, due to the different staffing ratios required for these ages.

For the operating subsidy part of the proposal, one option is to remove the current distinction for under and over 2s.

Brooker earlier told Stuff the Government was committed to introducing pay parity for ECE teachers with their counterparts in kindergartens.

“This is about fairness for teachers,’’ Brooker said.

“It also helps address the need to attract and retain teachers. The current funding system is not set up to deliver pay parity. This is why the ministry is consulting on a new funding system that would better align funding to services’ teacher salary costs.’’

The sector wanted to see an entirely new funding model, Wolfe said. The funding was all effectively drawn from own pool, so that it was a case of “robbing Peter to pay Paul”, she said.

Wolfe and the group of ECE providers have raised their concerns in a written letter to Tinetti.

Tinetti and Associate Education Minister Jo Luxton were approached for comment.