20 hours free ECE extension scrapped
Parents will have to wait until their child turns three before getting 20 hours of free early childhood education, following a cabinet decision to reverse Labour’s plan to expand the scheme.
However, the early learning sector has welcomed a continued commitment to increasing its funding rates by 4.6%.
Early Childhood Council CEO Simon Laube said the boost will allow providers to plan with confidence, with fewer forced to close due to funding pressures.
Budget 23 announced the 4.6% increase to 20 Hours ECE funding rates along with an extension for two-year-olds.
The latter has been reversed, among several policies scrapped by the new Government in its mini-budget announced yesterday.
The extension was described as one of the Crown jewels of Budget 2023, estimated to save parents up to $133.20 per week from March next year and would have cost $1.2 billion.
In July, Treasury cautioned the Labour Government against its $1.2 billion policy, warning of a risk of “significant deadweight cost” and “relatively low value for money” as the increased subsidies were unlikely to be passed fully on to parents.
It was not yet clear if the scrapped extension would be replaced with National's own childcare policy, FamilyBoost, which would give families up to $75 a week as a rebate on childcare costs depending on household earning.
Chief executive of Te Rito Maioha Early Childhood New Zealand Kathy Wolfe said she was “hopeful” that FamilyBoost would reach parents who were keen to use the proposed additional 20 hours policy to “return to work, thereby helping stimulate the economy”.
While the extension to two-year-olds was scrapped, the planned 4.6% funding increase was staying, which was “extremely heartening”, Laube said.
Centres have been under significant pressure, especially over pay parity, and the additional funding would offer greater “security” and “optimism”.
“It will hopefully be just enough to stop the seemingly constant centre closures we are seeing,” he said.
“The government has demonstrated that while they’re looking for savings, they are committed to the importance of investing in ECE,” Wolfe added on keeping the 4.6% increase.
A number of 20 Hours ECE funding conditions and requirements such as providers needing to set their fees by the hour, publish their existing fee schedules and submit fee schedules to the Ministry of Education have also been reversed.
The funding condition that home-based educators can charge parents top-up payments for 20 Hours ECE has been retained to allow educators to maintain income while still reducing costs to families.
The implementation date for this funding condition is likely to be May or June 2024.